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National municipal review, February, 1921

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Title:
National municipal review, February, 1921
Series Title:
National municipal review
Creator:
National Municipal League
Childs, Richard S.
McFarland, J. Horace
Hinckley, T. L.
Montgomery, Ruth
Black, Warwick
Eppich, Elinor M.
Shenton, Clarence G.
Merriam, Charles E.
Reed, Henry E.
Jackson, James F.
Lewis, E. I.
Sanders, Fielder
Fassett, C. M.
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Philadelphia, PA
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National Municipal League
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English

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Auraria Library
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Full Text
NATIONAL
MUNICIPAL REVIEW
Vol. X, No. 2 FEBRUARY, 1921 Total No. 56
THE PROSPECTIVE CONSOLIDATION WITH THE A. C. A. FROM THE LEAGUE’S STANDPOINT
BY RICHARD S. CHILDS
A variety of facts made a union of the American Civic Association and the National Municipal League opportune at this time.
The personnel of the American Civic Association staff was changing. We had a monthly magazine which could, and did, cover much of their subject territory, and yet reached only 18 per cent of their members. They had no magazine but had a variety of pamphlets that we could use and some of which we need. Mr. Woodruff, our honorary secretary, is their vice-president and Mr. McFarland, their president, is our vice-president. A roster of their active spirits and attendants at conventions would make any National Municipal League member feel entirely at home.
Our recent co-operation with the city-planning fraternity whereby our Review became the official organ of the City-Planning Conference increased still further our overlapping of active personnel. Mr. McFarland, who has from the first been the moving spirit of the American Civic Association, was in a mood to welcome the relief which union would bring to his
overburdened energy. The National Municipal League was disposed to alter its name and that of the Review, for the word “Municipal” was a misnomer in view of our interest in state and county problems, and for a year the council had been equipped with authority from the Cleveland convention to change the names. This reduced on our side the problem of institutional pride in an old name and made the project for a new composite name much more acceptable to us. On the other hand the American Civic Association is easily satisfied with any variation that includes their salient word “Civic.”
A more urgent reason lay in the existing duplication. The American Civic Association field included city planning, zoning, municipal art commissions, park and playground questions, and all the external physical problems of government which are included roughly in the old phrase “City Beautiful.” For years the League had been lapping over into that field for the natural reason that our members, as local civic reformers, were a choice audience for that propaganda.
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NATIONAL MUNICIPAL REVIEW
[February
Topics, speakers and even some papers, at the conventions of the two organizations, were frequently identical. Both had pamphlets on the subject of “Zoning” and there was one narrow escape from an almost simultaneous duplication of expensive pamphlets on “Billboard Control.” Some economies could be achieved by union in handling membership detail and still more by enabling the American Civic Association to reach its membership by a monthly magazine instead of by special letters and pamphlets.
Accordingly a “trial marriage” was arranged and approved unanimously at the Indianapolis convention. Overlapping councils were chosen. The Review is made the official organ of the American Civic Association. That is all for the present. The American Civic Association retains its office in Washington where Miss Harlean James replaces Miss Eleanor Marshall, who seems to like a certain fortunate man better than she does the office. A joint convention is scheduled for 1921 at
which identical governing boards can be elected and a composite name adopted.
A manifest result is the addition of, we hope, fully a thousand subscribers to our magazine out of the 1400 American Civic Association members who are not already subscribers, bringing our edition up to 4,000. The American Civic Association members are being billed for the Review, their new official organ, for the unexpired terms of their American Civic Association membership. The new American Civic Association minimum dues will be $5 plus $2.50 optional for the magazine. Higher classes of American Civic Association membership will include the magazine without the surcharge.
If the consolidation is completed at the 1921 convention—and there is no visible opposition—the organization thus united will be the one big general association of the United States devoted to civic affairs, and more than ever the natural clearing-house for service and inspiration to those who press for progress in the local fields.
BRACKETING THE NATIONAL MUNICIPAL LEAGUE WITH THE AMERICAN CIVIC ASSOCIATION
BY J. HORACE McFARLAND
The President of the American Civic Association discusses the fro-posed consolidation with the National Municipal League. Both have
been pioneer organizations. ::
The readers of this publication need no introduction to theNational Municipal League, nor is it in point here to recount its achievements or its history.
A recent inquiry showed that less than 20 per cent of the membership of the National Municipal League had also membership in the American Civic
Association. In view of the expressed desire on the part of the League to sit close to the association for mutual advantage, and with the possibility of an eventual consolidation, it seems therefore now most desirable to acquaint the readers of the National Municipal Review with that civic organization.


1921] BRACKETING THE NATIONAL MUNICIAPL LEAGUE 69
The American Civic Association was formed in 1904 through the merging of the American Park and Outdoor Art Association and the American League for Civic Improvement. The merged organization began business with high hopes and a considerable debt. The latter, it may be said in passing, increased considerably before it was extinguished completely, and is now only a memory of need, courage and accomplishment. The hopes remain, and are increasing as the years go by and the opportunities open.
Organized upon a very simple basis permitting quick and concentrated operation the American Civic Association found its hands full of things to do and its membership instinct with the desire to do them immediately. In those days mosquitoes were still a pest which it was expected should be endured, and flies were accepted similarly. Encouraging the organization devoted to the singing nuisance, that soon passed into the category of avoidable troubles, while the fly was swatted nationally because of the campaign organized by the association.
Poles, wires, avoidable black smoke, and the abuses of excessive outdoor advertising were tackled with courage and with mixed results. Most of the wires in populous places have gone underground, much of the black smoke has been economically consumed, but the billboards are yet with us,.
In 1905, at its first annual meeting after organization, the American Civic Association internationalized the ownership of Niagara Falls and began the movement which five years later resulted in a definite measure of protection to the great cataract through the negotiation of a treaty with Great Britain. The picturesque campaigns it waged, in which several successive presidents of the United States did good service, are now history, but the
need for continuing the effort in the face of a determined proposition to further skin the cataract of its power possibilities to the damage of its aweinspiring dignity and beauty, is very real.
It occurred to the officials of the American Civic Association that the national parks were worth at least one whole desk in Washington. Comprising as they did ten years ago a great territory, more than equal in extent to the two smaller states of the Union, they were handled casually and incidentally in the federal government in part of the time of men devoted to other efforts in the war department, the interior department and the department of agriculture. There was no national park service, and the parks themselves were not well managed. Insisting on the need for nationalizing the national parks, and interesting in them several successive presidents and secretaries of the interior, has resulted, directly through the efforts begun by the American Civic Association, in the establishment of the present efficient national park service, under which these splendid and unreplaceable resources of the nation are now being-used by the people who own them with pleasure and advantage. At the moment vigorous warfare is being waged in defense of the national parks, which have become so valuable to all the nation that, as usual, some few citizens of the nation desire to possess for their own selfish advantage the waterpower and the irrigation reservoir sites that would turn aside these areas from their designed beneficent use.
Steadily the aim of the American Civic Association to make American communities better places to live in has brought about the promotion of community betterment. It brought the playground movement to where a national organization could take it up


NATIONAL MUNICIPAL REVIEW
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and efficiently forward it alone. Making city planning known to the nation resulted similarly in the formation and promotion of a city planning conference which now does good work. Zoning in protection of living conditions and property values has been promoted toward a consistent and continuous practice. Housing has been fostered where it had relation to the community plan, always in harmony and without conflict with the national organizations devoted particularly to that all-important subject.
The method of operation of the American Civic Association, which does not seek to establish minor branches but welcomes to membership all forward-looking organizations and individuals; its avoidance of wasteful reports; its presentation to the press of the nation of succinct, readable items concerning important things doing and needing to be done; its direct work on
[February
congress when need arises; its history of keeping clear of entangling alliances not related to making the community a better place to live in—all have combined to give this organization not only a strong hold on the American public but a wide sweep of influence.
It is this organization which now gladly stands behind the National Municipal League. In its work it has always felt the need for the detail of administration effort which is the peculiar function of the League, just as the latter has found its work short-circuited without reference to housing, parks and playgrounds, the abolition of poles and wires, the mitigation of black smoke and the reduction of billboards.
This, then, is the bracketing of the two organizations, which it is believed ought to result in larger influence for both, and, what is very much more important, in larger good for America.
COMMISSION GOVERNMENT LOSING GROUND IN ST. PAUL
BY T. L. HINCKLEY
After six years of commission government St. Paul, the capital city of Minnesota, is somewhat disillusioned.
The complaint against commission rule is the familiar one of lack of coordination of activities. In the opinion of many, this has resulted in duplication of effort and rivalry between department heads, with consequent increased costs of administration. It is also stated that there has been so much patching of the original commission charter, that many of its provisions have been nullified, and that a new instrument is preferable to more amendments.
A further reproach is contained in the
assertion that although department heads have conceded the presence of a certain amount of duplication and admit that a general over-hauling of system would be highly beneficial, still, until very recently, no steps have been taken to bring this about.
As this goes to press word has been received of a survey of the city administration which is soon to be arranged, a step which may be viewed as an acknowledgement of the justice of this criticism.
Friends of the commission explain that a large portion of the increased costs of administration are due to the unprecedented increases in labor


1921] GOVERNMENT LOSING GROUND IN ST. PAUL
71
and materials charges, not to mention such things as the recent adoption of the two-platoon system by special vote of the people. As to elimination of waste, a leading official of the city government has stated that possibly the “slack” in city business methods may amount to $100,000 annually, a sum worth going after, whenever the people vote the funds necessary for a special investigation.
From the foregoing it will be seen that the financial side of the question has been the most emphasized in whatever public discussion has taken place. The advantages of a more responsible type of government, the council-manager type, for example, have been urged frequently by the press, but it cannot be said that popular interest has as yet assumed the proportions of a general demand.
A charter commission has been at work upon the general problem for some time, and recently an outline draft of a proposed new charter was published. This was stated to be a “modified city-manager” plan, but an examination of its provisions seems to
classify it rather as a modified federal plan, the mayor being charged with many of the duties of a city manager. Regardless of its precise type, this draft is understood to represent the views of many who fear that the voters would reject a clean-cut council-manager charter.
It is impossible to predict just what turn charter revision in St. Paul will take. The best informed opinion is favorable to the council-manager system, but, as indicated, there is no general demand as yet for this reform. Dr. A. R. Hatton recently addressed the influential St. Paul Association on the general subject of charter reform, but no final action has been taken on the matter. In the meantime, amendment of the present charter continues, there being two such amendments voted in by the citizens at the last election. Until other steps are taken, the passage of additional amendments is the only remedy for charter ills; but it is safe to say that with the passage of more amendments the feeling grows that a different form of government will prove more efficient.
RESULTS OF SOLDIER BONUS REFERENDA1
BY RUTH MONTGOMERY
Sub-librarian, Legislative Reference Section, New York Stale Library
Five states have been added to the list of those giving a bonus to their world war veterans, Maine, New Jersey, New York, Rhode Island and Washington. The laws of these states require the approval by the electors of any bond issue. For this reason it was necessary to submit the propositions for the soldier bonus to the voters. New York, Washington and New
1 For an earlier article on this subject see National Municipal Review for October, 1920.
Jersey did this in the November elections, Maine and Rhode Island earlier. In New York, at least, and probably elsewhere, considerable objection developed both within the American Legion and outside. In one small New York community with approximately 1,000 electors, only 80 votes were cast for the proposition; however, final returns will give the bonus an enormous majority. The most telling argument used against the proposition was the increased burden of taxation.


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Distributing the various amounts over ten to twenty years makes the burden very light on each individual.
The laws of Maine and Rhode Island, as approved, provide for the payment of $100 to all veterans regardless of the length of service. New Jersey and New York base their payments on the number of months of service, $10 for each month, fixing as a maximum $100 in New Jersey and $250 in New York. New York having the largest population naturally has the biggest task, her amount being fixed at $45,000,000. Rhode Island comes at the other end with $2,500,000, and in between New Jersey with $12,-000,000, Maine with $3,000,000.
The machinery for carrying the law into effect is provided for in each state except New York. The operation of that law must wait until the 1921 legislature provides a board for its administration. This will no doubt affect the number to be benefited, because one requirement is residence in the state when the law becomes effective. Departing from the usual ex-officio board, consisting of the military and financial heads of the states,
[February
Rhode Island has a civilian board in charge.
In addition to these states, we now note a law in Washington which was approved in the November election. It provides for a bonus of $15 for every month of service between April 6, 1917, and November 11, 1919, to be paid to all Washington men and women, or their heirs, in the military, naval and air service of the United States and its allies. Exception is made in those persons receiving bonuses from other states, or any compensation in addition to the regular army and navy pay, unless the amount received does not equal the bonus, then they are entitled to the difference. The state auditor with the aid of the adjutant-general is the administrative officer. The money will come from an issue of 6 per cent bonds, totalling $11,000,000, with an additional issue authorized if necessary. These bonds must be retired within twenty years, the retirement fund to be raised by an annual tax of one mill on the dollar of taxable property. This bond issue is in the hands of the state board of finance.
NATIONAL MUNICIPAL REVIEW
THE SOCIAL UNIT ENDED IN CINCINNATI
BY WARWICK BLACK
Cincinnati Municipal Reference Bureau
The history of the closing days of the Social Unit experiment in Cincinnati completes the cycle of articles and criticisms that have been issued from time to time concerning this much talked of endeavor. In the September number of the Review, there appeared a most comprehensive paper on the project, considering it from its main and original angle, as an experiment in government, rather than as a social service scheme. The final
chapters, however, show how much of the former plan had been abandoned, and how more and more the idea was developed along social rather than political lines. It ceased to be the workshop of the political scientist and became that of the social worker.
The final decision for the abandonment of the Social Unit was in nowise hasty, rather the contrary, the last step in a sure, gradual process of disintegration. After the mayor and


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THE SOCIAL UNIT ENDED IN CINCINNATI
73
his colleagues had taken a firm stand in opposition to this new “socialistic” phenomenon that had appeared rather suddenly in our midst, the question of its continued usefulness, if not its very life was a matter of time only. Financial stringencies added further complications, and soon the Unit was in the position of not knowing from whence the next dollar would come. For a while the discrepancies were tided over by gifts from funds of other organizations, which delegated to the Unit, in the Mohawk-Brighton district, work for which they would otherwise be responsible. Among these organizations was the Visiting Nurses’ Association, and others of a similar nature. Prompted by the threat of the withdrawal of large contributions, the Council of Social Agencies, which controlled the funds of these organizations, decided not to allow any transference from one agency to another. This exclusion of the Unit from any participation in the benefits either direct or indirect, of the Council of Social Agencies, forced the directors to conduct a separate campaign which did not end advantageously for the cause they sponsored. It was soon evident that the experiment could not proceed on its own momentum, and that steps preparatory to closing were in order. Accordingly, in July of this year, a final summary was published by the executive head of the organization.
The middle of November saw the first definite step of actual disbanding, when arrangements were made for the Baby Milk Fund Association to take over the infant and child welfare work, since this organization had previously functioned in the Mohawk-Brighton district before superseded by the Social Unit. A few days later came the
announcement that the final bulletin had been issued, and that various phases of the work had been turned over to several organizations, including besides the Baby Milk Fund Association, the Visiting Nurses’ Association, and the Anti-Tuberculosis League. For the time being, the Unit will continue a few functions, such as the health station, which will be open certain days of the week; the nutrition classes, and the dental clinic. At the time of closing there were under the care of the Social Unit 352 babies, 498 pre-school children, as well as 30 adult bedside cases, and 150 active and contact tuberculosis cases, out of a district comprising about 12,000 people.
A concluding estimate of its work cannot be made until we are further away from the beclouding details of the project, but certainly it is safe to say that while it did not contribute greatly in its original field, that of government, it did contribute much in the field of social betterment, and it remains to be seen whether the organizations now assuming its functions can manage them as efficiently, and with the same degree of satisfaction to those concerned as did the Social Unit. It has given us, as Mr. Phillips, Executive Secretary of the National Social Unit Organization, says, “Increased efficiency in social service, achieved through centralization which has amounted in the field of public health alone from 300-1,200 per cent; the increased participation in the affairs of the neighborhood on the part of the people; of supplementing public effort with the assistance of members of technical groups and the growth of the spirit of true neighborliness.”


RECORD OF LEGISLATIVE ACCOMPLISHMENT 1920
BY ELINOR M. EPriCH Training School for Public Service, New York
GOVERNMENTAL REORGANIZATION
During 1920 eleven states (Georgia, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, New Jersey, New York, Rhode Island, South Carolina, Virginia) held regular sessions of their legislatures, twelve (Oregon, Indiana, Wyoming, Nevada, Idaho, Arizona, West Virginia, New Mexico, Washington, Texas, Kansas, Delaware) held special sessions, and one (Ohio) held a second session of its 1919 assembly.
Of these states eight passed laws or resolutions or proposed constitutional amendments affecting the organization of government. The resolution passed by the Washington state legislature is the most comprehensive. It provides that the governor, with the assistance of the attorney-general, prepare and submit to the next regular session a civil administrative code providing for the vesting of all executive functions of the state in a limited number of departments. In Ne w York the constitutional amendments, recommended by the reconstruction commission appointed by Governor Smith, failed, but three alternative measures, one of which incorporates provisions to practically the same effect as those of the commission, were adopted and will come before the next legislature for second approval. By this amendment the present one hundred and eighty-seven boards, commissions and bureaus are consolidated into twenty-one departments, most of whose heads
are appointed by the governor with the consent of the senate. In Indiana-several constitutional amendments were proposed which must be acted upon by the legislature of 1921, and may thereafter be referred to the electors. Three of them fix the terms of various officers at four years, and two provide for the appointment rather than the election of two state officers, namely, the clerk of the supreme court and the superintendent of public instruction. Ohio passed a measure extending the term of county auditors from two to four years.
A constitutional amendment proposed by the legislature of Indiana was the only measure adopted by a 1920 legislature which provided for an executive budget. The attempt of the reconstruction commission of New York to obtain an executive budget failed, although a legislative budget was provided for. An unsuccessful attempt was made in South Carolina to repeal the executive budget system adopted in 1919.
Two states, Virginia and Maryland, passed acts providing for state purchasing departments. The law of Maryland creates a central purchasing bureau, while that of Virginia creates a commission to provide for and designate a state purchasing agent.
In the field of municipal government, the legislature of Maryland has passed a law providing for a single police commissioner for the city of Baltimore instead of the police board. In Rhode Island the Tiverton police commission
74,


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LEGISLATIVE ACCOMPLISHMENT 1920
75
was abolished and the police power placed in the hands of the town council. Massachusetts has made mandatory the audit of accounts of all cities and towns at least once in three years by the director of the division of accounts.
HOME RULE AND PUBLIC UTILITIES
Maryland advanced the cause of municipal home rule by granting to the voters of Baltimore city the right to change their form of government. They are also authorized to decide whether the police commissioner shall be appointed by the governor or by the mayor. In Massachusetts town governments “progressive changes are facilitated by a bill authorizing their independent action.”1 The senate of New York failed to pass the home rule amendment endorsed by the New York state conference of mayors and recommended by the governor. The Downing bill, giving the board of estimate and apportionment power to fix county salaries in New York city, also failed. Kentucky has made it possible for the smaller cities in the state to have commission form of government if they so desire.
South Carolina was the only state to pass legislation to allow municipal corporations to buy and sell public utilities. This act, which is an amendment of a law of 1912, provides for municipalities to buy and sell water works, gas works, and electric light works. In New York legislation to permit municipalities to acquire, own, operate and control public utilities failed, and likewise in Ohio a bill failed which authorized municipal corporations to issue bonds to purchase, construct and acquire by condemnation a
1 Review of Legislation of the session of 1920, by Speaker Joseph E. Warner of the Massachusetts House of Representatives.
transportation system. Ohio was saved by the governor’s veto from a measure giving the public utilities commission, where deemed by it necessary to prevent injury to any public utility or street railway in any emergency, authority temporarily to alter, amend or suspend any existing rates or schedules prescribed in contract or franchise. A measure somewhat like it failed in the New York legislature providing that the public service commission might regulate rates notwithstanding franchise or other agreements. Rhode Island passed an act to allow towns to contribute to costs of trolley service lines within their respective limits.
The tendency of the 1920 legislatures was toward public regulation of public vehicles. Maryland placed taxicabs under the control of the public service commission; Rhode Island placed jitneys and buses under the public utilities commission; South Carolina included steamboat lines and truck lines in the common carriers regulated by the railroad commission; Texas defines natural gas companies as virtual monopolies and subjects them to the power of the railroad commission, and Virginia empowers the state corporation commission to regulate the delivery of power, heat, light or water by public utility corporations.
PUBLIC DEBT
Massachusetts, as a state, has adhered to the pay-as-you-go policy, but other states seem to have been confronted with the necessity for expanding their debts. Even in Massachusetts the legislature granted to certain towns authority to exceed their debt limit. New Jersey increased the limit on net indebtedness of counties from 2 to 4 per cent of ratables; New York excluded school bonds from city debt limits; Maryland has authorized drain-


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NATIONAL MUNICIPAL REVIEW
[February
age commissioners to issue bonds; the legislature of Oregon proposed a constitutional amendment increasing the limit of state indebtedness for permanent roads to 4 per cent instead of 2, and the legislature of Georgia passed an act to amend the state constitution to allow West Point to increase its bonded debt.
The Ohio legislature passed an act to lift the interest and sinking fund levies, on account of bonds issued prior to January 20, 1920, from out of the limitations provided by the Smith one per cent law into the fifteen mill limitation. The question must be submitted to the voters of the individual municipalities.
TAXATION
As with debt so with taxation, legislatures have been compelled to look beyond present provisions for money to meet the increasing costs of government. Washington has increased the maximum tax levy to five mills instead of three, and has also increased the maximum tax levy for public schools; Rhode Island has passed an act allowing cities and towns to increase their tax assessment from 1§ to 2| per cent of their ratable property valuation; Maryland has increased the maximum rate in three counties; while Texas at the November election passed a constitutional amendment removing all limits from taxation for local school purposes.
Oregon submitted to the people measures providing for additional tax levies for the support of schools. Ohio has made drastic increases in existing taxes, the tax paid by wholesale cigarette dealers being increased as much as from thirty dollars to two hundred dollars annually. Kentucky has placed a tax on gasoline; Massachusetts a special tax of three-fourths
of 1 per cent on net incomes of corporations; the Indiana legislature proposed a constitutional amendment authorizing the levy of an income tax. Four important taxing measures failed in the Ohio legislature. These provided for taxes on net incomes, on gross receipts of transfer, truck and transportation companies, on the production of coal, oil, gas and other minerals mined in the state, and a license tax for sale of drugs. In Rhode Island an act failed which proposed an additional tax of six cents on each one hundred dollars of ratable property valuation for payment of current expenses.
One state, Indiana, provided for a revision of its tax laws. A measure providing for the reform of taxation methods failed in Washington. The legislature of Indiana proposed a constitutional amendment authorizing the general assembly to provide by law for a system of taxation in order to simplify the present constitutional provision. This must be acted on by the legislature of 1921 and may thereafter be referred to the electors.
CIVIL SERVICE
The legislature of Maryland adopted the merit system during its 1920 session. The law exempts many officers from the classified service, but gives the governor of the state the power to classify them. Enforcement is in the hands of a single commissioner appointed by the governor for a six-year term.1
Maryland provided for the pensioning of members of the fire and police departments of Baltimore county; Massachusetts for the pensioning of members of the police department of Boston; New Jersey for
1 Political Science Quarterly, September, 1920, Supplement, p. 73.


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the pensioning of firemen and policemen of municipalities; and New York passed a bill to bring about greater uniformity in the New York city pension system. This measure is expected to take care of all civilian employes other than those of the uniformed forces.
Maryland has included among those to be given preference in the civil service, army and navy nurses. Three states, Massachusetts, New Jersey and Ohio, passed veteran preference measures. The New Jersey law provides
for credit marks in civil service examinations to be given to United States soldiers, sailors or marines who served in any war, and requires appointment if among the first three certified. The Ohio law provides that any Red Cross nurse or soldier, sailor or marine may file with the civil service commission a certificate of service and honorable discharge, whereupon his name shall be placed on the eligible list by the commission, from which list he may be appointed to any position in the civil service of the state for which he is qualified.
NATIONAL PARKS OR IRRIGATION RESERVOIRS—WHICH?
BY J. HORACE McFARLAND President, American Civic Association
Measures pending in congress authorize the flooding of parts of Yellowstone Park in favor of private interests. Secretary Payne, however, has announced that the water from these lakes can be utilized after it leaves the park without detriment to this national recreation center. :: :: :: :: :: :: ::
At a meeting of the Great Falls Commercial Club, of Great Falls, Montana, held Friday, October 15, 1920, a circular headed “The National Parks in Imminent Peril, ” as sent out by the American Civic Association, received attention. The result of that attention was the taking of the following action:
Alter considerable discussion on this matter the directors of the Great Falls Commercial Club expressed themselves as heartily in accordance with the use of the reservoirs as irrigation and power sites, being strongly opposed to the wishes of your communication.
This matter will be taken up with the various commercial clubs in this state toward the encouragement of the use of these waters for the purposes of irrigation and power for the betterment of our state.
It is thus seen that the point of view of commercial organizations of the states surrounding the YellowstoneNa-tional Park was that these great areas are not parks, but reservoirs. To be sure, in 1872 congress set aside a part of the area which nature had long before set aside, for the use of the people as a park, and indeed as a museum of natural wonders. Evidently the Great Falls Commercial Club, at first, regarded this action as merely a convenient way in which the property was kept out of the open public domain. Now that somebody needs the water either for irrigation or for power, this action of congress must, of course, be set aside and the water in this park, or any other park must be


NATIONAL MUNICIPAL REVIEW
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put to what will at once be called “practical use.”
Such was the idea of this organization of business men. Being business men, they were amenable to facts and argument, and a little later, after hearing from the American Civic Association, the Great Falls Commercial Club rescinded its action, notifying the senators and congressmen of its state of its changed point of view.
PARTS OF YELLOWSTONE TO BE FLOODED
The Great Falls organization was thinking of a proposition for the damming of Yellowstone Lake at its outlet so as to raise its level either seven feet or twenty-nine feet, in proportion to the amount that can be put over on congress. This impounded water, rising to the determined level as the snow melts in late winter and early spring, would then be drawn down during the summer for irrigation and for power. Such action would, of course, leave the sloping shores that had been flooded in the same condition of mud and destruction as the shores of Jackson Lake, a few miles to the south, now are in consequence of the same action. Nevertheless, various congressmen and promoters insist that no harm can happen by the damming of the Yellowstone Lake or any other lake, and that, indeed, the beauty of the lakes is enhanced by impounding in them more water.
The general Yellowstone scheme goes far beyond the great and beautiful lake that bears the name of the park. It includes all the bodies of water to the west and the south. Heart Lake is an appropriately named small lake, Lewis Lake farther west is larger, and Shoshone Lake still larger. These are to be united by a general scheme of flumes, tunnels, pipe lines, conduits, poles and wires, so that they may
[February
serve both for power and irrigation not only in Montana to the north but in Idaho to the south.
That is, this was the scheme when John Barton Payne succeeded to the Interior portfolio and his firm stand and vigorous English became a factor. The three smaller lakes were given up for the time being, although the necessary engineering data had been gathered, and the flooding height of the Yellowstone Lake was reduced from twenty-nine feet to seven feet in the bill which Senator Walsh of Montana introduced upon the reassembling of congress in December last.
In the southwest corner of the Yellowstone Park there is a region shown on the topographic survey as the “Falls River Basin.” It is indicated as marshy. Early this year a bill permitting the erection of a dam, or several dams, at the southern border of Yellowstone Park slipped through the senate without comment and was on the unanimous consent calendar in the house under the leadership of the Honorable Addison T. Smith of Idaho, when we were waked up to its impor-tance. Objection was made, and by vigorous action Mr. Smith’s bill was prevented from coming up on passage. At a hearing held in May, when Mr. Smith sought to obtain a rule which would have confined discussion of this proposition—the entering wedge for the destruction of the Yellowstone—to one hour, he and his friends made such a poor showing that they were nearly laughed out of the committee room.
But the scheme still remains. The bill is still on the house calendar. It was brought up immediately upon the reassembling of congress, but because the people have begun to wake up to the danger to their park property, enough congressmen have objected to its consideration to diminish the menace of its passage in this congress.


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Mr. Smith has personally informed me that he expects to introduce a similar bill in the next congress after March 4th. He hopes the people will forget, and let him get his scheme through.
During the summer Mr. William C. Gregg, a New Jersey manufacturer, who for many years made it his pleasure to visit the little known regions of the Yellowstone Park, went into this Falls River Basin properly equipped to investigate it. He found that instead of being, as was alleged by the promoters of the irrigation scheme, an unpleasant marsh, it was a succession of grassy meadows, set with lovely streams and bordered with impressive waterfalls on a plateau which, of course, would furnish the cheaper part of the proposed impounding reservoir. Mr. Gregg made many photographs, and thus brought away indisputable evidence of the wrong of the project. The location, by the way, is less than twenty-five miles from Old Faithful Inn, and Mr. Gregg and his family found no hardships in reaching it on horseback.
It is a significant comment on the persistence and intelligence of the Idaho congressman that at a hearing on another unrelated bill held January 6, he soundly abused Mr. Gregg for daring to investigate the Fall River Basin in a belief that the map made in 1878 might not be accurate now. “Who dares to doubt a government map,” shouted Mr. Smith, even while his associates were looking with interest at photographs proving its error in 1920.
THE VALUE OF NATIONAL PARKS
This is only the beginning of what is undoubtedly a concerted assault on the nation’s possessions in parks. The question arises as to whether or not these areas ought to be preserved as
parks or whether they are required for economic development of the surrounding territory.
The first inquiry, then, is as to the value of national parks, or, for that matter, as to the value of any park. It is not proper here to enter into an elaborate argument, but it will be a rash publicist who asserts with any expectation of supporting his assertion that a park is not a necessity, that it does not perform a beneficent function, that it does not wholly justify itself if well administered in its directly favorable effect upon the economic life and production of the community which it serves.
The national parks have another quality than that of simply recreation. Each one of them includes some rare natural phenomenon, and some include many such wonders. The Yellowstone, for example, not only has the geysers, all of awe-inspiring quality, the mud volcanoes, the paintpots, and other similar evidences of nature’s resourcefulness, but it has the Grand Canyon of the Yellowstone, possessing a quality all its own. It has glass cliffs, it has petrified forests, and in addition it has great and lovely open areas set with mountains towering to ten thousand feet and more, and bordered by ranges carrying eternal snow. The Fall River Basin includes a lovely valley, ideal for camping.
Similarly, the other national parks have each their own wonders which we have heretofore thought were worth preserving. The glaciers characteristic of Glacier Park, the atmospheric phenomena of the Grand Canyon of the Colorado, the exquisite waterfalls of the Yosemite, the reserved tree monarchs in General Grant and Sequoia parks, and all the rest of the wonders in all the parks, go far beyond the primary recreational use as memorials of the nation’s possessions.


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There is a vast financial potentiality in these areas, which, belonging to all the people, are beginning to be used by many of them. In 1920 some thirteen thousand automobiles, very largely of the Ford type and coming from the neighboring states, toured into the Yellowstone with camping parties to take their pleasure in the nation’s great pleasure-ground. With less than two hundred miles of developed roads in more than three thousand miles of its area of wonderland, the use of the Yellowstone is barely beginning. Each use is accompanied by a relatively large expenditure which the traveler and visitor makes to the benefit, in a commercial way, of all with whom he comes in contact of service from his home until he reaches it again. Niagara, for example, is admitted now to earn, independent of the power that has been stolen from its majesty, beyond thirty-five million dollars annually in travel revenue.
IRRIGATION POSSIBLE WITHOUT INJURY TO YELLOWSTONE
But what is the economic possibility in these parks which justifies the western promoters in opposing the idea of keeping the parks in their integrity? It happens that there is competent evidence in this direction.
At the hearings held in connection with the Smith bill referred to it was developed that between five hundred and one thousand farmers, organized into twenty-four corporations, were operating irrigation projects in Idaho, south of the Yellowstone Park. These farmers had had five successive good crops, but in 1919, a year of slack water, they either lost their crops almost altogether or had them materially reduced. It was felt, therefore, that there ought to be assurance against any such recurrence by reach-
ing into the Yellowstone National Park, so that the property of one hundred millions of people might be given over to the uses of a bare thousand of them to assure continuously profitable crops! No suggestion has been made that the cost of food would be decreased by such action. There is no suggestion of public benefit. Indeed, it has since appeared that in this very region, not twenty miles from the proposed dam, “dry” farmers have been continuously successful in raising large crops for twenty years.
It is therefore insisted that the economic use is a selfish use, that it appertains to but comparatively few of the people who actually own the parks, and that consequently such diversion is unfair as well as practically sacrilegious.
But there remains a still more definite showing of the wrong of these propositions. Secretary Payne visited the Yellowstone during the summer of 1920, and, as he writes, “gave a hearing to persons interested in this project. ... I [pointed out to them that it was very much more desirable from every standpoint that the dam for reclamation should be built outside of the park. The water flow in the vicinity of the Yankee Jim Canyon is more than twice as great as at the mouth of Yellowstone Lake. . . .
The value of water for power and reclamation purposes I fully appreciate; but since the water does not remain in the park, means may always be found to utilize the water after it leaves the park to the same and often to a greater extent than if the effort was made to use it in the park. ”
It should be noted that Judge Payne is the head of that branch of the government’s activities which has to do with reclamation and irrigation. It is obvious that cheapness of development is the only excuse, if one believes


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his statements, for these assaults on the national parks.
Yet another danger remains. The federal water power act, approved June 11, 1920, specifically permits the filing of claims on water for power purposes in any park or other reservation set aside hy the government. Under this claims had been made on many of the nation’s most precious scenic possessions. The attitude of the newly formed federal water power commission was that congress did not intend to destroy the national parks, and this commission, including the secretaries of war, agriculture and interior, has declined to consider these applications until after congress has had an opportunity to correct the obvious error committed. If this error is not corrected, then an added and greater danger is imposed upon the national parks.
Senator Jones of Washington has introduced and had reported out of committee a bill removing the parks and monuments from the provisions of the water power bill. Mr. Esch of Wisconsin has introduced an identical bill in the house. At a hearing on January 6 Secretaries Payne, Baker and Meredith urged the passage of this legislation, citing the applications that had been held in abeyance in the hope that congress would act.
If we are to have national parks instead of irrigation and power reservoirs, if the mere one per cent of the public domain thus set aside is to remain in natural beauty and integrity of scenery, our citizens will need to make very plain to their congressmen and senators that determination.
Private interest never sleeps; public interest often nods. Park security depends upon wakefulness and vigilance.
PHILADELPHIA’S “MANDAMUS EVIL”
BY CLARENCE G. SHENTON, LL.M.1
The city treasury of Philadelphia must pay millions of dollars annually to meet obligations over which the city government has no control.
Not content with establishing numerous governmental agencies in Philadelphia and saddling the cost of maintaining them on the city treasury, the people of Pennsylvania have in many cases adopted an exceedingly vexatious method of having the cost determined. They have given local agencies power to finance themselves out of city funds. Most to be desired, of course, is a system under which the city’s legislative and tax-levying body, the council, would have complete control over the city treasury. As this is at present unattainable, Philadelphia would be more nearly content—its 1 Of the Philadelphia bar; staff member of the Bureau of Municipal Research of Philadelphia.
2
plight at any rate would be no worse than that of hundreds of other municipalities throughout the land—if, in addition to its council, the legislature were the only body with authority to spend its money. As it is, millions of dollars are disbursed annually by the city to satisfy contractual obligations —including the wages of an army of employes—the amounts of which are not fixed by the legislature nor controlled by council.
UNRESTRAINED AGENCY
Broad powers to determine what shall be spent for the maintenance of the courts are vested in the judges.


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The president judge of the municipal court is authorized to appoint “such tipstaves or employes as are reasonably necessary,” and their number and compensation are to be fixed by a majority of the judges of the court. The president judge is also authorized to appoint a chief probation officer “and such additional probation officers and employes as he may determine, at salaries not to exceed $2,500 a year.” Other statutes give judges power to fix the number or compensation, or both, of janitors, stenographers, detectives, etc. The constitution provides that the prothonotary shall appoint such assistants as may be necessary and authorized by the courts of common pleas of Philadelphia county, and that the clerk of the orphans’ court may appoint assistant clerks with the approval of the court.
The city and county of Philadelphia are coterminous. The legislature has “consolidated” them, but only in a half-hearted way. There is but one treasury. Taxes paid into it are levied by the city council alone, and disbursements from it, except as the result of suit, can be made only pursuant to appropriations by council. Yet, superimposed upon the city government is a county government, headed by a board of commissioners, in whom are vested most of the usual powers of county commissioners to commit the county to financial obligations.
The Philadelphia county prison is managed by a board of inspectors appointed by the courts of common pleas. This board has authority to fix the salaries of all persons employed in the institution, to contract for supplies, and to determine the “quantum and kind of food to be furnished to each person.” The county commissioners are authorized to draw their warrant on the “county treasury” for
“any deficiency in keeping and maintaining said prison.”
A board of managers, appointed by judges, has authority to establish houses of detention for delinquent children—one house for each twenty-five children. The powers of the board are as comprehensive as those of the board of prison inspectors mentioned above. A recent act of assembly authorized the creation of a house of detention for untried prisoners which is to be administered in the same way.
Considerations of space forbid anything like a complete enumeration. There are other agencies with similar powers, and the agencies mentioned have powers which have not been enlarged upon. A list of the moneyspending powers of the county commissioners would itself make a longer story than can be detailed here.
“mandamusing” the treasury
If council appropriates funds to satisfy the obligations incurred by the agencies in question, payment is not difficult to secure. If there are no appropriated funds against which the agencies can draw warrants, the employe or other claimant to whom promises have been made brings suit against the city. As there is seldom any doubt that the services have been rendered, and that the law of the state makes the city liable for the amount which has been promised, there is usually no point in contesting the case. The city solicitor therefore brings the city into court amicably, agrees to the facts, waives a jury trial, and, except in rare instances, makes no argument on the law. Judgment against the city is the result.
The plaintiff then proceeds under an act of assembly which authorizes the court to issue a writ—known as a “ madamus ”—commanding the city


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treasurer to pay the judgment, with interest and costs, out of any unappropriated moneys in his possession, and if there be none such, out of the first moneys received for the use of the city. The writ differs from a common law mandamus in that the statute expressly contemplates the possibility of its issuance against an empty treasury. If because of lack of unappropriated funds the writ is not satisfied when presented to the treasurer, it is registered as of the date of presentation, and draws interest at 6 per cent until paid. Claimants not desiring to wait for the city to be in funds to pay their writs have had no difficulty in selling them at par to the banks, which usually regard them as especially choice securities.
A PARADISE FOR POLITICIANS
The opportunities which the situation affords for “playing politics” and mystifying the electorate cannot be overestimated by the most fertile imagination. Responsibility for the spending of the city’s money is so widely diffused that efforts of the taxpayer to see to the careful disposition of his contribution cannot succeed. Agencies with the “mandamus power” are more extravagant than they would dare to be if embarrassed by the necessity of levying taxes to meet their expenditures; and council, which levies all the taxes, can justly disclaim responsibility for a large but indefinite part of the levy.
Although the system is known to be wasteful, the waste cannot be measured. There is no way to estimate what could be saved if all municipal agencies were required to live within appropriations of council. The amount by which an agency exceeds its appropriation has no significance in this connection. Council usually has the
choice of making what it considers an unjustifiably large appropriation, or of cutting the figure to a point which it considers proper, with the certain knowledge that the balance will nevertheless be collected by mandamus. Confronted by this embarrassing alternative, council has generally surrendered and appropriated the amount demanded. There are times when observers suspect that an opportunity to bow to the mandamus power is welcomed by councilmen as a convenient way to get what they or their political friends want, without assuming any responsibility. Accordingly, the fact that an agency with the mandamus power lives within its appropriation does not mean that the agency has been economically managed. Conversely, the fact that the agency exceeds its appropriation may just as well mean that council has failed or refused to give due consideration to the necessities of the agency as that it has been extravagantly administered.
The use of the writ of mandamus to collect salaries of appointees of judges is peculiarly objectionable. The impression is abroad in Philadelphia that judges are above the law; that they are arbitrarily asserting superiority over the legislative and executive branches of the government. While, in a strict legal sense, their use of the mandamus perhaps does not justify this, nevertheless the spectacle of a judge appointing an employe, fixing his salary, sitting as judge and jury in a suit to collect the salary, rendering judgment in favor of his own appointee, and commanding the city to satisfy the judgment, is not edifying.
THE REMEDY DIFFICULT
Attempts to abate the nuisance will no doubt be met by formidable resistance from many of its beneficiaries.


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Assuming that this can be overcome, the line of attack is in most cases obvious. Agencies of the type of the Philadelphia county prison, which are non-judicial and owe their existence solely to legislative enactment, can, of course, be shorn of any or all of their powers by the legislature. A power which is expressly conferred by the constitution, like that of the courts of common pleas to authorize the appointment of assistants to the prothonotary, manifestly cannot be divested except by constitutional amendment. Probably, also, there is no satisfactory way to abrogate the money-spending powers of the Philadelphia county commissioners except by constitutional amendment ordaining or permitting the abolition of county government in counties which are coterminous with cities.
The most interesting legal problem arises in connection with “mandamus powers” assumed by the courts without statutory or constitutional warrant, and those conferred upon the courts by legislative enactment. Strangely enough it cannot be asserted with assurance that these powers can be revoked by the legislature. This doubt results from the character of the opinions which have at times been expressed by courts as to their immunity from legislative control.
“We think upon the outset,” said the supreme court of Idaho,1 “that without discussion or controversy, it must be admitted that the courts have the inherent power and authority to incur and order paid all such expenses as are necessary for the administration of the duties of the courts of justice.” Said the supreme court of Indiana:2 “Courts are an integral
1 Schmelzel v. Ada County, 16 Ida. 32, 100 Pac. 106 (1909).
2 Commissioners v. Stout, 136 Ind. 53, 35 N. E. 683 (1893). The italics are the author's.
part of the government, deriving their powers directly from the constitution, in so far as such powers are not inherent in the very nature of the judiciary.” (!) Declarations equally brave might be quoted in considerable numbers. Their tenor, in view of the problem at hand, has made necessary, an analysis of the cases in which they occur.
The cases fall into three classes. In the first, judges seem to derive satisfaction from announcing that, although no occasion is presented for the use of “inherent power,” they nevertheless have it. Such expressions are dicta, and need not be seriously considered.3
The second class includes eases in which courts make orders in matters concerning which statutes and constitutions are silent. Lycoming County v. Hall,i sometimes cited as the leading case in this country on the subject of inherent judicial power, was a case of this sort. A Pennsylvania county court, considering it imperative that a jury in a capital case should be closely observed throughout the trial, directed that they be kept together and provided with board and lodging at a public house at the expense of the county. Although no express provision of law authorized the order, the supreme court held that the county must pay the bill. The doctrine of this case has been extended in Philadelphia to the point where juries are given automobile outings at public expense.6
In cases of the third class the courts exercise powers which not only are not expressly conferred on them, but which are expressly denied to them by statutes. The right of judges to
3 See, e.g,, State v. Cunningham, 39 Mont. 165, 101 Pac. 962(1909).
4 7 Watts (Pa.) 290.
5 See Qallagher v. Phila., C. P. No. 2, March Term, 1920, No. 7451.


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select certain of their assistants forms the usual issue in these cases. For example, the supreme court of Illinois has decided that the legislature cannot deprive judges of the right to appoint their probation officers.1 It was said that the appointment of probation officers is so essentially a judicial function that a statute depositing the right to select them elsewhere than with the judges is, under a constitution vesting the judicial power in the courts, an unconstitutional assumption of power by the legislature.
In cases of the type last mentioned the courts do not go so far as to assert independence of the legislature with respect to the number of their appointees or the amounts which they are to be paid. Indeed, not a single case has been found in which a court of final appeal has itself attempted, or has permitted an inferior court, to spend money in defiance of an express and unequivocal statutory provision. In its bearing on the Philadelphia situation this fact may be significant. If the legislature can be prevailed upon to exercise for itself or delegate to council the final discretion as to what is to be spent on Philadelphia courts, the courts cannot refuse to be so limited without an unprecedented arrogation of power.
Of course, no judge will ever admit that the legislature, by withholding financial support, can destroy a court which the people by their constitution have decreed shall exist. There is a point somewhere short of the annihilation of courts with constitutional status at which it would be held that the discretion of the legislature ends. Whether the supreme court of Pennsylvania would decide that the legislature’s discretion ends when it contravenes the desires of the judges, and that the judges must be the final arbiters as to what is necessary to 1 Witterv. Commissioners, 256 111. 616 (1912).
maintain the courts as the constitution contemplates that they shall be maintained, is a subject upon which it is impossible to do more than speculate.
The Pennsylvania state treasury, like the federal treasury and most, if not all, of the state treasuries, is protected against disbursement without appropriation by constitutional prohibition and by the principle that a sovereign government cannot be sued without its consent. It is difficult to say whether these limitations would be effective if interpreted by a judiciary determined to make an issue of what it considered inadequate financial support. Sustained by a constitutional mandate for its existence a court could, with perhaps some show of reason, override constitutional obstacles which it considered threatened its existence. Apparently so desperate an issue has never arisen, and it is not likely that it will. The immunity enjoyed by state and federal treasuries, however, does not extend to municipalities. They can be sued without their consent, and forced to pay whether they appropriate or not. Here is a source from which courts, even those which are distinctively state and not local tribunals, can more easily obtain unappropriated funds than from state treasuries. Interesting possibilities are suggested by the case of McCalmont v. Allegheny County,2 in which the supreme court of Pennsylvania, holding session in a district comprising a number of counties, without authority of the legislature compelled the county in which it was sitting to pay certain of its expenses.
The municipal court is one of “such other courts” as the constitution gives the legislature power to establish “from time to time.” Does it, by virtue of the constitutional warrant for its creation, possess constitutional
1 29 Pa. St. 417.


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status and the accompanying inherent powers? The question, while interesting, is not likely to be of practical importance, since the undoubted power of the legislature to abolish the court makes it inconceivable that the right to revoke any of its powers would be disputed.
PROSPECTS OF RELIEF
Agitation on the subject of the “mandamus evil” has been running high in Philadelphia for the last year, but in view of the very complex political situation it is difficult to predict what relief, if any, can be obtained. Then, too, there exists in certain quarters a deep-seated reluctance to be identified with a movement looking toward curtailment of the prerogatives of the courts. No doubt efforts will be made during the 1921 session to have the legislature withdraw certain mandamus powers. Probably, however, most is to be expected from the proposed new constitution. The commission on constitutional amendment and revision, which has been working since December, 1919, has been quite sympathetic toward those who urge placing complete control of the city’s purse-strings in the city council. The bureau of municipal research, working in conjunction with a committee appointed by the mayor, prevailed upon the commission to recommend the adoption of the following provisions :
No debt shall be contracted or liability incurred by any municipal commission, board, officer, employe or other agency, except in pur-
suance of an appropriation previously made therefor by the municipal government.
* * * * *
In any county whose boundaries coincide with or lie wholly within the boundaries of any city, all county officers, and judges, other than the judges of common pleas and orphans’ courts, and all state or county officers whose salaries or expenses are payable, in whole or in part, out of funds receivable by any city or county officer shall submit to the chief executive of the city, in the manner and the time required of city officers, estimates of the needs of their respective offices and courts. The city council or other body vested by law with the power of appropriation shall have the same control over appropriations for the support of such offices and courts as it has over appropriations for the support of city offices, except that the general assembly may fix the salaries of such officers and judges.
In any such county any or all county offices may be abolished by law and the functions and powers pertaining to any such office may be transferred to any officer or officers of such city.
As this is being written word comes that the commission has changed the wording of these sections to improve the style but with no intent to violate their substance. From what has been said, it will be appreciated that if the substance of these paragraphs can be made part of the fundamental law, the fight against the mandamus evil will have been won in Philadelphia, except for the powers of the orphans’ court and the courts of common pleas. Apparently the commission cannot be persuaded to recommend that these powers be disturbed. It may yet happen, therefore, that the right of the legislature to control the expenditures of courts with constitutional status will become a live issue in Pennsylvania.


RECENT TENDENCIES IN PRIMARY ELECTION SYSTEMS
BY CHARLES E. MERRIAM University of Chicago
The writer, a keen practical observer of politics, believes that the direct primary has not yet had a reasonable test. It should be retained and certain other improvements introduced, notably the short ballot, the merit system and the Massachusetts ballot, to insure satisfactory nominations. :: :: :: :: :: ::
In 1909 the writer published a history of primary elections in which were traced the tendencies in primary legislation and practice down to that date. Since that time there have been many changes in the nominating system, and it is now a matter of importance to appraise again the broad movements in the evolution of nominating methods.
The operation of the primary laws, outside of the South where the direct system seems to be generally accepted, has proceeded amid many difficulties in the last decade. In the first place, the primary laws were in many cases the result of the work of the progressive Republicans who were particularly active and successful in the years around 1910. The split between the Progressives and the Republicans in 1912 left the stand-pat Republicans, in the main unfriendly to primary regulation, in complete control of the party. It was not until 1916 that the breach was covered and most of the Progressives returned. The primary was a product of insurgency, but the insurgents went out of the party about the time the new law was obtained, so that there was no adequate opportunity for a sufficient test of it. By 1917 the War had broken out, and the general tendency was to present a united front against the common foe.
Factional divisions and even party divisions were minimized. There was much discussion of party union; and in a few local cases a combination of the major parties against the Socialists was actually carried out. In any case this was not a favorable time for trying out primary systems. In brief, we may conclude that the real test of the direct primary lies ahead of us, rather than behind us.
The general tendencies of primary election procedure may be grouped under several divisions, in each of which distinctly different effects are evident. The primary in urban and local affairs, the primary in state affairs, the primary in presidential choices, show widely different characteristics.1
MUNICIPAL PRIMARIES
In urban communities the overwhelming tendency was toward nonpartisan elections, from which national political parties were excluded as far as possible. Nominations were usually made by petition only, or in the so-called “non-partisan primary,” which was in effect a double election system. The direct primary had never been demanded for cities by students either
1 My discussion of presidential primaries is omitted from this paper for lack of space.
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of parties or municipalities, and during this period it disappeared almost entirely, although there were notable survivals as in New York and Chicago. In the absence of effective national parties in cities, it was difficult to apply any form of a party primary law with any degree of success. The parties having adopted no general or uniform policy in regard to local affairs, each locality was left to shift for itself, and party allegiance became much weaker than in the case of national elections, although the party machinery was still in formal action. But in practice non-partisansliip was established by the friendly collusion or connivance of party machines and bosses long before the demand for non-partisan elections was made by the citizenship generally.
As a result there came a local alignment differing from the national, sometimes brought about by custom or common consent and sometimes attempted by legislation pi-oviding nonpartisan ballots. One of the most conspicuous tendencies of the last ten years has been the spread of the nonpartisan system to the cities of the United States. There was, to be sure, no guaranty that this would eliminate the national party from the local election; but in many cases this was the result, while in others it tended to minimize the influence of the party in urban contests. Without attempting to discuss the large question of the relation of national parties to local affairs, it is sufficient to point out that a new tendency appeared in the growth of the nominating system, and that it was almost universally triumphant in municipal nominating systems. In some instances the non-partisan method was applied to the election of judges, to the choice of school boards, and in Minnesota to members of the legislature.
State and County Primaries
In the case of state and other than urban local officials, the tendency toward the extension of the direct primary system continued its legislative march. The direct method of nomination was taken up by state after state, until at the end of the period there were only a half dozen in which the direct primary was not in general use either by party rule or by legislative enactment.
A brief survey of the developments under the new system shows many interesting and significant situations. I indicated in 1909 that certain changes were necessary in order to make any nominating system, direct or indirect, regulated or unregulated, successful in its operation. These were the shortening of the ballot, the adoption of the merit system in public administration and its enforcement, the return to the original form of the Australian ballot without the party circle or emblem. Some progress has been made in all of these directions, but it cannot be said that they have been effected yet. The ballot has been shortened, notably in the cities, progress has been made in the direction of the merit system and in the supporting sentiment without which the law itself is ineffective, and some changes have been made in the way of modifying the blanket ballot. These conditions are as significant today as they were ten years ago, and still affect materially the success of all nominating systems.
An examination of the actual developments under the direct primary shows that many of the arguments urged by the advocates of the new system and many of these advanced by its bitterest opponents were not wholly valid. On the other hand, there were many effects not generally anticipated. It was frequently charged that the direct primary would destroy the party system or -would make party organiza-


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tion so ineffective that it could not survive. This was no doubt sincerely believed by many of those who opposed the direct primary. Some even expressed the fear that representative government would be undermined and overthrown. It is perfectly plain that parties still survive and the organization still goes on; and it is no longer seriously contended that party management is incompatible with this particular form of nomination. On the contrary we frequently encounter the argument that the direct primary strengthens the machine, and should therefore be repealed, although this must be taken with a grain of salt when coming, as it frequently does, from members of the organizations said to be so strengthened.
It was believed by many that the direct primary would result in discrimination on the part of the urban districts against the rural; that the mass vote of the cities would uniformly and inevitably overwhelm the more widely scattered rural vote; and that the agricultural sections would lose their influence in the selection of party candidates. This has not come true. There have been instances where the cities have taken more than their share of candidates and also vice versa, but as a rule this has not been the case; and the old argument from this point of view is now rarely encountered.
THE PRE-PRIMARY SLATE
On the other hand, the pre-primary slate has appeared more frequently than was anticipated either by the advocates or the opponents of the new primary plan. The possibility of this â– was pointed out by some students of the subject, but it was not generally realized that the organization or the machine might name the candidates in advance and then obtain the ratifica-
tion of the slate proposed by them. In some cases this possibility has become a fact and a custom. In such cases the primary has ceased to function as intended by its proponents. In many other instances there have been no slates at all, or if framed they have not obtained a uniform or even encouraging success. In other cases there have been two or more slates and the honors have been divided between them. When there is a long list of candidates to be chosen with much patronage at stake, it has been more easily possible to form and carry through a slate. The direct primary has not made automatically impossible the control of the nominating system by a ring or a machine, even of the corrupt type.
To what extent the new system has influenced the choices made by the organization which still nominally controls is a question much more difficult to answer. The character of nominations is determined not only by open and successful resistance to organization nominees, but by the possibility and the probability of resistance which is anticipated or discounted or thwarted by the character of the nominations made by the organization itself. A wise machine will make many concessions in order to prevent the raising of the standard of revolt by an opposing faction or by unorganized insurgents. Resistance is generally more readily made under the direct primary than under the convention system. There is always a certain protest vote, and a certain disgruntled vote, and there are always groups within the apparently united machine that are ready to take advantage of any insurgency for the sake of advancing their own ends. Such resistance is more effectively registered by the popular vote than by the number of delegates elected.


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The question whether better candidates are obtained cannot easily be answered, first because no sufficiently elaborate inquiry has been made to cover all the facts in the case. That such an inquiry would be eminently useful, there can be no question. Very bad candidates have been selected under the direct primary system at times, and also very good, competent, honest and representative ones. That more than usually unfit candidates are selected because no one is directly responsible is not true as a general thing, although it may happen occasionally. But incredibly bad candidates have also been chosen by “responsible” conventions under adverse conditions, to phrase it mildly. On the whole it is difficult to see how the “bad” man would find it easier to obtain a nomination under the direct system than under the delegate plan, while it is clear that a “good” man may win a primary fight when he would be wholly lost sight of in a struggle for delegates and the collateral control of a convention nominating a whole series of other candidates. That there are many competent candidates who are excluded from office because of their unwillingness to go through a primary is a pleasant fiction without much basis in the actual facts of political life. Yet no competent and impartial observer will contend that the new nominating system has revolutionized the character of candidates with reference to their ability, their integrity or their representative character. This is a part of the great problem of democracy, which cannot be so simply solved, and which will not be determined finally either by direct or indirect methods of selection.
CAMPAIGN EXPENSES
That the expense of campaigning tends to exclude worthy and favor
undesirable types of candidates in the direct system can scarcely be sustained. It will be found that where there is a candidate of exceptional efficiency or one who stands for some broad general policy in which a large number of voters are interested, it is possible to raise the fund necessary for the reasonable conduct of the campaign; and if this fund is raised upon a democratic basis so much the better for the party and the candidate and the general public. Occasionally a candidate is available because of his “barrel,” yet the machine can always raise the necessary funds through the application of its own peculiar system of revenue. If no insurgent candidate is available except one who conditions the use of his funds on his own candidacy, little is lost for the community. Nor can it be forgotten that the conventions have often been controlled by small groups of men representing directly or indirectly wealth and privilege in concentrated form. If money was not spent, it was ready for spending.
Furthermore, the elaborate and reckless use of funds is not beneficial to candidates, and may even be positively harmful, and often disastrous. The personally financed campaign of Governor Lowden and his related defeat for the presidential nomination is a striking illustration of the deceitfulness of riches. There is much insincerity and ignorance in the discussion of campaign funds, but there is little evidence to show and none to demonstrate that the use of wealth in direct primaries is more effective than in the capture and control of conventions. The abuses of the use of money should be checked and there should be publicity in regard to receipts and expenditures, but too great confidence should not be placed in automatic devices for this purpose. They will not include the expensive


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services of the “organization,” or of outside associations, or of the press. The confiding electorate that trusts to a statute for fencing out money or economic power from primaries and elections deserves its certain fate.
It is also to be observed that some confusion has been caused by attributing the expense of public regulation of primaries to the direct system. If the primary is to be supervised by the state, whether it is direct or indirect, the public expense will be about the same in either case. The outlay for rent of polling places, the payment of election officials, the printing of ballots, the provisions for canvass of votes are as great in one system as in the other. If all direct primary laws were repealed and the regulated delegate system retained, the public expense would not be materially reduced. And if there are real contests under the delegate system the expense of the campaign is not much altered. Some money might be saved by having neither primaries, conventions nor elections; but more would be lost.
One of the “ Unforeseen Tendencies ” observed by Godkin in his incisive study of this subject was the small vote under universal suffrage in many elections. This is still more true of party votes than of general elections. The direct primary has not always drawn out as large a vote as was predicted by its most enthusiastic advocates in the first days of its introduction. In the minority parties, whether in states or counties, the vote has often been very small, running down at times to a small fraction. In other cases, however, the vote has been much larger, rising to 50, 60, 75 per cent, or even higher. The direct primary cannot be relied upon to develop a 100 per cent vote. As compared with the old caucus system, it unquestionably brings more voters to
the polls on the average, but the number still falls below the figure originally expected by some of its champions.
THE PRE-PRIMARY CONVENTION
In some instances an effort has been made to retain some form of a convention or a preliminary conference in state affairs. This has been done in some cases by those who were hostile to the whole primary movement and were seeking to undo it in the interest of the organization, as in Wisconsin and in New York, but in still other cases the move came from friends of strictly regulated primaries on the direct basis. From another point of view' the Socialists paid little regard to the primary system, but made their own nominations through their conferences or through referendums of dues-paying members, subsequently ratified in the official primary.
In Colorado a law was passed in 1910 providing for a pre-primary convention of delegates to consider and recommend party candidates. Those who received at least 10 per cent of the convention vote for any office were placed upon the regular party primary ballot, but any other names might be put upon the ballot by petition, either with or without consideration by the convention. The action of the party in the primary was final, and might follow or disregard the recommendations of the convention. Governor Hughes made a strenuous effort to establish an official “designation” plan in New York, but was unable to carry it through. The theory of his measure was, briefly, that the responsible organization in charge of the party should meet and present its choice for party office, but that other names might also be filed and printed on the ballot along with the choices of the organization.


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The final selection of candidates would then be made by the party voters in a succeeding direct primary. This is not unlike the process that actually occurs in many places, but it was sought by this plan to provide legal machinery, and if possible bring home a little more closely the official responsibility.
In South Dakota the Richards law was adopted after long discussion in 1917. This was an elaborate statute providing in great detail for the calling of a pre-primary convention, for the selection or recommendation of candidates, for the conduct of the primary itself, including provision for joint discussion by candidates, for the recall of party officials, and other interesting features. It was an ingenious and somewhat complicated system, but not unworkable, although much disliked by many of the voters. It is by far the most elaborate attempt to organize party leadership and popular party control through a statutory system that has yet been proposed or attempted.
SOME ALTERATIONS LIKELY TO BE MADE
On the whole, there seems to be in state politics a widespread desire to retain some of the features of the party conference, but at the same time a still stronger desire on the part of the rank and file to make sure that they possess in last analysis the right to name the candidates. The reconciliation of these elements has nowhere been worked out in such a form as to command a general acceptance by the various elements in the major parties. There is some discontent with the primary, although this is stronger in the East than in the West, and does not figure in the South. The organizations would repeal the law if they had the power, and would not imperil their position thereby; but the mass of the
voters apparently have no intention of returning to the old delegate system with which they were familiar twenty years ago and under which they suffered grievous misrepresentation. The difficulties and disappointments of the direct primary system are fresh in our minds, but when we recall the alternative of the old system we are likely to recoil from it. The gerrymander of districts, the logrolling for nominations, the bribery and undue influencing of delegates, the domination by combinations of bosses and special privilege, the helplessness of the average voter under the old convention plan has been for the moment obscured. When we: begin to compare the old system with the new, however, it is unlikely that there will be general acquiescence in a quiet abandonment of the direct primary and return to the old method of indirect and unregulated choice.
Adjustments and adaptations of the primary laws are likely to be made, but the adoption of the short ballot is fundamental to all of them. The suggestion has been made that a system of party enrollment be adopted. This is now the law in a number of states, but in many communities would not be desired. The enrollment tends to exclude many voters who are members of the particular party, but who for various reasons do not care to affiliate formally with any party. There are thousands of these voters, and they are often very influential in obtaining the best type of nomination. Their exclusion would be unfortunate. This is especially true as women without traditional party affiliations are coming into the field of primary activity.
Again, all enrollment systems must be made flexible enough to allow for party change. But just here serious difficulties are encountered. Either change is so easy as to make the sys-


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tem ineffective, or enrollment most be set so far ahead of the appearance of the issues on which parties may divide that those who belong in the party are excluded.
Official pre-primary designation has also been suggested as a desirable amendment of the primary law, with the provision that if there are no opposing nominees there shall be no primary. Selection of party slates of candidates before the primary is now a common practice in many places. But it has not changed the general character of the candidates of the party, as may readily be shown in concrete eases.
In Chicago, for example, the majority faction controlling the county committee suggests a list of candidates, and any other faction then suggests another slate, or other candidates may file and contest with the majority or the minority faction. To make a statutory requirement that there be an official designation of candidates would not change the situation, except that opposing candidates would be branded “rebels,” and would be held responsible for the expense of the primary which otherwise would not be held. All of which would help the organization. However, a general provision that there be no primary if there is only one set of nominations, whether official or unofficial, would be of value, and would not discriminate against any list of candidates.
PARTIES WEAK ON RESPONSIBLE LEADERSHIP
There is great need for better organization of party leadership. It is evident that the party is under-organized on the side of policies and principles, and somewhat over-organized on the side of elections and office distribution. The writer’s analysis of party leader-
ship, and a suggestion for a party council to remedy the situation, is omitted from this article for limitations of space. The urgent need of better organization of parties for purposes of consultation and conference, interchange of views, discussion of party technique and propaganda, and the opportunity for those personal contacts so important and useful to leaders and managers in other groups, cannot be denied. On the contrary, every effort should be made to develop the party in the directions of intelligent deliberation over questions of public policy, and the development of genuine leadership.
If the party is really to function as an agency for the formulation and expression of policies and leadership, there must be devised ways and means for this purpose. Obviously the stock “convention” does not correspond to the conference and council of other groups with common aims. The party’s official and governmental representatives, its leading candidates, its technical managers, its unofficial leaders, might readily be brought together in conference from time to time, if it be desired to do so, and if there were a genuine demand for the better organization of this side of the party’s life. In the absence of any adequate organization of the policy determining side of parties, it is likely that the party activities will be treated as primarily a part of the electoral process, and be governed accordingly. The spectacle of public regulation of the details of party organization, and even of the tests of party membership can be explained only on the ground of the ineffectiveness of the party on the side of principles and policies, and of its leadership of the community in this direction. I should like to see the party conference tried both in state and nation (although not by mandatory statutory requirement); and the


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assembly of the party leaders and managers in genuine consideration of the major issues of public policy and of party technique. Possibly such conferences might be purely perfunctory and ineffective, but if so would this not throw an interesting light on the character of the party and its actual function in the state?
THE SHORT BALLOT INDISPENSABLE
My observation leads me to believe that the short ballot is indispensable to any satisfactory system of party nominations, and that there will be continuing and justified dissatisfaction until this is brought about. In the meantime it seems to me that the elements of a sound policy are: the nonpartisan election of local officials and of judges; the continuance of the direct primary for state offices; the development of supplementary agencies for party consultation and conference (but not by statutory methods.)1
But I believe it is of the very greatest importance to conduct a comprehensive inquiry into the whole nominating system and to obtain the best judg-
1My discussion of presidential nominations is omitted here.
ment on the facts that the mature experience and careful reflection of many minds can produce. A possible agency for this purpose would be a committee or commission appointed by each of the parties with direction to review the facts regarding party conditions and to present recommendations for the consideration of the public and the party. If no changes are needed or possible, the value of such a report would be very great in allaying popular discontent and if, on the other hand, alterations are necessary, such a body could indicate lines of modification which if they met with general approval might be adopted and made effective. If the parties will not do this, it might be undertaken by some other agency such as the League of Woman Voters, which would have the advantage of approaching the question without established prejudices; or the Institute for Governmental Research; or the American Political Science Association; or some private endowment in whose conclusions the public might have confidence. The fact that changes in party organization and method are made slowly is only an additional argument for starting the work without delay.


COUNTY GOVERNMENT IN OREGON—A GROWING PROBLEM
BY HENRY E. REED
Assessor of Multnomah County, Portland, Oregon
An urban county with eighty taxing authorities instead of two, ramshackle rural counties that resist business methods, and arbitrary tax limits by constitutional amendment as the current attempt at a cure!
Every once in awhile the people of Multnomah county, startled by the confusing complexity of local government, propose what seems to them the logical solution, the consolidation of all agencies into one body, to be called, say, the City and County of Portland. At such times, as Pericles said in his oration on the “Causes of Athenian Greatness,” “there is visible in the same persons an attention to their own private concerns and those of the public; and in others engaged in the labors of life there is competent skill in the affairs of government.” While the subject is fresh it is discussed with vigor and a degree of intelligence, but soon the interest wanes and no more is heard of the matter until some incident of public administration causes it to bob up again. Then it passes through the same endless chain of rediscovery, analysis, argument pro and ccn, and lethargy. The issue is a vital one, but there is no organized endeavor to instruct the people upon the advantages of unified government, no positive programme to work to, and the result is inevitable, nothing definite accomplished.
With this brief introduction, I will leave Multnomah county’s chief concern—unification of government—-
while I give an historical outline of the origin and powers of counties in Oregon, and review the important con-
stitutional and statutory enactments pertaining to them.
HOW THE COUNTIES BEGAN
While the vast area west of the Rocky Mountains and northward from present California to Latitude 54 degrees and 40 minutes was jointly occupied by the United States and Great Britain, the rugged settlers organized in 1843 a provisional government and called it Oregon territory. Some 400,000 or 500,000 square miles, the exact size depending upon what was considered the northern boundary of the United States, were divided into four districts. In 1845 the legislature changed the designation of “districts” to “ counties,” which was continued by the territorial and state governments. Thus, for seventy-five years, the county has been the principal agency of the state in the Oregon scheme of government.
The state constitution, effective in 1859, recognized the existing counties, and provided that no new county might be created with less than 400 square miles of area, or 1,200 population. Each county was required to elect, biennially, a clerk, a treasurer, a sheriff, a coroner and a surveyor, and was authorized to elect or appoint any additional officers that might be necessary. County debts or liabilities
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(Article 11, Section 10) were limited to $5,000, except to suppress insurrection or to repel invasion. In 1912 this section was amended to permit a further debt of 2 per cent of the assessed valuation of all property to build permanent roads, and in 1919 the road limit was increased to 6 per cent. In two cases decided years ago, the supreme court, construing the $5,000 county debt limit as it stood from 1859 to 1916, held “that, in the administration of its affairs, debts of a certain class were thrust upon the county by operation of law, and were not within the constitutional limitation, such as salaries and fees of witnesses and jurors, and that the $5,000 limitation applied only to voluntary indebtedness.” The tax and indebtedness limitation amendment to the constitution, adopted in 1916, on which more will be said later, applied the $5,000 limitation to “debts hereafter created in the performance of any duties or obligations imposed upon counties by the constitution or laws of the state, and any indebtedness created by any county in violation of such prohibition and any warrants for or other evidences of any such indebtedness . . . shall be void.” The
effect of the tax and indebtedness limitation amendment upon the $5,000 county debt limitation, according to the recent ruling of the supreme court in School District No. 2J/. of Marion County vs. Smith, was to nullify the force of the old decisions of the court “ as to a distinction or priority of debts of any class or character, and to bring all kinds of indebtedness within the constitutional limitation.”
A PRIMITIVE GOVERNMENT FOR PRIMITIVE TIMES
Under the earliest territorial laws of 1849, county business was transacted
by the probate courts. Boards of county commissioners were first created and powers of counties defined in 1851. Present general powers of counties were fixed by act of the territorial legislature, effective May 1, 1854. At that time there were fifteen counties, having an aggregate population of between 30,000 and 40,000. The chief pursuit of the people was agriculture, and their principal place of residence the Willamette Valley counties.
Multnomah county was yet to be created, and he would have been bold, indeed, who would have visioned the complexities of the county’s problems at the present day. This act is Section 2861, Lord’s Oregon Laws, and it reads:
Each county shall continue to be a body politic and corporate for the following purposes to wit: To sue and be sued; to purchase and hold for the use of the county lands lying within its own limits, and any personal estate; to make all necessary contracts; and to do all other necessary acts in relation to the property and concerns of the county.
The few words above quoted, enacted into law under primitive conditions sixty-six years ago, comprehend the general grant of authority which the legislature has given to the counties. Time and again the supreme court, in passing upon some issue arising out of the relation between state and county, has ruled that the county is a mere agency of the state. In Yamhill County vs. Foster (53 Or. 124), the court held that “a county is not a private corporation, but a political agent of the state, created by law for governmental purposes, and charged with the performance of certain duties in behalf of the state.” To the same effect is Mackenzie vs. Douglas County (81 Or. 442) and School District vs. Smith, decided in the summer of 1920. In the Smith case the court denied the right of a county,


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in levying a tax, to “nullify a mandatory act of the legislature through the exercise of discretionary power vested in it by other legislative acts.”
The legislature set the counties adrift in 1854 and let them work unregulated for nearly sixty years. Laws defining the powers and duties of county boards and county officers fill the codes and session laws, but there is a dearth of legislation pertaining ‘to county finance. All that was required of counties was that they should, through their county boards, at some stated term in the year, levy taxes for their own support, and for any other purposes provided by law, and enter their determination at large in the records. It would be impossible to say, without making a detailed examination of the records of each county, to what extent the determination entered in the records partook of the nature of carefully prepared budgets. The duty was performed as well as might have been expected when the officials charged with its performance were not subject to the check of a superior power. It is perhaps true, in a general way, that for a long time after 1854, more than a half century, some sort of estimates were made each year, that the people understood them, and that the county boards faithfully adhered to them. Still, there are instances where no details of any sort are shown in the records, and only the rate of tax levy in mills for various purposes is entered. During this long period the big policeman idea of government obtained, the needs of the people were few, the cost of administration was light, and there were more watch dogs of the treasury at large then than there are now to challenge expense accounts. At no time during all these years did the legislature think it necessary to require county commissioners to furnish
a bond. In 1891, the legislature directed the county boards, sitting in January and July, to examine the books and papers relating to the financial affairs of county officers collecting and disbursing county funds; in other words, make a casual and unprofessional audit. This slipshod enactment was the law of the state for twenty-four years.
During the great depression that followed the financial panic of 1893, all forms of governmental expense in Oregon were kept down to actual necessities. There was economy to the point of parsimony. A typical illustration of the caution that prevailed is furnished by Multnomah county where the total taxes levied on the assessment roll of 1900, when the state was prosperous, were actually 15 per cent lower than the levies on the 1896 roll, when the state was in the dumps.
NEW COUNTY SERVICES
Along about 1901 the people of Oregon began to drift definitely away from the big policeman concept of government. The political powers of the people were enlarged by the initiative and referendum, the direct primary, the corrupt practices act and the recall of public officers, and contemporaneously there sprung up a demand for more service from government. The good roads movement emerged early, followed by a train of new courthouses, libraries, poor farms, bridges, schoolhouses, public auditoriums, salary increases, etc. “All the old services in state, county and city were continued, new ones were undertaken, and new and old were conducted on a higher plane than formerly.” Public expense mounted under the pressure and with it taxes. Total taxes levied in Oregon grew from $4,920,000 on the
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1902 roll to $18,300,000 on the 1912 roll. Levies on the 1912 roll for county purpose, including roads, but excluding schools, climbed to $7,725,-000, or $250,000 more than was raised for all purposes in Oregon on the 1906 roll.
The excitation of the pocket nerve brought a vigorous protest from the taxpayers. Much of the criticism was directed against the county boards, which enter all the levies but are not by any means responsible for them. There were charges of waste, extravagance, unbusinesslike methods in purchases of county supplies, unsystematic accounting, and even of dishonesty. A census bureau official, sent to Oregon to collect data upon the financial condition of the counties, was quoted as saying: “You people of Oregon must be very good natured to permit your county affairs to be handled in so loose a manner.”
When the legislature met in 1913, the land boom which had prevailed for most of ten years had subsided, the business depression had set in, and there was a general sentiment in favor of laying upon county government the strong hand of the state. The legislative interest in the welfare of the taxpayer did not, however, extend to reduction of appropriations, for the money grants of the session were the largest in the history of the state up to that time. However, two very important acts were passed. They are summarized as follows:
1. County budgets.—Provides that no tax may be levied by a county unless a detailed estimate of the amouns proposed to be raised by taxation it prepared, published twice in a newspaper, and discussed with the taxpayers at a public meeting. At the hearing any taxpayer may be heard for or against any proposed levy. After the hearing the county board
[February
must make the levies, but these may not legally exceed the published estimates by 10 per cent. Expenditures may exceed the levy by 10 per cent to take care of emergencies. The county board may prepare the annual estimates or delegate this work to others. In Anderson vs. Hare (78 Or. 540) it was held that a substantial and not a technical compliance with the law is all that is required.
2, Uniform system of accounting.— Directed the state insurance commissioner to install a uniform system of accounting in all departments expending state money and in all counties. The commissioner was vested with sweeping powers and could subpoena witnesses the same as a circuit judge. Beginning January 1, 1914, the commissioner was to make an annual audit of the books and accounts of each county, the cost thereof to be borne by the county concerned. The commissioner was empowered to call at any time for a report from any person or officer or employe of state or county government, whether or not such person actually handled money. All information gained from the audits and reports was to be published in convenient form for the information of the legislature and the taxpayers.
THE REBELLION AGAINST UNIFORM ACCOUNTING
Budget making was accepted without protest, but uniform accounting raised a storm throughout the state. County government had never before in the history of Oregon felt the strong fist of the state in the pit of its stomach, and it rebelled. County officials had long followed their own systems of accounting and would not give them up. The idea of the state’s stepping in and telling them to adopt new methods was appalling. So, when the


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legislature of 1915 met it was confronted with a vociferous demand to put uniform accounting out of business. That much abused word “economy” furnished the excuse. The legislature was wild on the subject and hit right and left, at good and bad alike. In an omnibus measure, repealing a large number of standing appropriations, it withdrew the financial support of the state from uniform accounting and then made bold and repealed the uniform accounting law itself. “Uniform accounting, the safeguard and insurance of economy,” said one reviewer of the session’s work, “was struck down on the ground of economy. This much abused word economy was never more prostituted for political purpose by the last legislature than when, in the name of economy, they abolished systematic accounting. And the word economy was used by every unscrupulous, extravagant and loud-mouthed political legislator to cover his own selfish purposes.”
Having wiped uniform accounting off the books, the legislature proceeded to square itself with the people by giving them (1) a law, superseding the layman audit of 1891, requiring county courts, under penalty of forfeiture of pay, to make a real audit annually of the records and affairs of each county officer handling county funds; and (2) a tax limitation law, named after its author, the Bingham Act, which was applied to ail governmental agencies. Under the limitation law, no county, city, etc., could, in any year, unless authorized by vote of its electors, levy a greater tax than the largest amount levied in any one of two preceding years, plus 6 per cent. Statutory millage rates, also, were subjected to the limitation, but levies for bonded debt, outstanding warrants of prior issue, judgments and interest were not included. County assessors were di-
rected to reduce any levy made in violation of law.
The Bingham Act was in effect one year, when it was succeeded by the tax and indebtedness limitation amendment to the constitution, adopted by the people in November, 1916. By its terms, neither the state, nor any municipal corporation authorized to levy a tax, may, in any year, unless permitted by popular vote, so exercise its power as to raise a greater amount for purposes other than the payment of bonded debt and interest than the amount levied by it in the year immediately preceding for the same purposes, plus 6 per cent. If an increase beyond the 6 per cent is voted in any year it must be excluded in determining the levy-base for the following year. There is an indebtedness limitation clause, the effect of which has been heretofore referred to in this article. The restriction of the Bingham Act upon statutory millages vras not carried into the constitutional amendment.
The tax and indebtedness limitation amendment rode the bumps safely in the supreme court in July, 1920, in the case of School District No. 24 of Marion County vs. Smith, as county school superintendent. A legislative act of 1919 directed a county tax of ten dollars per person of school age for the county school fund. The Marion county board, in making up its budgets, levied the ten dollars, but certified that $1.75 of it was in excess of the limitation. In a test case in the Marion county circuit court, the excess was declared void. Thereupon, the school district sought to mandamus Smith to compel him to apportion to it the full ten dollars per capita. In deciding the issue, the supreme court distinguished between mandatory and discretionary taxes voted by the legislature. It held that the school tax


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was a mandatory tax, and that all tax-levying bodies, in making their budgets, must first provide for mandatory taxes before levying the discretionary ones. “We hold,” said the court, “thatas to the constitutional limitation the power of the county to levy a discretionary tax is subordinate to its mandatory duty to levy a tax under a specific act of the legislature.” In another place the court said that the six per cent limitation must be respected and enforced, and while it denied to the county boards the right to reduce a mandatory tax in favor of a discretionary tax, did not venture an opinion as to what might happen if the boards should have to distinguish between all mandatory taxes and still keep within the limitation—in other words, when, as in physics, two inelastic bodies come into collision.
: THE TAX SUPERVISING COMMISSION
The legislature of 1919 again hearkened to the demand of the taxpayers for a further check upon counties and other tax-levying bodies and considered a measure having for its purpose the complete separation of the levying and the spending functions of government. Under the budget laws, the governing body, whether commission, council or board, prepares the estimates, hears the objections to them, makes the levies, and receives and disburses the money. The new proposal was to create a super body over all units of government, with power to pass upon the budgets, make the levies and hold the spending authorities to stride accountability. In the last hours of the session, and after much log-rolling, a bill was put through creating a tax supervising and conservation commission in each county having a population of 100,000 or over. That meant Multnomah county, as it
is the only county that can qualify in the matter of population. The measure would have been a good one for the state at large, but the upstate counties did not want it and slipped from under.
When the legislature finished juggling with the bill its teeth had been drawn, and the commission created by it was given advisory jurisdiction, only, over all public bodies vested with the power of levying a tax. It can examine annual budgets, hold hearings upon them, report findings, and make recommendations, but “the power and authority to fix and levy taxes shall remain vested in the same authorities as now provided by law.” The commission is empowered to compile statistics of public indebtedness, interest and expenditures; to inquire into management and methods of accounting; and to advise with heads of government with the object of conserving the public money and increasing efficiency. The chief weapon placed in its hands for the furtherance of its objects is newspaper publicity.
The tax-supervising and conservation commission made its first report to Governor Olcott in January, 1920, and presented a mass of valuable information relating to taxes and administration. It stressed the point that in its advisory capacity it cannot accomplish anything tangible. It found that supervision of the numerous annual budgets of Multnomah county in the manner contemplated by the act creating the commission cannot be instituted and maintained without further legislation. Recommendations included the enactment of a competent budget law; constitutional and statutory changes to make possible centralized administration of tax-levying functions; audit and examination of accounts; concentration and uniformity of financial records; installation of cost-accounting methods; and classifi-


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cation of salaries in the public service with the right of continuous employes to progressive compensation.
It is to be regretted that the commission did not see fit to recommend Multnomah county’s greatest need— unification of government—and that it went out of its way to attack the county auditor by innuendo. It says that the administrative code, adopted by the county board in 1913, has remained inoperative, especially in its check and accountancy features, “because of official resistance where cooperation should have been willingly extended.” The so-called administrative code is a cumbrous document and was compiled by a man who knew nothing of county government in Oregon. In certain phases it conflicts with law, and in others it is manifestly unworkable. It was not worth the $1,000 that it cost. If Multnomah county had never had, nor ever heard of an administrative code, it is abundantly protected in all its financial operations by the law defining the duties of the county auditor, which is sufficiently broad to give the county any kind of a system of accounting it is willing to install and pay for. If the county board is not satisfied that the auditor is conducting his office in obedience to law, which he persistently claims he is doing, the board can refuse to audit his salary, or even mandamus him to bring him to time. Neither of these things has the board ever done. Furthermore, the county board can examine the auditor’s records, or it can appoint some one else to do the work. Neither of these things has the board ever done. Again, under a law of 1915, notwithstanding the strict duties imposed upon the auditor, it is the inescapable duty of the county board to make an annual audit of all county officers handling county money. The
penalty for failure to perform this duty is forfeiture of salary. Although this law has been in effect for five years, the county board has never ordered an audit, nor have its members forfeited their salaries. Less disposition in certain quarters to criticize and antagonize the county auditor and more willingness to co-operate with him, less disposition to justify an expenditure seven years ago of $1,000 for an administrative code and more willingness to draft a new and better code, would be highly beneficial to county government in Multnomah county. The code of 1913 is far from being the last word on the subject of administration.
A PROGRAM OF REFORM
The reader who has followed this survey of the beginnings and development of county government in Oregon must be impressed with the thought that the whole system is in need of complete reorganization. It is. The legislature could not address itself to a more valuable subject than this very one of disentangling the county mess and whipping the entire structure into workable shape. Definite results can be accomplished by four enactments, in brief as follows:
1. County charter.—Counties should be permitted to incorporate under general laws, with powers defined by charter, the same as cities and towns now do, with power to say what officers they shall have, subject to certain constitutional requirements; and with power, also, to fix the salaries of their officers and employes. In general, counties should be vested with as large a degree of local self-government as is compatible with the right of the legislative assembly to pass a law effective everywhere in the state.
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ties should be subject to a state law providing for uniform accountancy, along the lines of the act of 1913, which was repealed in 1915.
3. Budget law.—The county budget law should be revised and strengthened and harmonized with the tax and indebtedness limitation amendment to the constitution. For example, the expenditure of 10 per cent beyond the final estimates, allowed by the present budget law, is of doubtful validity, if it creates an indebtedness in excess of $5,000, under the ruling of the supreme court in the recent Smith case in Marion county.
4. Tax supervision.—Each county should have a body like the existing tax-supervising and conservation commission of Multnomah county, but clothed with power to enable it to function effectively. The levying and the spending departments of government should be separated and each in its own sphere held to strict accountability.
All of the foregoing measures can be enacted without constitutional amendments, unless it is desired to alter the title or tenure of certain county officers now required by the constitution. The reasoning of the supreme court in Love joy vs. the City of Portland will support these suggestions for county government reform. If the insurance business, which was the issue in the Lovejoy case, is of sufficient importance for the state to assume the exclusive regulation of it, then county government is of sufficient importance for the state to take hold of it and improve it.
THE SUPREME NEED-----UNIFICATION
Multnomah county would participate in the benefits accruing from the betterment of county government at large, but for it the ultimate remedy is
[February
unification of its local governments. This step cannot be taken hastily. Constitutional authority for consolidation must first be obtained and this will take time. Next will come the drafting of the charter which will draw upon the best talent that the county possesses.
Multnomah county is one of Oregon’s thirty-six counties. It is the smallest in size, but it leads all the others in population, wealth, manufacturing and shipping. Its gross area is 451 square miles, of which about 111 square miles are in the Bull Run timber reserve. The principal tax-levying corporations within its boundaries, not counting the county itself, are: Port of Portland 209§ square miles; School District No. 1, of which the larger portion is within the corporate limits of Portland, 80 square miles; the City of Portland and the Portland Dock Commission, each 66.3 square miles. The population of the county is nearly 276,000, or 35 per cent of the state’s total, compared with 12§ per cent in 1870. There are 612 people to the square mile, a greater density than is present in Denmark, Holland, Japan or pre-war Germany. Portland has over 93 per cent of the population of the county and over 96 per cent of its assessable wealth. The industrial and commercial interests are extensive.
One who sits before a map of Multnomah county, and traces its transportation systems and is impressed with its tightness, is struck with wonder that its people tolerate the annual levying of taxes by a large number of public bodies “acting independently of each other and actuated by no co-ordinating impulse.” Year in and year out, these bodies decide how much money they want from the taxpayers, make their levies and report them to the county board, which


NOTES AND EVENTS
I. GOVERNMENT AND ADMINISTRATION
The Illinois Constitutional Convention Takes Long Recess.—The Illinois constitutional convention, after nearly a year of floundering, has taken a long recess, leaving the people of the state, who expected so much from this body, in doubt as to whether it will ever submit anything that will meet with the approval of the voters. The convention met in January, 1920, and was in session most of the time until July, when it took a recess until November. After reconvening, and remaining in session for a few weeks, another recess was taken until September, 1921.
Successful business men, bankers, and lawyers of high standing are prominent in the convention. Judged as individuals, the membership rates high. Collectively, the body has shown little ability thus far to function effectively. Most of the members have a strong sense of individuality, and commanding leaders have not appeared. There is no real group working for a definite program. Proposals thus far given tentative approval by the convention in committee of the whole form a rather confusing mixture of good and bad features. Apparently the majority intend to submit the new constitution to the people as one document, which many think means sure rejection. If the convention will submit its work to a popular vote by parts there is much more chance that some features will be adopted. There is much pessimism, both within the convention and among the people of Illinois, as to whether anything will be accomplished. Just prior to the last recess there was difficulty in keeping a quorum.
The subjects arousing the most controversy were those of revenue, limitation of Chicago’s representation in the legislature, and the initiative and referendum.
Many citizens of Illinois confidently expected that the convention would authorize a provision for the classification of property for purposes of taxation. The majority refused, however, to give sanction to this idea, but voted to leave in the constitution the requirement for the taxation of all property according to the rule of uniformity. The draft as approved in committee of the whole does stipulate, however, that there may
be an income tax on intangible property as a substitute for other forms of taxation of such property. There is provision also for a graduated, progressive income tax with the proviso that the highest rate shall not be more than four times the lowest rate.
At the time the delegates were elected, the Hearst newspapers of Chicago were instrumental in securing a popular vote on the question as to whether the proposed new constitution should contain initiative and referendum provisions. The vote on this question was favorable in the state at large, including Chicago. The proposition failed to carry, however, in the part of the state outside of Chicago. When the principle of the initiative and referendum was rejected several members left saying they would not return, and the Hearst papers announced that the convention was dead.
After bitter debate, the majority of the committee of the whole voted for drastic limitations upon Chicago’s representation in both houses of the state legislature. Thereupon, some of the Chicago members withdrew; others resigned committee memberships and announced that they would perform no more work so long as the attitude of the convention should remain what it was upon the question of limiting Chicago’s representation. The Chicago members, while contending for the principle of equality of representation in both houses of the legislature, stood willing to accept as a compromise some limitation in one house.
While the convention contains some able advocates of the short ballot principle, the majority of the body is opposed to any move in favor of a shorter ballot.
The provision concerning counties, as tentatively approved, though awkward in form, holds out hope for substantial progress in county government. After repeating various restrictions of the existing constitution that interfere with intelligent legislative action regarding counties, the proposal stipulates that notwithstanding such provisions the legislature may enact laws uniform as to classes of counties for the organization and government of counties, which shall
104


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become effective when approved on local referendum.
The convention approved the idea of giving Chicago broad constitutional home rule powers, with the right to frame and adopt its own charter. However, it refused to give home rule charter making powers to other cities of the state.
There are provisions intended to authorize the consolidation of the governments of Chicago and Cook county, but it is doubtful whether in their present form they will serve their purpose.
There are provisions about zoning and excess condemnation that are held to be fairly satisfactory.
One interesting provision approved by the committee of the whole is that intended to give cities additional borrowing powers for the acquisition of local public utilities. The present constitution limits debts to 5 per cent of the assessed valuation of the taxable property. The proposal in question aims to authorize an additional indebtedness for municipal ownership purposes of 15 per cent of the value of the real estate. This additional debt-incurring power is accompanied by the condition, however, that the rates charged by municipally owned utilities shall be high enough to make the property self-sustaining.
Everything that the convention has done to date is tentative. There is uncertainty as to what may be the course of action when it meets again next September. In some quarters the hope is expressed that the spirit of compromise may be invoked so as to secure agreement upon a program that can be expected to secure popular approval when the results shall be submitted to the people.
*
Employment Standardization in Philadelphia.
—It will be recalled from Mr. Woodruff’s article in the July, 1920, number of the Review, that the actual work on employment standardization in Philadelphia was begun on April 17, 1920. For the technical work the civil service commission had retained Griffenhagen and Associates, Ltd., a private consulting firm from Chicago. In order to enable the mayor and the city council to incorporate the new standard titles and the new standard rates of pay in the budget for 1921, the date for the completion of the civil service commission’s report was fixed by council at October 1. The commission, in turn, required in its contract with the private consulting firm that the latter should file its report
by September 15. Both the private consulting firm and the commission reported the body of their recommendations well within their respective time limits.
To facilitate the application of the commission’s recommendations to next year’s municipal pay-roll, the mayor, on August 12, issued instructions to all departments asking them to embody the new standard titles of positions and the new standard rates of pay in their budget estimates for personal service. These instructions in the main were faithfully carried out and the departmental estimates were forwarded to the mayor.
On October 13, when the mayor transmitted his budget to council, he announced that in order to stay within next year’s revenue under the existing tax rate, it had been necessary to lay aside the recommendations of the civil service commission with regard to salary increases, and that “with a few minor exceptions” only policemen and firemen were to receive a substantial increase in pay. The new standard titles also had been stricken from the budget estimates and the old titles had been restored. In effect, this was a complete repudiation by the mayor of the recommendations of the civil service commission. The only hope for their adoption thereafter lay with council.
Almost at the outset the sentiment in council appeared to be unfavorable to the recommendations. Although Philadelphia city employes are at present grossly underpaid, there is at this time such strong popular feeling against higher taxes that council declined to assume responsibility for the immediate 10 per cent increase in the cost of personal service which the adoption of the standard rates of pay would have entailed. The mere fact that the mayor had thrown his influence against the recommendations also proved a big obstacle in the way. It was not surprising, therefore, that on December 6 council took definite action continuing the existing schedule of titles and salaries and postponing the whole problem of classification and standardization until next year. The only general increases in compensation enacted during the budget deliberations applied to the uniformed police and fire forces, the rank and file of which were given a flat rate of five dollars a day regardless of their length of service.
William C. Beyer.1
1 Assistant Director, Bureau of Municipal Research of Philadelphia.


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Reorganization of the Federal Departments.— On December 14, 1920, the House of Representatives finally passed S. J. 191, which had been passed by the Senate on May 10, in the last session. The joint resolution, which became a law automatically after ten days in which the President failed to veto it, will create a joint committee of six, three from the Senate and three from the House, “to make a survey of the administrative services of the government for the purpose of securing all pertinent facts concerning their powers and duties, their distribution among the several executive departments, and their overlapping and duplication of authority; also to determine what distribution of activities should be made among the several services, with a view to the proper correlation of the same.” It is provided that the committee shall report from time to time both to the Senate and to the House and prepare and submit bids; but final report of the committee is required by the second Monday in December, 1922. The committee is specifically authorized to go into the executive offices with the right of examining all records and, presumably, all persons, therein.
It is generally admitted that the Federal departments and commissions could be grouped more advantageously and a good deal of work has already been carried on in the way of securing and collating information by civic bodies, semi-official groups and by the United States Bureau of Efficiency. It came somewhat as a surprise to those who had followed this work that, judging by the debate in the House, the sponsors for the joint resolution apparently had it in mind to conduct some such detailed survey as had been carried on by the Joint Committee on Reclassification, which employed an army of experts, commandeered the time of hundreds of clerks employed in executive departments and expended a generous appropriation of public money in the preparation of its voluminous report. The date set for the final report on reorganization two years hence would indicate the scale on which it is proposed to proceed.
Harlean James.
*
Philadelphia Votes for $33,000,000 Improvements.—At the November election the voters of Philadelphia voted upon a $33,000,000 loan ordinance for permanent improvements. The loan was carried by four to one. Among the interesting items are those having to do with buildings that are to front upon the Fairmount
Parkway, the new diagonal thoroughfare which itself cost $17,000,000. The items include $1,500,000 for the art museum which, with previous loans, makes $3,500,000 available. There is included $1,000,000 for the public library, which makes a total of $4,750,000 available. The new building for the municipal court is provided for to the extent of $1,000,000 which is to be added to $900,000 already made available. Toward the acquisition of property for the construction of the city hall annex $1,000,000 is available.
Philadelphia has opened the Delaware Avenue, an important riparian thoroughfare along the water front, which at its narrowest portion is now 150 feet wide. The Loan bill provided for carrying this improvement both north and south, a total of $1,550,000. For various parkways and parks the voters approved $2,750,000, this including especially playgrounds and parks in the congested section of the city. Philadelphia has been building a new elevated system and is preparing to extend and improve its water supply and among the items are $6,600,000 for these two purposes. There is also included $3,500,000 for construction of wharves and docks.
The emphatic note of all recent city planning in America is accomplishment and in such improvements as the Fairmount Parkway and Delaware Avenue, Philadelphia has an honorable place among the leaders.
Andrew Wright Crawford.
*
Ontario Committee Reports on P. R.—The
committee of the Ontario legislature appointed to study and make recommendations in regard to proportional representation has just submitted its report, approved by a good majority of the members. The report recommends:
(1) The experimental use of the Hare system of P. R. in two cities (Hamilton, and Toronto being suggested) and two large semi-rural constituencies for members of the provincial legislature;
(2) The use of the Hare system in singlemember districts (the “alternative vote”) for the remainder of the legislature; and
(3) Legislation making the Hare system of P. R. optional for Ontario cities.
This report may be regarded as a result of the successful trial of P. R. in the Winnipeg provincial elections last June, at which Mr. A. S. Winchester was present as representative of the Ontario government.


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Zoning in Milwaukee.—Readers of the Review will be glad to hear that the admirable zoning ordinance, prepared for Milwaukee under the guidance of Arthur C. Comey of Cambridge, Mass., as consultant, has been adopted by the city. The ordinance, while along the usual lines, adopts some of the newer methods of regulation. There are four use districts,— residence, business, commercial and light manufacturing, and industrial. There is a limitation, varying in the various area districts, of the number of families permitted to the acre or fraction of the acre, as in the Newark ordinance and one or two others of recent date. There are no one family house districts, all residential structures being allowed in the residential districts. The enforcement of the ordinance is in the hands of the building inspector, as it should be. The city has no authority to establish a board of appeals, but will ask the next legislature to grant them this power.
*
County Home Rule in California.—Santa Clara county, California, the seat of Stanford University and the center of the prune industry of the county, is considering the adoption of a freeholders’ charter. Following the lead of San Bernadino, Los Angeles, Tehama and Butte counties, which have home-rule charters, and San Francisco, which has city and county consolidation, Santa Clara county with San Jose as
its county seat, has discussed both plans and will proceed with a freeholders’ commission to draw up a home-rule charter. No consolidation is possible under a borough system of city and county government, because of the extent of area and the diversity of interests. No separation of the county is possible at present because of constitutional and statute provisions which cannot be avoided. This leaves the home-rule plan with a consolidation of offices and a readjustment of functions and duties, as the only possible alternative, and the one most generally accepted by city and county organizations.
Edwin A. Cottrell.
♦
Minnesota to Tax Iron Ore.—One of the issues in the state of Minnesota for a number of years has been the special taxation of iron ore. A tonnage tax bill has been introduced into every session of the legislature except one since 1907. Such a bill was vetoed by Governor Johnson in 1909 and another was vetoed by Governor Burnquist in 1919. This matter was one of the main issues in the recent state election. It is now generally believed that a special tax for state purposes will be levied upon iron ore at the session of the Minnesota legislature which meets in January. Such a tax would relieve, to some extent, the burden upon Minnesota municipalities.
II. MISCELLANEOUS
English Housing Notes.—Last October, Mr. Lloyd George explained to the British Parliament that the house shortage in England at the present time numbers 500,000. Also he added
100.000 houses are needed annually to take care of the regular increase. A ten years’ program therefore would call for a million houses.
Since the new housing act was passed and England began her scheme of subventions and subsidies to house builders not much actual progress has been made. In October the minister of health, Dr. Addison, gave out public figures to show that in something less than two years only 7,000 houses had been built, although
50.000 more were in various states of erection.
The Prime Minister wishes to dilute the building trades with unskilled workers in order, as he says, to build more houses. The unions’ reply is, that so many men are employed on luxury building such as cinemas, garages, and the like, that there are not enough workers for the houses.
From what can be learned their contention seems true.
The most interesting development at present is the award of a contract for 400 houses to the London Building Guilds. These houses are to be built at Walthamstow, a suburb of London, and involve the sum of 400,000 pounds. The guild of course builds without profit and if the housing shortage of England can be solved’ by the mere building of houses it seems likely that the building guilds will have to be depended upon to carry out the work. The Wholesale Cooperative Society works jointly with the guilds in supplying materials at the lowest possible price and in the case of Walthamstow, the Co-operative Insurance Company insures the contract up to 20 per cent of its value.
News comes that the city of Sheffield has completed its own civic survey—the first to be made by any English municipality. The results have been translated into diagrams which have been


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NATIONAL MUNICIPAL REVIEW
[February
hung in the town hall so that the people can get a really clear understanding of how Sheffield came to be what it is, and where it is going. The growth and direction of population, the influences of transportation are revealed and great emphasis is given to the difficulty of carrying out such complex problems as housing betterment. The people of Sheffield are shown that before houses are built it is necessary to know where to build them, although the importance of gaining this knowledge is never considered in America from the broad standpoint of the common welfare. The Sheffield diagrams reveal the city as a jumbled lot of unrelated and inconvenient groupings which is of course what happens to all cities under the present and haphazard method of growth. We are not informed as to whether the Sheffield diagrams present a study in land values but it is very interesting to note that the city of Manchester is proposing as one of the fundamental steps towards a solution of its great housing problem, a 5 per cent capital tax on land values. It is true that the corporation of Manchester has decided that its great public services shall be run hereafter as nearly as possible at cost and not for a profit. “Perhaps the Council would not have come to this Spartan conclusion,” says the Manchester Guardian, “if they had not seen an avenue of relief opening through the capital tax of 5 per cent on land values.” Of course this tax would only bear upon unused building sites although the scheme proposed would involve the untaxing of buildings and improvements “to the extent of the reduction of the rate.” The Guardian believes “that the greatest and simplest reform in housing would be simply to lower if not to sweep away the tax on building.” This is of course the theory of the single taxers, but at present it remains a theory only. Under the present price and profit system of industry, the guilds believe that the untaxing of buildings is not the only answer.
Charles II. Whitaker.
*
City-Planning Notes.—One of the newest cities to start city-planning work is Poughkeepsie, where the president of the Chamber of Commerce has appointed a city-plan committee.
In Indiana, the movement for city planning is practically state-wide. In Indianapolis, Terre Haute, South Bend, Elkhart, Fort Wayne, Muncie, Marion, Anderson, Mishawaka, there is definite city-planning interest manifested. In
Marion and Elkhart a city plan, or at least some phases of it are being prepared. In Indianapolis and Terre Haute there is a city-plan committee, and in most of the other cities there is a city-plan committee of the Chamber of Commerce. AH this interest is now being crystallized in an effort to pass a city-planning and zoning bill at the present session of the legislature. The Indianapolis committee is known as the Committee of One Hundred, and was appointed by the president of the Chamber of Commerce.
St. Paul, Minnesota, will continue the cityplanning program under way. The work is now well started, and Messrs. Bennett & Parsons, Consultant City Planners, will make their preliminary plan report on a general street plan the first of the year. The city council has appropriated for work in 1921—$23,000, and a balance of $10,500 in the present year’s funds has been reappropriated, $8,500 for a zoning survey, and $2,000 for a survey of street railway facilities, and a report on rerouting.
Mr. George H. Herrold, secretary of the Plat Commission, is also managing director and engineer for the St. Paul City-Planning Board, thus making it possible to correlate the work of these two bodies and control the development in the entire county area surrounding the city.
*
Meeting of Governmental Research Conference.—The sixth annual meeting of the Governmental Research Conference took place at Indianapolis on November 17 and 18, some of its sessions being held jointly with the National Municipal League. Forty-six members were present from fifteen different bureaus.
The sessions of the conference were devoted mainly to discussions of civil service and accounting, and to the more effective organization of the research movement. The old committees on civil service and the budget section of the model state constitution of the National Municipal League were continued: new committees were established on budget classification, the budget section of city charters, the purchasing section, the accounting section and the bonding section, of charters, statistics of city debt, and the organization of boards of education.
The following officers were chosen for the coming year: James W. Routh of Rochester, Chairman; Robert E. Tracy of Indianapolis, Vice-Chairman; and Lent D. Upson of Detroit, Secretary and Treasurer.


BOSTON—THE PUBLIC TRUSTEE PLAN
BY JAMES F. JACKSON
Chairman, Board of Trustees, Boston Elevated Railway
Chapter 159 of the acts of the legislature of Massachusetts of 1918, known as the Public Control Act, went into effect on the first day of July in that year. It arranged what is practically a lease of the Boston Elevated Railway for the term of ten years to the state of Massachusetts representing for that purpose Boston and certain suburban cities and towns which the railway serves. Five trustees to be appointed by the governor of the state and to hold office for the ten years of the lease were given absolute control over the management and operation of the railway. The rental was to be paid in fixed dividends upon outstanding stock at 5 per cent for the first two years, at 5| per cent for the next two years and at 6 per cent for the balance of the term.
This act grew out of the vain struggle under private management to furnish service upon a five-cent fare, a struggle that even under pre-war prices and conditions had grown more and more desperate until the payment of dividends was suspended and the effort to maintain the property practically abandoned. The problem was no longer a question of profits for stockholders but of the existence of the service upon a system prostrated by lack of capital and revenue.
The legislature could have met the situation in any one of four ways. It could have allowed the railway to go into the hands of a receiver with the consequent expense, delay and uncertainties; or it could come to the aid of private management with relief from burdens and with guarantee of credit;
or it could commit itself completely to the theory of public ownership; or it could take the less radical step of an experiment with public control of the railway under temporary lease from its owners. It chose the last of these courses.
WHY THE TRUSTEE PLAN WAS ADOPTED
Three factors in the situation undoubtedly had influence in bringing about this decision.
The first was the fact that the usefulness of the street railway had come to be fully understood. It was appreciated as never before that the street car is not alone the poor man’s carriage but that of the public official, the man of business, the professional man—• directly or indirectly the carriage on which everyone relies and for which no jitney or other kind of electric omnibus can be substituted. It must be preserved.
The second was the fact that this metropolitan railway represented an honest investment under a public supervision that had prevented excessive issue of stock or bonds and that, therefore, there was no call for reorganization to eliminate watered stock-
The third was the fact that the new capital which was indispensable to sustain this service must be obtained by buying it at market prices as other necessities are bought, in other words that investment must have its secure return.
To the legislative mind the problem for experience to solve was whether or ill


112 NATIONAL MUNICIPAL REVIEW SUPPLEMENT [Feb.
not a public management could be efficient, that is conducted without waste and without loss of ambition or pride in achievement. It was thought that a trial was worth while.
The basic plan for this experiment was that which I believe is the best for any street railway enterprise—a service at cost—meaning of course proper or necessary cost.
In assuming their duties the trustees took over a railway that covered 535.326 miles of track, 475.717 miles of it surface track, 30.080 miles in subways and 29.529 miles upon elevated structure. Much of the surface track was of light construction and badly worn, a large part of the rolling stock in poor repair and of obsolete type. The power plant was in process of development and repair shops and car barns utterly inadequate. The total investment in this railway system was $93,612,211.21 represented by outstanding stock and bonds in about equal proportion. The aggregate cost of the subways and tunnels under lease to this company was $35,033,506.11. The Cambridge subway was then included in the corporate property at its cost of $7,868,000 but last winter this subway was transferred to the state practically at cost and leased to the company as the other subways had been leased at construction.
MORE REVENUE NEEDED
The act directed the trustees to reinstate the railway in good operating condition. To do this additional capital and additional revenue must be immediately obtained. As a measure for providing a first installment of the needed capital the act authorized an issue of preferred stock to the amount of $2,000,000. To secure operating revenue the act directed the trustees to put in force fares that would make the
service self-supporting and provided that meanwhile deficits incurred should be met from taxation in the cities and towns served by the railway, the amounts so advanced to be repaid whenever operating revenue should exceed operating cost.
The new capital was immediately used in part payment for 250 modern cars. Successive advances in fare followed. A seven-cent fare was put in effect in August and in October gave way to an eight-cent fare which after a trial of seven months also proved inadequate. At the close of the year ending on June 30, 1919, receipts had failed to meet expenses by approximately five million dollars which amount was raised by taxation in the cities and towns served.
The ten-cent fare now in force was introduced in July, 1919. Losses under it continued in decreasing amount for two months, but in September this fare began to produce revenue sufficient to meet expenses and eventually to absorb the earlier deficits so that on June 30, 1920, the trustees were able to report that operating receipts for the year had met operating costs including all fixed charges and a reserve to depreciation.
In summer months the expense for street work is always large and receipts are always smaller than in other months, traffic falling below average. These conditions prevailed as usual in July, August and September of this year. The expected operating deficit for those months was realized but unless some extraordinary event intervenes this will be readily absorbed before next July leaving at the close of this year as at the end of last year no deficit.
There is a natural interest about the effect of higher fares upon traffic. Our experience has shown that there has been a gain in total revenue but a loss in the number of passengers carried.


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Under the ten-cent fare this loss at first amounted to 12 per cent of the traffic but gradually diminished to 10 per cent. To use figures the number of passengers carried under a five-cent fare for the month of October, 1917, was 32,854,047. Under the ten-cent fare in October, 1920, the number was 29,382,315.
Had there been during this time no unusually large increase in operating costs over those prevailing in the days of private management, receipts would have met expenditures at a fare considerably below ten cents. As everyone knows, however, prices had risen upon every hand at a tremendous pace. This was featured most strikingly through advances in wages. The average number of employes upon this railway is 10,000. In the spring of 1918 an advance in wages took place the effect of which was felt throughout the first year of public control. In that year a further advance took place and last year a third. The aggregate increase in operating cost on this account has been approximately $7,000,000. To-day more than half of every fare goes to compensation of employes.
The higher cost of coal has been another leading feature of increases in operating cost. Owing to a favorable contract that expired last July this advance has been seriously felt by us only during the last four months. As our yearly consumption of coal approximates 300,000 tons the additional expense this year would reach at present rates $2,000,000.
One item of expenditure is a reserve to depreciation amounting to $2,000,-000. This is annually set aside from fares to provide for renewals and replacements. Proper charges to depreciation are made not to build up the property to the full measure of original investment for the benefit of stockholders, but to maintain it in good operating
condition for the benefit of the public.
This means that the old-fashioned notion of maintaining a railway by hand to mouth methods with large expenditures in prosperous years and small expenditures or none at all in the lean years is a thing of the past. Sound policy to-day takes care that out of every day’s receipts something is put aside to meet the wear and tear that is constantly taking place. The lack of this precaution accounts in large part for the disasters which have overtaken so many street railway enterprises.
ZONE FARES OR FLAT RATE?
Boston has a single flat fare. It is a tradition and also the profound belief of many that this distributes the population, attracting people from congested centers into the outlying suburbs and that in so doing it establishes more healthful living conditions. Many families have undoubtedly established their homes in these suburbs in the confident belief that this single flat fare would never be disturbed. But there are in Boston enthusiastic advocates of zone fares as more equitable and just in making the cost of riding proportionate to some extent with the distance the passenger is carried. The trustees are studying the comparative merits of the two systems in the light of experience in this and other countries.
Experiments have been recently made with a five-cent fare upon lines where the run is short and where practically no competition with the general ten-cent fare is involved. Some of these experiments have proved failures but two of the lines are now in successful operation.
Nothing is more idle than an attempt to compare street railway service in one city with that in another without


114 NATIONAL MUNICIPAL REVIEW SUPPLEMENT [Feb.
the knowledge that is necessary to enable one to make proper allowance for distinguishing conditions that make the service dissimilar. These differing conditions vitally affect both the kind and the cost of transportation. Take a look at the situation in Boston. The center of business is confined to a small area into and from which on an average forty to fifty thousand people daily ride upon the street cars at about the same hour in the morning and at night. The problem of furnishing proper accommodation is one that is difficult. We have here a transportation wheel with a hub becoming more and more inadequate to receive the spokes which enter it as the terminal for radiating lines. Street surface was long ago inadequate for general travel and the street cars were driven into subways. The first subway built in this country was built in Boston. The cost of constructing and maintaining these subways is borne under existing law by the car rider in rentals paid from fares into the public treasury. The exaction of this tax now means an annual payment of nearly $2,000,000 or one-half of a cent upon each ride.
This is a relic from days when tolls were exacted for the use of highways. The street car is a public conveyance operated in Boston by public officials and the subway is a public highway. The automobilist uses highways specially adapted at great cost to his convenience without contribution from him to construction expense. What excuse is there for this discrimination in his favor and against the car rider?
The investment in the Boston elevated system, including subways and tunnels, is $136,500,000. The average ride over this system is four and one-half miles while the longest distance covered is nineteen miles. The average number of passengers carried daily in 1918 was 955,245; the average in
1919 was 889,750. The average for October of this year was 947,816. The budget of expenditures for 1919 was $32,000,000. The budget for this year is $34,000,000.
Upon assuming office the trustees immediately worked out a general plan of improvement involving a total outlay during a period of five years of about eighteen million dollars chargeable in about equal proportion to capital and replacement. Substantial progress has been made toward the consummation of this program bringing with it modern cars, improved track, larger accommodation and more frequent service.
The trustees make no claim as to the success of the experiment in public control which is in their charge. One reason for saying little or nothing about what has been done is the ever present knowledge on their part that whatever it may be it is only a step toward the goal which they hope the service will finally reach.
The board is organized with chairman and recording secretary, the former assuming the duties ordinarily performed by the president of a railway and the latter those ordinarily performed by the clerk of a board of directors. Committees of two are assigned to administrative departments and report from their several spheres of activity at the stated or special meetings of the board. The trustees in this way are keeping in close touch with all matters of administration. The operating staff has at its head our general manager, Edward Dana, who was appointed to that position in recognition of his fitness for its responsibilities. The confidence reposed in him has been amply justified in what he has accomplished, and his ability, energy and untiring devotion to the work and his harmonious relations with the trustees and with sub-


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ordinate officials and employes have proved invaluable.
GUIDING PRINCIPLES OF ADMINISTRATION
There are certain principles of administration that the trustees have adopted to which I will briefly refer.
Roosevelt, as we know, was fond of referring to the square deal. If men would oftener take the trouble to get below the surface of life they would find that there is something in every one that responds to the call for it, for even handed justice. It is the saving grace in the world. But we can be sure that no such thing is possible where ignorance rules instead of knowledge. Every effort then should be made to give out the truth, the whole truth and nothing but the truth with respect to all matters that are of interest to the travelling public.
Nothing hinders the approach of railway service to the standard which it ought to reach so much as the lack of patience. We all fail to exercise it. We jump to conclusions without knowing the facts; we hand in our verdict without waiting for the evidence. How can we secure patience on the part of the public? In only one way, by publication of facts. Plain and complete and frequent information makes for the sound public opinion which is the safeguard of management.
Street transportation must always be subject to unavoidable interruption. A car loaded with passengers anxious to reach office or home stops, and another car stops, and another, and another until the line is choked with cars carrying hundreds of impatient men and women. The use of every effort to let the crews and the passengers know perhaps that a truck has fallen across the track, or that a drawbridge
is up, or that a rail is broken, or something wrong with the power is worth the cost at almost any price. With the information conductors can cope with the emergency and passengers will be as patient as we can fairly ask.
Financial interests are entitled to know the whole truth. Credit cannot live without frank information. If this is given credit will follow as far as it ought to follow.
Close relations should be established between management and employes. Acquaintance on the part of the men with receipts and expenditures with the reason for existing conditions and plans for their improvement and opportunity to make suggestion about them will tend to lessen indifference, create mutual confidence and awaken ambition and pride in work.
Street car service for the most part is a personal undertaking. Its standing in the community depends chiefly upon the men who operate the cars. Directors or trustees or general managers may be wise in their day and generation and yet if their wisdom fails to establish team work with their employes it will be of little avail.
Co-operation between the public and employes is vital to success. Both must contribute to it. Bad work by the employe is quickly condemned. Why not commend good work? The automobile is the carriage of the individual. The car is the carriage of a group of individuals, practically their automobile. If your chauffeur shows skill you compliment him. Why not say a word in commendation to motor-man or conductor who does good work?
Everyone knows the difference between the motorman whose skill makes the journey safe and agreeable and the motorman who stops and starts his car in a way that throws his passengers about or drives it at a pace that is


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disagreeable if not dangerous. Everyone appreciates the conductor who is alert, helpful and pleasant. Why should passengers refuse to heed the request he makes of them in their own interest and that of all who ride?
I have a last personal word. I have long been acquainted with the men who have had charge of the railways in Massachusetts and in New England. They have been men who are held in the highest esteem in the communities where they live. Through the stress of all these years they have kept at their posts undismayed. The record is one of ability, loyalty to public interests and unblemished honor. Nor are they
unlike the men who have managed street railways elsewhere.
Under the conditions which prevail to-day we may all of us feel a new zeal, a new confidence in the success of the work at which they have labored so long. My last word then is one of optimism. But the struggle is not over. Fares are not yet adjusted. There is the fight against the jitney and the contest with the private automobile; the search for new economies to meet higher costs of operation; the effort to restore credit and inspire new confidence in capital. So it is an up grade and a long pull that lies ahead, but the street car is bound to win.
INDIANAPOLIS RETAINS THE FIVE-CENT FARE1
BUT REJECTS SERVICE-AT-COST
BY E. I. LEWIS
Chairman, Public Service Commission of Indiana
Your convention meets in Indianapolis, a community that believes in a five-cent street carfare. It hopes to retain it.
Those of you who have come from Portland, Maine, and Portland, Oregon, from New Orleans and the Twin Cities, and from cities between, may experience in Indianapolis the pleasant reminiscence of the good old days of
1 Editor’s Note: At the time of the National Municipal League meeting in Indianapolis, there was pending before the Indiana Commission, as commented on by Mr, Lewis in his address, a petition of the Indianapolis Street Railway Company for a two cent transfer charge. This petition was acted upon December 18, 1920, and a one cent transfer charge was granted, the five cent basic fare being retained. The question of retaining or increasing this charge in the future will be answered in accordance with the anticipated changed conditions affecting both costs and revenue during 1921, as their effects are discerned.
five-cent street car rides. With the desertion of Cleveland, the list of places where the all but forgotten sensation of buying a street car ride with one coin—unless it be a ten-cent piece—is approaching the point of near extinction.
Delegates from Portland on the Atlantic Coast paid a ten-cent street carfare to get to the railroad station. If they stopped at any cities enroute, except New York whose five-cent fares are causing heavy deficits that cannot continue, they have paid seven, eight or ten cents for street car rides. In Boston it was ten cents, in Providence six, in Albany seven, in Buffalo seven, in Newark seven, in Philadelphia seven, in Baltimore seven, in Washington eight, in Pittsburgh ten, in Cleveland six, in Detroit six, in Toledo seven, in


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Columbus six, in Cincinnati eight cents.
Those coming from Portland on the Pacific Coast paid eight cents to get to their station. If they stopped off enroute they paid a ten cent fare in Seattle, in Tacoma ten cents, in Spokane six, in San Francisco five, in Los Angeles five, in Salt Lake seven, in Denver six, in Topeka eight, in Omaha seven, in St. Paul six, in Minneapolis six, in New Orleans eight, in Louisville five, in Kansas City eight, in St. Louis seven, in Milwaukee seven, in Chicago eight cents.
On July 1, 1920, I do not have the numerous changes upward since that date, if you had stopped off for a street car ride in any one of 69 municipalities, including such cities as Boston, Pittsburgh and Seattle, you would have paid ten cents for a street car ride; if in any one of 32 cities, eight or nine cents; if in any one of 178 cities, seven cents; if in any one of 176 cities, six cents; and, generally, there would have been extra charge for transfer or for continuation of ride from one zone into another zone. To-day 600 cities have street car cash fares in excess of five cents.
While discovery of a place where one can actually buy 18 miles of riding for five cents is notable, it is not as remarkable as the discovery that the company is solvent and full of hope. Returning confidence in its future is indicated by higher bid prices for its securities.
On July 1, 1920, there were 118 companies, with a total of 7,820 miles of track in receivership. Since July 1 there have been a number of receiverships added to this depressing total. Other companies, some of which have exhausted possibilities of eight- and ten-cent fares, are showing hopeless tendencies. Fifty-six of those 118 receiverships occurred between June 1, 1919, and July 1, 1920. Obviously
the departure from the five-cent fare has not been a complete success. As an institution the street railroad has the pallor of bankruptcy.
A great deal of attention has been directed to rehabilitation, or one might say resuscitation, of the national system of steam railway transportation. Our congress has given its best efforts to that solution. Important as is the problem of the steam railroads, the fact remains that while they transport approximately one billion persons annually, the street railways transport fourteen or fifteen persons to every one carried by the steam roads.
The day is past when financial distress of the street railway industry could be looked on as being only of concern to the industry. The growth of cities is, as never before, insistently demanding money for extensions. The fact that the voice calling for that money generally does not inspire confidence constitutes one of our most important municipal problems.
THE company’s ATTITUDE TO THE EIVE-CENT FAEE
When I was invited to appear on your programme it was to speak on “The Success of the five-cent fare in Indianapolis.” I suggested change of title to “The Five-Cent Fare in. Indianapolis.” That does not imply that the five-cent fare has not been a success, but I believe that no one should speak of accomplished success until the-war’s readjustment period is past. We hope, and there seems to be good reason to expect, that two or three-years from this time Indianapolis,, when called on at one of your meetings* can respond to the toast “Indianapolis, the Five-Cent Street Carfare City.” I proceeded after making the change in title to block out what I would say. Since then, however, a changed condi-


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tion has come. The local street car company, by formal petition, has come to the Commission saying that the frenzied price raising in coal has caught it and reversed, with the beginning of fall, the favorable financial showings made up to that time. The company is asking for temporary relief, a transfer charge and readjustment of payments by interurban companies for trackage and terminal facilities, to tide them over this coal crisis.
The significant feature of the petition, however, is that there is indicated no desire for a higher basic fare than five cents.
What can be more remarkable than the experience of a public utility commissioner having gentlemen who two years ago sat on the front steps bemoaning the denial of a six-cent fare petition, coming around and saying “We need some temporary relief to get us past the exorbitant coal price era, but we want to hold fast to this five-cent fare.”
These gentlemen are not in business for pleasure. They are intent on making money—a most commendable policy for public utilities notwithstanding occasional short-sighted comments to the contrary. Why do not these gentlemen who now say a temporary emergency faces them, petition for a six-cent fare? Because they have experienced a great awakening. It may all prove to be a mistake, but they now are of the opinion that a higher basic fare than five cents, at least in Indianapolis, would result in cutting down the most profitable part of any street railway company’s business— that is, the short-haul patronage for which there is always the potential competition of that patronage’s own legs, as well as the appeal of jitneys.
Facing the fact that within two weeks, I shall sit as one of the judges in this matter, I may not, with propriety,
go into some details that you might desire. However, I am entirely free to summarize the historic background of low fares in Indianapolis. From my angle of view it covers the substantial and fundamental phases of the subject. It is not necessary to go further back than the year 1918 when, on a decision of the supreme court of Indiana, the Public Service Commission assumed jurisdiction and eliminated fares of less than five cents. In December, 1918, the company came to the Commission for a six-cent fare. The Commission rejected the plea chiefly on four revelations that resulted from public hearings.
WHY A PETITION FOR INCREASED FARE WAS REFUSED
The first revelation was that the company was not collecting its earned revenues. The Commission reached this decision as a result of putting trained checkers on the cars. Their presence was not suspected. Officers of the company had testified that losses of earned revenues did not exceed 2 per cent, and were more nearly 1 per cent. The Commission’s inspectors showed a loss of 13.6 per cent on cars checked during a six day period. The Commission held that “It is futile to provide increased revenues for petitioner if it does not collect revenues already provided.” The introduction of pay-as-you-enter cars was the result of this investigation and decision.
The second revelation was that the value of petitioner’s property did not warrant its financial obligations. The company presented an inventory and valuation totaling $28,634,210.83. If the Commission had ever let that valuation get by, Indianapolis would have been paying a seven-or eight-cent fare. I am very certain that officers of the company now will agree that the


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financial outlook under such conditions would not be as favorable as it is now. The hearing revealed values only a little in excess of half the twenty-eight million six hundred thousand dollars. No one, except local taxing officials, who have assessed the company at almost twenty million dollars, is now claiming a value in excess of $16,000,000 or $16,500,000. When a service-at-cost proposal was laid before the Commission this year the city and company practically agreed to a valuation of $15,000,000.
From the date of its decision, the Commission has had the co-operation of officers and various groups of stock and bond holders in working out a voluntary reduction of obligations to a proper basis. A superimposed holding and operating company, the In-dianapolisTraction and Terminal Company, was eliminated. Four million dollars of common stock for which there was no substantial background was wiped out, and two million one hundred and eighty of interest bearing bonds, held in sinking funds, were cancelled, thus reducing securities approximately $6,180,000. Also $1,000,000 of stock was made junior to such an extent that it cannot be considered a liability. Securities were thus reduced approximately 30 per cent. Indianapolis Street Railway stockholders who had been slumbering in comfortable berths with the assurance of guaranteed stock dividends, were called forth to operate their property and to assume the hazards of preferred stockholders.
The third revelation was of a device that was not uncommon in the profitable days of unregulated street railroading. This device was a sinking fund for the retirement of bonds. The street car riders were not only to guarantee dividends to a nonoperating company, but were also to wipe out the bonded indebtedness.
One hundred twenty thousand dollars annually was going into this sinking fund. Also, the bonds which, it would seem, should have been annually retired were continuing to draw interest. • Payments to the sinking fund, and payment of interest on bonds held in the sinking fund, were amounting annually to almost $200,000 of money that was badly needed for property and service.
When the Commission pointed out that this plan, simply analyzed, meant that the public was placed in the position of giving to the company not only sufficient fares to maintain and operate service, but also ultimately to give the company its property, and that such a plan was not at all consistent with regulation which, for emergency relief, the company was seeking to come under, there again was fine co-operation on the part of the bond and stockholders and officers. At least temporarily the sinking fund provisions are waived. Most advantageously to all concerned, the waiver provides that this money go into betterments. This means better security for bond and stockholders; better service for the rider.
The fourth controlling revelation was that the community was drained dry of its young men, who were among the 4,000,000 away to war; that the absence of this vital part of the population, together with the absence of many young women and the depressions of war, had very nearly stopped social activities; that influenza epidemics, sweeping the nation, had all but suspended local shopping, theatre and moving picture traffic; and that locally industrial activity was not normal.
The Commission, in its denial, took all these conditions into consideration. It accurately forecasted reassumption of normal life and greater traffic. The change came with a rush. In 1918


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the Indianapolis street cars transported 70,003,795 revenue passengers; in 1919 the traffic jumped to 84,051,850 passengers; in 1920 it will probably pass the 94,000,000 mark.
Briefly then, in answering to my subject “The Five-Cent Fare in Indianapolis,” I would summarize by saying that its foundation lies in:
(1) Elimination of unwarranted financial obligations;
(2) Elimination of a holding company—and, incidentally, the elimination of absentee landlordism;
(3) Awakening to the fact that the short haul passenger is the profitable passenger;
(4) Collection of earned revenues;
(5) Taking into calculation subnormal traffic conditions in the war period and correct forecasting of increased volume of traffic after 1918.
(6) A healthy spirit of co-operation;
(7) An intelligent handling of the whole situation by the city;
(8) Better public relations.
ADVANTAGES POSSESSED BY INDIANAPOLIS
It is true that there are other conditions which contribute fundamentally to make it possible for Indianapolis to be, when the readjustment is past—■ “The Five-Cent Street Carfare City.” These advantages are geographical and social.
The street car company mines a large amount of its own coal in fields located near to Indianapolis and this means cheaper fuel costs than those faced by most companies. Wages and cost of living all through the war period have been at somewhat lower levels in Indianapolis than those prevailing in the zone of greatest war activities and excesses which reached back from the Atlantic seaboard through Buffalo, Pittsburgh, Youngstown, Cleveland, Detroit, to Chicago. This applied to street railroading. Now, that the national period of read-
justment has come, it is naturally to be presumed that this area will be least and last, affected.
When the company came to the Commission its plea was that it was at bankruptcy’s door. Its tracks and pavements were in bad condition; the condition of its rolling stock was ag-gravatingly proclaimed by flat wheels; its finances were such, it was represented, as not even to permit the installation of rather inexpensive fare collecting boxes, or pay-as-you-enter equipment; its operating forces were not good; four much needed extensions were not forthcoming.
There are, of course, critics and the impatient. Everything that is desired has not been accomplished. Cars are crowded during rush hours. But those who will stop to survey the situation, must agree that, under the reorganization, with a five-eent fare and universal transfer, and in face of the most adverse conditions the country has ever known, there has been in the short period of two years a decided change. All cars have been made pay-as-you-enter; new cars have been purchased and open cars have been converted into closed cars, and some of these are of exceptionally good type; the operating force is of higher standard; flat wheels have disappeared and general maintenance has greatly improved; three of the four extensions, the College avenue, the Shelby street, and the Premier motor car plant extensions, have been made, and the fourth, the Illinois street extension, is scheduled for next spring, unless the world upsets again. During this period the city has done a great work in street reconstruction and the street car company is struggling along with that.
No one would presume to say all things are 100 per cent good, or even 90 per cent good. I am, however, asking you who live in six, eight and


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ten cent street car cities and who have well in mind what your own cars and service and extension inadequacies are, do you really think there is very substantial ground for complaint from the five-cent car riders of Indianapolis or the city itself?
I desire specifically to disavow any intention of saying that continuation of the five-cent fare would have been possible for all companies and cities. I am fully aware that it could not, for it has been our duty, as a public service commission, to put higher than a five-cent base fare into six Indiana cities. I do believe, however, that many cities did not try out the possibilities of the five-cent fare.
Looking at the street car situation nationally, it appears that the peak has been reached in operating costs, and that the break is near at hand. Still the skies are not clear. Industrial letting down will likely increase any baneful effect of high fares which may fundamentally, but not now obviously, exist. High fares are not going to get some street car companies past the sheriff for the reason that there have not been fundamental readjustments of financial obligations and elimination of needless superimposed operating companies.
The aftermath of the war also is generally marked by heavy increases in local taxation. Papers last week announced the inauguration of the six-cent fare in Cleveland and gave as one of the reasons for the increase, at a time when prices are falling, a $150,000 increase in local taxation falling on the company. In Indianapolis at just the time when we began to look on favorable operating sheets the same burden fell.
The whole subject of taxation—direct and indirect—of the conveyance of the masses of urban population loudly cries for careful study. Direct
taxation, franchise tax and paving streets will, during the coming year call for almost eighteen per cent of the fare paid by Indianapolis street car riders.
I would make a general observation that is applicable to the Indianapolis situation: When the water has been squeezed out, and securities represent, and are warranted by values of property put to public service, those financial obligations must be protected. Occasionally the shortsighted demand that these legitimate demands be passed or deferred.
Laying aside all moral considerations what—especially to-day when all the world wildly is bidding for money for rehabilitation—can be so detrimental to a community as such a course?
Indianapolis is typical of all cities. It is growing with marvelous rapidity, ten per cent every three years. Street car lines must be extended so it can expand. More and better cars must be provided to carry more citizens. More power house capacity must be had to move these cars. The chairman of the board of works of this city says that $1,500,000 to $2,000,000 must be spent by the local company next year to keep transportation apace with city growth. In this and all other cities, such heavy expenditures must constantly continue year after year. The great need of the street railway industry is credit.
Where is this money to come from? From security holders who are unfairly dealt with? From bankers and other custodians and trustees of money who see legitimate obligations ignored? Or are the cities in a position to furnish the capital needed to keep local transportation abreast with their growth?
SERVICE AT COST
In April this year, the city of Indianapolis laid before the Commis-


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sion a service-at-cost plan. It was designed to strengthen the credit of the local company. Officers of the company were most favorable to the plan. Most of the members of the Commission thought that at last the formula for the solution of the local street railway problem had been offered. I was enthusiastic. Mr. Samuel Ashby, corporation counsel for the city, had made a study of the Cleveland, Montreal, Boston and other service-at-cost plans that—especially the Cincinnati plan—had been nationally proclaimed as being the latest and best thought. He had particularly studied the great problem of inspring incentive and initiative in the operating company. His plan incorporated—and I believe improved upon—the Cincinnati idea of giving the company higher return for lower fares. Efficiency was to be rewarded by maximum returns; inefficient operation was to be penalized. The plan suggested just what rate of return should apply to each step of fare. Mr. H. H. Horn-brook, attorney for the street car company, thought, with possible minor changes, the plan was good.
It was agreed that it would be well personally to make the rounds of some of the nearby service-at-cost cities for the purposes of picking up suggestions and perfecting the plan so that when it was put into effect “ The Indianapolis Service-at-Cost Plan” would supplant the Cleveland and Cincinnati plans as a national model. With high spirits we began our journey—Ashby, Horn-brook, and myself—all service-at-cost advocates. We did not limit ourselves to interviews with the companies, or the cities. We checked statements of one against the other, and then made independent investigations. It was not long until we began to be less assured that we had found a panacea. We came home to think it over. It
was mutually agreed to wait until business trips carried us, individually, within striking distance of more distant points for further investigation. In the meantime the Commission was being subjected to criticism, together with some hammering, for delaying the adoption of service-at-cost. The term had, as usual, made its popular appeal.
After the three friendly investigators had come to a unanimous decision there still remained different points of view among the public service commissioners which, with sickness, resulted in further delay. The first of this month Mr. Ashby, author of the original proposal, filed with the Commission a motion to withdraw it. The company did not object. Recently the Commission, without a dissenting vote, acted in the affirmative on the motion. In his motion for withdrawal Mr. Ashby says:
We have been unable to find or agree upon any plan of operation on the basis of serv-ice-at-cost which would furnish the incentive of private ownership in an operation of service-at-cost. The result of our investigations generally has been to raise a most serious question and doubt as to the wisdom of the service-at-cost plan. The inevitable tendency seems to be for the operator or company readily to accept increased cost of operation with the view that it can be passed on to the public by higher fares. Such a course results in only adding to the burden of the public.
Experience has demonstrated that any increase in fare above the normal fare, results in a very substantial reduction in the number of passengers carried, and has a tendency at the same time to increase the cost of operation, so that the financial results of the company under such a plan is unsatisfactory and in some cases disastrous.
The experience of Cincinnati is a good illustration of the operation of the plan. The fare was increased from five cents to six cents and from six cents to seven cents, and from seven cents to eight cents, and during the comparatively short time in which the plan has been in operation the company has accumulated a


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very large operating deficit of over $2,000,000. During practically the same time the Indianapolis Street Railway Company has been operating under the emergency order of the Commission at five cents. It has been able, as heretofore stated, to operate without a loss, its revenues have been more than its operating expenses and sufficient to pay a reasonable return on the fair value of its investment.
I have little to add to his brief summary. The Commission does not pronounce the verdict of nostrum on service-at-cost, nor dogmatically cast it out of all future consideration.
DANGERS AHEAD
It must, however, be confessed that it is suspicious of it. We, at least, will wait to see whether it proves to be panacea or nostrum. Personally, I am apprehensive. I have heard popular acclaim of other epigrammatic panaceas. “Let the people rule” gave us the direct primary which seems not to have met all the expectations of its friends, or the expectations of all of its friends; “cost-plus” has been repudiated; “he kept us out of war,” only won an election.
The remarkable thing to me is that service-at-cost did not appeal to every one. I recall numerous adverse comments. One is sufficient. When the hammering of the Commission to “save the company” by adopting the service-at-cost proposal was at its height, an elevator operator said to me “What is the Commission going to do, Mr. Lewis?” I replied that I did not know. His answer surprised me: “Service-at-cost is the limit—put that in and the company can do anything and charge it up to the riders.” My elevator operator hit on the head one of the chief defects, and one which it seems to me is fundamental.
For example: Coal is hard to get and the price is very high. A service-
at-cost street car operator who already, as in most places, finds it impossible to earn the maximum return and is assured of the minimum which will cover fixed charges, is called on by a representative of a coal company. He has plenty of coal for sale—good coal at that. Why should this street car executive worry about its price? Why should he join in the night and day scramble of other public utility operators who do not have his sinecure, and who are struggling to get coal for a low price in order to pull them through and give their people some return on their investment? It is true that they may be able to buy coal at $4.00 a ton, but here is coal offered to him in his nice warm office at $6.00. It goes into operating costs. All right—service-at-cost covers all operating costs. I fear that service-at-cost simply means that the lid is taken off.
It is possible that some time in the future some workable plan incorporating incentive for efficiency and initiative will be worked out. While the Commission does not pass finally on service-at-cost, nevertheless it seems to most of us to run contrary to human nature, which, at least in business, requires opportunities of a struggle for gain. Psychologically, the blocking out of rates which shall apply if operating expenses increase, threatens to become an open invitation for laxity.
There is still another possible defect. Service-at-cost is closely connected with city halls. Quite often city halls are closely connected with political organizations. Again, quite often political organizations are connected with various interests. When one ventures into the field of speculation of what may happen to service-at-cost after the novelty wears off, and after changes in management supplant men who may have pride in keeping their plants


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up and their operating costs down, one finds that the possibilities rival those which have brought cost-plus into disrepute.
It is possible, for example, that a coal operator, standing in with a highly politicalized city hall crowd, could obtain a contract for supplying coal to the service-at-cost utility at a price considerably in excess of a fair price. It is possible that real estate developers, operating through such a city hall, could cause the construction of losing lines to their projects. A tie between a political machine and the street railway would open the door to every sort of a demogogue and agitator. These are only a few of the possible diseases that may attack service-at-cost in its maturity. I do not believe that, up to this time, they have developed to any great extent. I sincerely hope they will not develop.
During the last campaign we have seen, notably in New York and Chicago, the street carfare made the football of politics. My inclinations— I am not saying that they may not be wrong, but nevertheless they are my inclinations reached after a study of public utilities on four continents during a period of twenty years—are that it is very desirable that public utilities be removed just as far as possible from the very conditions which I fear service-at-cost invites.
I strongly believe in the policy of delegating regulation to men who will give their time and best thought to the subject and who are selected
because of fitness for their work, and to the removal of such supervision and regulation from too close contact with local influences and prejudices, which we know by experience are sometimes narrow, blind and dogmatic. Such regulation permits of the accomplishment of those things enumerated herein, which have resulted in both the five-cent fare and solvency of the street car company in Indianapolis, and in Indiana, while all around are higher fares and wreckage.
As a final thought, the theory of regulation of public utilities is service-at-cost. Regulatory bodies determine rates by making them only sufficient to cover:
1. Operating costs.
2. The replacement of the wear and tear of the plant—depreciation.
3. Taxes—but not individual income taxes.
4. A fair and reasonable return upon the fair value of property used and useful in performing the public service.
When you have based your rate on those foundations you have a service-at-cost.
In behalf of such control, I would point to the fact that not one of the 118 electric railway receiverships in the country is in Indiana; that only six of the 600 cities having more than a five-cent fare are in this state, and that the electric railways in this state emerge from the trying ordeals of the war period and the more trying ordeals of the post-war period, solvent and full of hope.


CLEVELAND—SERVICE-AT-COST AND EFFICIENT MANAGEMENT
BY FIELDER SANDERS City Street Railroad Commissioner, Cleveland
On Sunday, November 14, 1920, the rate of fare in Cleveland was automatically raised, under the Tayler “Service-at-Cost” grant, to a six-cent cash fare, nine tickets for fifty cents, one cent for transfer and no rebate. No objection was made by the city, because the stabilizing fund being below $300,000, under the franchise the company had the absolute right to raise its charges. The fare on March 1, 1910, at the inception of the Tayler grant was three cents cash, five tickets for fifteen cents, one cent for transfer and no rebate. It is, therefore, the fact that after more than ten years of operation under the Tayler grant, the fare paid by the car riders has almost doubled, the exact figure being the difference between 3.33 cents, the average fare paid in 1910 in Cleveland, and 5.90 cents, the average fare which will be paid under the present rate, an increase of 77 per cent.
This makes an examination of the franchise and a survey of the operation of the railway company, thereunder, peculiarly fitting at this time in determining whether service-at-cost has been a success or a failure, or to what extent it has been either. In my judgment it has certainly not proved a “Nostrum," “a quack medicine,” but possibly has not quite approached a “Panacea” or “an absolute cure for all ills.”
The street-railway situation in Cleveland for many years prior to 1910 was that of operation by private companies with the usual competition, and five-
cent fare, with a slightly reduced ticket rate. These companies consolidated, the fare remaining at five cents on all lines, but with added transfer privileges for which no charge was made. This was followed by a bitter fight on the part of the city authorities for a lower fare, which after much warfare culminated in the present settlement. At the time of the adoption of the franchise, as for many years before, the car-riders were paying five cent fare, eleven tickets for fifty cents with universal free transfers. It was claimed that, under proper management, with the proper franchise, the car riders could be carried for three cents. As a result of all the dickering back and forth it was determined that the car riders should not be carried at five cents nor at three cents, but at actual cost, whatever that might prove to be. The conclusion, therefore, of success or failure of the plan, must be predicated upon the purposes which the plan was intended to carry out, and be a finding as to whether those purposes have been carried out.
The franchise boldly states in its preamble an ambitious programme, to wit:
It is the common desire of the city and the company to have all the grants of street-railway rights then outstanding surrendered and renewed upon terms thereinafter recited, to the end that the rate of fare may be reduced, the transfer privileges made definite, and the right of the city as to regulation and possible acquisition made definite and certain, and that a complete readjustment of the street-railway situation should


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be made, upon terms that would secure to the owners of the property invested in the street-railway security as to their property, and a fair and fixed rate of return thereon, at the same time securing to the public the largest -powers of regulation in the interest of public service, and the best street-railroad transportation at cost, consistent with the security of the property, and the certainty of a fixed return thereon, and no more.
It will not be claimed by anyone that any of these declared objects of the franchise is or was anything but desirable and laudable, except that possibly, in view of the developments of the last two or three years, some may claim that a fixed rate of return, and no more, is not now in the best interests of the company and the public. I will refer to this particular claim again. It will also be admitted that, if these objects of the grant have been substantially carried out, a great civic benefit has resulted.
The questions therefore before us are, Has the rate of fare been reduced, the transfer privilege made definite, the city’s regulation effective? Have the owners had security for their property, and have they had a fair and fixed rate of return, have the car riders had the best street-railway transportation at cost? If so, how has it been done, and what is there about the franchise, or the management, or the surrounding circumstances that has made such a conclusion possible?
ARBITRATION BOARD ENDORSES TAYBER GRANT
The question of the failure or success of a contract is ordinarily determined usually by the facts themselves, but sometimes by the opinion of experts who have gone over the facts and have drawn conclusions therefrom in the light of testimony and their experience. I desire to present in evidence an opinion first, which combines the two
methods. During the last half of the year 1919 and the first half of the year 1920, the city of Cleveland had a very lively controversy with the Cleveland Railway Company to determine the question whether the fixed return of 6 per cent provided in the original franchise should be changed to 7 per cent. This finally developed into a popular vote at a referendum, which resulted unfavorably to the company, as such matters usually do when placed before the public. But in the middle of the controversy a very extended hearing was had before a board of arbitrators.
This board of arbitrators went into the financial condition of the company and all matters surrounding it very thoroughly. The hearing consumed many weeks. Financial and street-railway experts from all over the country testified, both in behalf of the city and in behalf of the company. The city lost the arbitration so far as the 7 per cent question was concerned, but in the decision of the board, the franchise, the management of the company and the actions of the city in its regulating capacity received a very illuminating commendation. The board said:
The franchise and the amendments thereto have been shown by ten years of trial to be sound in principle, practical in operation, and of great benefit to the Cleveland Railway Company and its stockholders and to the public. It has kept the Cleveland Railway Company from exposure to the dangers and misfortunes that have overtaken other railway properties in most other large cities. The protective features of the franchise, together with the high standard of railway management and intelligent municipal supervision which the Cleveland Railway has had, have resulted in giving to Cleveland the best street-railway service at the lowest cost of any city in the United States. The testimony has taken a wide range. . . . The city street
railroad administration has always been efficient and keen to the public interest, and there is no reason to believe that it will be otherwise in the future. . . . The evidence shows that this


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railway property has been maintained at a high standard, that it justly enjoys the reputation of being the best managed, best equipped and most successful street-car enterprise in the country. We have been shown that a higher percentage of expenditure for maintenance and upkeep has been in force here than in any other cities. Experts have analyzed the situation and presented the conclusions to us, that by reason of efficient and intelligent executive management, and by reason of the high rate of upkeep and maintenance, a large appreciation in the value of the property has resulted. . . . The most im-
portant result of this hearing is the full and complete illumination of the question of the safety of the Cleveland Railway stock as an investment. A right understanding of the franchise discloses that the stock of the Cleveland Railway Company is safeguarded and protected so as to become a quasi-municipal investment. .
We have no difficulty in reaching the conclusion that this stock is protected and safe to the investor. . . .
This was the decision of an unbiased court on the facts before it.
THE TESTS OF FARES AND SERVICE
Let me now briefly examine the facts themselves, of ten years of operation, to see if they show that the franchise has carried out its objects, if this particular service at cost has made good. Considering increased fare first, the objection that the fare has almost doubled under service at cost might be dismissed with the statement that every other commodity has doubled in price in the last ten years, and that it is only in accordance with the general economic trend of the last ten years that the price of a ride in Cleveland is now almost twice what it was in 1910. The wages of the trainmen operating the cars, for instance, have increased 188 per cent since 1910.
But if that alone were said, we would be justified in concluding that the franchise has not been a moving factor in improving matters, but has simply ridden with the general trend of events.
The fare at its inception was about two cents lower than the fare in other cities through the country, with one or two possible exceptions; it has stood through the years at the same ratio to rates general elsewhere, and, notwithstanding this last raise, it is still lower than most, and possibly still at the same ratio to the fares in other cities. One tremendous result of this low fare in Cleveland not to be forgotten is the fact that its car riders in eight years between 1910 and 1918 have saved more than thirty million dollars, over and above what they would have paid if the fare had continued to be five cents under the pre-existing private management as in other cities; or, in other words, they have saved for their own use an amount which, if it had been put in a sinking fund, would have purchased all of the railway company’s property in September, 1918. From the public’s standpoint, this one fact alone has justified the Tayler franchise.
But that fact is only the more obvious of results obtained forthe carriders. Examining further, notwithstanding the low price of our service, statistics show that from 1910 to 1920, while the population in the city and suburbs increased 40 per cent and the number of fares paid increased 75 per cent, the service given in Cleveland has doubled. The Broadway, Euclid, Payne and St. Clair lines east of the river, and the Lorain and Detroit lines west of the river, the six heaviest trunk lines of the system, show in their headways that during 1910, in the morning rush period, 7,790 seats per hour were furnished; 3,192 seats per hour on the base tables and 9,690 seats per hour in the evening rush period. The present headways on the same six lines furnish 15,700 seats per hour in the morning rush, 5,590 seats hourly on the base tables and 19,300 seats per hour in the evening rush, an increase of 102 per


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cent in the morning rush, 75 per cent on the base tables and 99 per cent in the evening rush. I am giving seats rather than headway because of the difference in the equipment.
The number of passenger cars has increased from 955 in 1910 to 1,515 in 1920. Great changes in the character and size of the cars have been made. The average seating capacity of the old cars was about 38; the newest cars seat 58 and 60. The total seating capacity of the 1910 equipment was 36,100, of the 1920 equipment 74,800. The total standing capacity was 44,000 in 1910; in 1920 it is 80,460. So that while the number of cars has not doubled, the seating capacity has more than doubled, and the combined seating and standing capacity is almost double. In these ten years 375 of the 955 cars owned in 1910, nearly 40 per cent of the total, have been retired, so that there are now on the system, of 1,515 cars, only 580 that are more than ten years old.
In the same period of time, the company has developed a large number of additional lines within the city (a smaller number outside). In 1910 the railway operated 246 miles of track, exclusive of special work, track in car yards, etc. Today it operates 303 miles, an increase of 23 per cent. Most of this increase is in new trunk lines and new cross-town lines within the original limits of the city of Cleveland, although some of it represents pushing out into the country. In addition almost the entire layout of car houses, shops and power stations has been completely renewed. Many new most modern car stations have been built. The various power-generating stations have been abandoned, except one, which is on the programme for dismantling in the near future. Power is being purchased, and many new substations have been built or are under way for distributing purposes. The
finest street-railway shops in the world have been built, at a cost of $1,300,000. The company has developed in the last three years an extensive plant for handling materials in its maintenance-of-way yards, and has added all kinds of improved conveyors, trucks and labor-saving machinery for doing its work. The 935 cars added to the system since 1910 have been in each instance of the latest and most efficient type, some of them built in the shops of the company by direct labor, others purchased. Of the original 246 miles of track existing in 1910, 162 miles have been renewed, about 66 per cent of the original trackage, and the average age of all the present tracks on the system is very close to nine years. The number of cars owned per mile of track has increased from 3.9 in 1910 to 5.05 in 1920. The fare remained at 3.33 cents until December 15, 1917, and since that time has been at varying rates, most of the time 5.33 cents.
It is apparent from the foregoing brief summary, without going into detail, that the fare has been low, the service has been high, and that the property has been well kept up and highly improved, under service at cost a real railway has been developed, to an extent so noticeable as to merit and receive the commendation of every street-railway man who surveys it, and so different from practice general elsewhere that many public addresses on this subject have summarized it by saying, “The railway has grown from a scrap heap in 1910 to the finest property in the United States in 1920.”
ARE ALL PARTIES SATISFIED?
Another and third way of testing whether a contract has carried out its purpose, in addition to the opinion of experts and the actual facts hereinbefore detailed, is to analyze the effect


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which the contract has had upon the parties interested, with particular reference to their conduct under and general satisfaction with the contract. Satisfaction with an arrangement by all parties to it does not always prove that the arrangement is a good one calculated for their mutual advantage, but satisfaction with an arrangement after a thorough trial over a period of years, after an exposition and public demonstration of claimed defects, is proof of the inherent soundness of the contract.
The Tayler franchise has been criticized at various times because of the so-called lack of incentive in it, and possibly on lack of other matters, although no critic has ever been able to frame a franchise which in practice has worked better. I have at times made the same criticism myself. But notwithstanding the criticism, the people of Cleveland are satisfied. We know that to be so, because it happened that the first period of the grant expired on May 1, 1919, and it was necessary before that time for the city government either to renew the franchise for a further period of twenty-five years, thereby extending the expiration date ten years, or to permit the property to continue in the hands of the company without city control of the service, or to exercise its option to buy it and put in force municipal ownership. A series of meetings was held in the city council chamber over a period of six or seven weeks by the committee of council having the decision to make. The matter was widely advertised in the newspapers, and especially the fact that the grant was about to run out. Nevertheless, all the amendments that were offered to the grant as being desirable were suggested by the city street railroad commissioner. There was no public sentiment manifested for municipal ownership, or for any particular change in the grant, except on
the part of a few councilmen and a few public officials who had been in very close relationship with the railway company and its day to day operation. No amendment was offered by any civic society of Cleveland, of which there are many and active, nor any newspaper, nor by the chamber of commerce, or any of the various clubs interested in public matters. The railway company refused to accept the amendments, said that it was satisfied with the franchise as it stood. It became immediately evident that the public also was satisfied with the franchise and the service under it. The result was that the council renewed the agreement in identical terms for a further period, and we are now operating thereunder.
THE SIX PER CENT FIXED RETURN
There is one serious problem now pending, arising in connection with the fixed return of 6 per cent for the stockholders,—a problem which is entirely likely to face the operators of the various new service-at-cost franchises, now being adopted. It is the difficulty of finding new money with which to finance extensions, betterments and permanent improvements. Extensions in Cleveland have always been financed by the sale of new stock. For more than a year it has been impossible to sell Cleveland Railway 6 per cent stock at par in Cleveland, and the franchise forbids its being sold at less than par. The fate of all public utility stocks has been largely reflected in the market on Cleveland Railway stock, through no fault of its own. The management of the railway made an effort to raise the dividend rate on all their stock to 7 per cent, and failed at a popular vote. Although extensions are needed in Cleveland, the people evidently thought the 7 per cent remedy too drastic and


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far-reaching. So for the present we are standing still—just finishing the programme laid out a year and a half ago. Many solutions for the future needs of the company and city have been suggested and debated, and I have no doubt the problem will be worked out satisfactorily in a mutual spirit of co-operation, as have so many of our previous difficulties.
THE SUCCESS EXPLAINED
The question now arises, What is the reason for the obvious success of this plan? There are many reasons. The low capitalization at which the railway was taken over has had some effect, of course, but that effect has been very largely overrated. The added expense of a few millions to its aggregate capital value, with a return of 6 per cent thereon, distributed among the number of fares paid would have made an increase in the rate of fare so small as to be hardly noticeable. It would be expressed in tenths of a cent, less than a mill a ride. At the beginning of the grant, an addition of ten million dollars to the capital value would have made a difference of only three tenths cent in each fare paid, and this, of course,would have decreased each year since. The low capitalization was far more effective in developing public confidence in the honesty of the management and in the honesty of the arrangement than in any financial way. The whole secret of the success of the scheme has been the admirable combination of efficient and jealous management of the part of the company and its officials, of close municipal supervision, of harmony between the company and the public, of the confidence which the public has in the arrangement, and the ultimate fact resulting from all of these, that the company is financially strong, and able, up to a short time ago, to market any
amount of its securities with which to carry out the object of the street railway. All of these have been deciding factors in the success of the plan.
THE CITY’S PART
The city, through the council and the commissioner’s office, also guards its rights carefully. It maintains a complete department for the supervision of the company’s expenses of all kinds. It prescribes the quality and quantity of service. In the commissioner’s office a traffic department maintains, through a large force of inspectors, a continuous check of the traffic loads on the various lines of the city, and from time to time makes changes in the headways, in the running time, and in the cars on the various lines to more closely balance the service rendered with the service required. It makes all the studies and investigations for determining any changes necessary. The results are tabulated, and graphs are drawn showing the necessity or non-necessity for any changes. Changes are being made almost daily by orders to the company to put in force new headways and new schedules. In so doing the commissioner is able to tell from day to day whether the schedules which he prescribes are being run, and to see that the company does no more nor less than run the service prescribed. The traffic department also makes the seasonal changes due to the closing of parks and the opening and closing of factories, makes the changes in places of stopping necessitated by new conditions, makes changes in routes necessary to relieve congestion and to speed up service, and also advises with the operating department daily in the collection of fares, loading and unloading of passengers, the stationing of men to sell transfers outside the cars, the pre-


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payment areas, and all the details which make for excellency of service. The street railroad commissioner’s office, also, through its engineering department, keeps close supervision over the cost of improvements, renewals and ordinary repairs, and approves them in advance of expenditures. Not a bottle of ink is bought without the city passing on it and approving it first. In those matters we not only authorize and supervise the railway company from day to day, but we also advise with its officers and suggest changes and improvements. We maintain a day to day continuous audit.
THE railway’s PART
The railway officials have also had at heart not only the preservation and development of the property, but pride in themselves as successful managers. They have co-operated in every way in increasing the efficiency of the service. They have largely initiated a great many of the reforms which have made Cleveland street-car service a model of the country. They have adopted and carried out many of the suggestions made by the city. The result has been the employment of almost every new idea in street-railway operation, usually some years in advance of the rest of the country, such as the skip-stop, the speeding up of schedules, short-routing, cross-town lines, prepayment areas, pay-enter and pay-as-you-leave fare collection, the most modern—the-pay-as-you-pass—street car; the purchasing and distribution of power instead of costly generating plants; modern car shops, car stations and automatic power sub-stations; scientific and exactly sufficient schedules of service, the last word in maintenance-of-way equipment, materials and yards, labor-saving machinery of every kind, the scientific training of employes in a separate
school and department equipped with machinery and instructors for that purpose, careful and strict discipline of the employes; in short, most of the advancements and improvements in street-railway management of the last ten years have originated or been tried in Cleveland. The peculiarly close combination of company management and city supervision has enabled Cleveland to devise and put in force every possible economy which tends to efficiency.
DOES THE PLAN LACK INCENTIVE?
I think that most of the criticism of the service-at-cost plan as developed in Cleveland in the last ten years, as to the lack of incentive, is really directed at the conditions of the franchise and not at the working out of the same as shown in actual operation. Cleveland is not under absentee ownership. Clevelanders own the company. The management in Cleveland are all heavy stockholders in the company and are directly interested; therefore it is not really management of paid service alone, but it is a management largely by stockholders themselves. Some of its success is due to that. In this management they have also the benefit of daily counsel and criticism, not monthly or annually such as is granted by public state commissions. Nor has the criticism been selfish, partisan or political criticism, such as has so often developed at the hands of political bodies and newspapers in other cities.
TOM JOHNSON OPPOSED THE SLIDING SCALE
In the meetings in March, 1909, between Tom L. Johnson, mayor of Cleveland, and Horace E. Andrews, president of the Cleveland Railway


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Company, and various couneilmen, one of the couneilmen suggested a sliding scale of interest, namely, that the lower the rate of fare the more interest could be paid on the investment. He said he thought there would be an incentive then for the stockholders to make the fare as low as possible, a saying which sounds very familiar now after eleven years. Mayor Johnson then replied, “And also quite an incentive to skimp the service; wouldn’t it?” Mr. Andrews suggested the well-known gas company arrangement in England, and thought that it would be a fairly good arrangement, but Judge Tayler was firmly of the opinion that the company should have only a fair return on the money for the privileges granted by the city, and that it should not be subject to the hazards of operation. He was of the opinion that the railway company was entitled to earn only a fair return for the use of the streets, and that if by ingenuity and economical devices adopted by the operators a reduction in fare was accomplished, and if thereby they obtained more than a fair return on the money, or, as he expressed it, an abnormal rate on their investment, there was something wrong somewhere.
It seemed to the judge that it was fundamentally wrong to pay a man a bonus for doing that for which his salary is supposed to compensate him; that a bonus could not be a legitimate part of the cost, and that, therefore, this sort of an arrangement was service at more than cost; that the people are entitled, for the salary that they pay to the officers of the railway, to intelligent and efficient management, and that they ought not to be taxed any more. My own notion is that the idea is not only fundamentally wrong, but that practically it would not work because it creates an incentive on the part of the railway company to keep down
their expenses by skimping the service. Under the present service-at-cost plan the company has no desire and no incentive to skimp the service. They do not interfere in the slightest way with the full latitude of the city in exerting its power, and there is no desire on their part to do so, because it makes no difference to them, within the limits of their power to earn 6 per cent, how much or how little service is run. But I believe any temptation of an added dividend before their eyes, resulting from a reduction of cost which would make it advisable for the company to reduce its operating expense, would create a tendency on its part to encroach on the city’s prerogative as to service, by hampering and reducing the service in the many small ways by which they could do so without being caught by even an elaborate system of watching, and to render a cheaper and more unsatisfactory service even while ostensibly complying with the city’s order. Such an objective is bad.
From the stockholder’s standpoint it is an incentive for the management not to keep the property up, because the lower the maintenance charges, of course, the lower the rate of fare and the higher the return to the stockholders. It is also an incentive to keep down the maintenance by increasing the capitalization by charging repairs and replacements to capital, which could easily be done, thereby tending to make the enterprise top-heavy and reduce the physical value of the security which the stockholders have. This same thing would strike largely at the service given the car riders, because the first requisite of good service is a high class railroad, sufficiently maintained. Further than that, it increases the price which the city would have to pay on purchase and reduces the consideration for the price.
A sliding scale of return based on a


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sliding scale of fares, in my judgment is also theoretically wrong, because the stockholders of the company are compensated by dividends, the management of the company is compensated by salary; in other words, the price of money is one thing and the price of service is another. They have no immediate necessary connection. But if you are going to vary the price of money which the stockholders put into the company in the ratio of the rate of fare, or, in other words, the cost of service, the law of economics would, it seems to me, command the reverse of the suggested arrangement. I have heard it argued by financial experts (especially in the last arbitration) that there is no connection between a fair return on money, in other words, the price of the same, and the price of other commodities. Others have argued that theyrise and fall together. If there is any truth in the last argument that the price of money goes down and up as the price of commodities goes down and goes up, then as the cost of labor and materials used in the street railways, which largely determines the rate of fare, goes down, the return on the money invested should not go up. But, under the present incentive franchises, the return to the stockholders does go up as the fare goes down, instead of going down as it should if the above rule is correct.
It is also likely to be a bad arrangement from a practical standpoint for the public. According to the judgment of almost everyone we have reached the peak of high prices. There is bound to be a decrease in the next five or ten years. They may not drop to the point at which they were in 1914. They may stay at a slightly higher level. After the Civil war it took from ten to fifteen years to bring the prices of everything down to where they were before the war. The same
condition obtained after theNapoleonic wars in Europe. If history repeats itself, by 1930 we shall be back where we were in 1914. But even if that is not so, it is admitted that prices must decrease even if they do not come to the low level of 1914. If they do decrease, street-railway fares must and should go down. But under the sliding scale, what is the result from the public’s standpoint? As the costs go down, the expense of operating is going up by the extra amount which the stockholders secure, which tends again to keep the fares up.
The fare in the last five years went up largely without the fault of the railway companies of the country, due to economic conditions, and I am satisfied that, without their action, without any credit to them, they will, by reason of the same law, go down in the next five to ten years. But even if you grant that all these conclusions are wrong, I think that any scheme of incentive sofar suggested is open to the criticism of lack of effectiveness, because of the remoteness from and lack of direct application to the actual executives. I cannot help thinking from my experience of service at cost, from my knowledge of what has happened in the last five years, that after all the real incentive to efficient management is to give the man at the wheel, the man who actually operates, sufficient compensation to keep his best interest in his work, and then to have an efficient city administration to act as the watchdog, to criticize, advise and sit on his neck day by day, as is done in Cleveland, to see that he earns his salary.
To recur to the question originally asked Panacea or Nostrum? We offer the Cleveland franchise, as a practical success, a sufficient remedy under its circumstances. Experience in Cleveland shows, in my judgment, that service at cost is not perfection, neither


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is it a nostrum or quack medicine, that whether it is a panacea or not, or how closely it approaches being a panacea, depends partly upon the franchise, but much more upon the development of it, upon the people who are charged with executing it, in
whose hands it rests, and upon the public, who, if they have confidence in the arrangement, will make it a success or a failure. Many criticisms of the Cleveland plan can be made, perhaps justly, but, as for Cleveland, Cleveland is satisfied.
SERVICE AT COST VERSUS MUNICIPAL
OWNERSHIP
SEATTLE’S EXPERIENCE BY C. M. FASSETT
Fortner Mayor of Spokane, Staff Member American City Consultants
The latest link in the constantly tightening chair of public regulation of utilities is found in the service-at-cost franchise. Beginning with the passage of the interstate commerce law by congress in 1887, public regulation has steadily, if slowly, increased the power of government over public utility corporations, gradually lifting them out of the class of private business which may be operated to suit the purpose of its owners, and enforcing in increasing measure a consideration of the needs and the purses of their patrons, the public. As in the case of the steam-railroads, this progressive regulative effort in the public utility business has grown up in response to the demand for the abolition and curtailment of certain specific practices of the owners and managers of utility properties, which an awakening sentiment had condemned as contrary to the interests of the public.
PRIVATE MISMANAGEMENT
Only in recent years has it been recognized that a public utility is a natural monopoly. In fact when utilities were unregulated, the only hope of
the consumer for reasonable rates and tolerable service was in competition. The great municipal utilities which operate in the streets of American cities to-day are almost without exception, consolidations of companies which were originally started or soon developed as competitors. The growth of urban population was extremely rapid, but the demand for utility service was in greater ratio. In the decade 1900 to 1910 population in the continental United States increased 21 per cent, while the number of passengers carried one mile by the steam railroads more than doubled, and a like condition prevailed in municipal utilities. The pioneers in the utility business soon found that competition was the only interference with their profits, and consolidation of the competing companies was the logical answer.
With their utilities consolidated the public soon felt the pressure of rate increases and service deterioration, complaints began to find their way into legislative bodies, and public regulation began to be attempted. Consolidation had not increased physical assets but had greatly increased capitalization, for not only had enor-


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mous prices been paid for the control of competing companies, but large bonuses went to pay the promoters and financiers who had brought the consolidation about. Then if the new concern showed profits above a fair dividend, further issues of stock appeared, the total capitalization being based upon the earning power of the utility in its years of greatest prosperity. It was not considered good business to apply excess profits to debt retirement, nor to large dividends on stock already issued. Either of these practices, if they became known, would have been the basis for a public demand for reduced rates or better service. Depreciation reserves were neglected, or if they were set aside at all it was merely as a ledger account, and the actual money was used for dividends on the heavily watered stock. The rates were all the traffic would bear and the service was as little as could be given without too much public protest. Growing cities suffered for much needed extensions of utility service which were not made because they would not show an immediate profit. Street cars were designed to carry the greatest number of standing passengers, and the arrogance of the utility magnate was reflected in the conduct of his lowest employe. His responsibility was to his stockholders. His goal was more profits.
In order to ward off further competition and to defend themselves from attack, the utilities were forced to maintain lobbies in constant attendance upon legislative bodies, and to corrupt legislatures and city councils, and the story of these activities furnishes one of the saddest chapters in the history of municipal government in America. Extensive and expensive propaganda was used to influence public officials and leading citizens against
public ownership and in favor of increases in rates, and the wells of public opinion were persistently and systematically poisoned.
Occasionally there has existed an honestly managed and efficiently operated public utility in private ownership, and to these I apologize for the company in which I have found them. Of all the different utilities, street railway interests have been the chief offenders. Ten years ago a proposal to guarantee them net earnings of 6 per cent on the actual value of their properties would have met with derision; now it is the straw which they hope will save them from drowning. Ten years ago one might search the files of their trade journals in vain for advocacy of public ownership; now you find it on every page. Ten years ago the proposal that a representative of the public should be admitted to the counsels of the management of the business would have been intolerable; to-day it has become an accepted part of the regulative scheme.
Regulation began with the imposition of a franchise tax, usually based on gross earnings. This was wrong in principle in that it took revenue from citizens in proportion to their use of the utility, for the benefit of citizens in proportion to their taxes; it was justified only because we had not learned any better. We knew that the profits of the utilities were too great, and were groping to find the proper way in which to curtail them. The sharp advance in the cost of labor and materials brought about by the war, the competition of the automobile and jitney, and past methods of frenzied finance by which the street railways were held at the verge of bankruptcy, have now forced them into a desperate situation. Increased fares are a palliative which is likely only to postpone the crisis.


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THE EFFICACY OF SERVICE AT COST
Two alternatives will save them from destruction: municipal ownership or service at cost. Both are now being tried and we will be better able to judge their comparative merit ten years from now than we are to-day. But the situation presses.
The modern service-at-cost franchise puts an end to the evil practices of utility management which I have already outlined. It restrains financial sky rocketing, gives a reasonable control over management, provides for extensions and betterments, recognizes the street railway business as a natural monopoly, gives the public a little authority in the directorate, enforces adequate accounting, and retains to at least a small extent the alleged advantage of leaving the business in private management. But only to a small extent. The dominating motive of private ownership is a desire for profit, and business undertakings are attractive to business men largely in proportion to the chances of earnings beyond the legal rate of interest. If they can only earn 6 or 7 per cent they might as well invest in mortgage loans and go on a camping trip. Just now, however, the question with them is not future earnings, but the salvaging of the millions of capital which is threatened with obliteration.
The crucial point in a service-at-cost franchise is the valuation of the property of the utility, and this is true also of proposals for municipal ownership. Here is a decaying business, but one which it is essential to the public good to keep going, at least until its successor has been developed. Here is a property with securities outstanding far in excess of any reasonable estimate of its real value. It is in mueh the same condition as a manufacturing concern whose processes are obsolete
and whose product is losing hold on public favor. What is it worth? It is not difficult for engineers to arrive at the value of property of a going concern, one with a future, but to fix a fair value of a street railway at the present time is a task which staggers the ablest expert in the business. A trolley pole may be worth what it costs as a trolley pole, but what if it is only an encumbrance to the street? Are we taking an unjust advantage in offering its owner its junk value? The American public wants to be fair to the public utility interests, but it does not want to be cheated. It does not want to buy a work horse and get a dead carcass which has no value except the hide.
DIFFICULTIES IN MUNICIPAL OWNERSHIP
Some cities have determined that they will themselves ora and operate their street transportation business and are having a very interesting time. Many difficulties must be met and overcome. When the most of our state constitutions were written it was considered unsafe to allow much freedom to city governments. Honest men feared the entrance of the political unit into business, even the business of supplying the collective needs of its citizens, and the selfish interest of the utilities had an easy victory in denying the cities the right, or closing the avenues of opportunity, to engage in other businesses than those wffiich did not offer profit to private operation. In fixing constitutional debt limits, even in some so-called home rule states, the full debt limit could not be reached excepting for water supplies and sewers, or less frequently, for sewers, water and light plants. And behind the constitution stood the legislature, usually dominated by a combination of interests in which the utility corporations were fully protected.


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But even if the law gave authority and opportunity, the very structure of city government, up to the last ten or fifteen years, was not adapted to the new proposal of public ownership. The public mind was not open to such business undertakings nor were the usual public officials competent to operate them or willing to undertake the new burden. A new light is dawning upon American municipal life, but the dawn comes slowly, and the greater number of cities are to-day in the condition I have just outlined. The electorate is heedless, the government is cumbersome and unresponsive, the officials are frequently changing, poorly paid and unexpert, employes receive appointment and hold jobs on account of election day services, wages and standards of efficiency are low, and “politics” is not the science of government but a disreputable game for spoils. For such a city public ownership of utilities is unthinkable as a hopeful business undertaking. Public regulation of 'privately owned utilities, having as its latest development the service-at-cost franchise, is as far as such a city should attempt to go.
But no city government is as good or as bad as it might be. Extreme examples are rare. Cities are like the human beings which build them and inhabit them, containing much good in the worst, and some evil in the bast of them. Bad impulses, in a city government as in the individual, are not only immoral, they are unintelligent, and when that fact is discovered and both reason and moral impulse get to work there is sure to be a change for the better. The decision between service at cost and municipal ownership in any city cannot be made on the basis of right and wrong; it must be influenced by local conditions, and particularly by the character of the city government.
SEATTLE ACTS HASTILY
Seattle has chosen to own and operate its street railways; it took them over by purchase on April 1, 1919, at a price of fifteen millions, paying for them with utility bonds, pledging the first application of the gross earnings to the payment of the interest and the gradual retirement of the principal in the term of twenty years. Seattle is a thriving city of 315,000 population. Its growth during the last decade was 33 per cent. Its population contains an unusually large proportion of intelligent, progressive, wide-awake Americans. Its government is the mayor-council form, the voters having defeated a city manager charter a few years ago. In addition to the recent purchase of its street railways it has owned and operated for many years its water works and an electric light and power plant, both of which have been very well managed and successful, and its Port district has splendidly equipped ocean terminals, warehouses, grain elevators and cold storage plants, all publicly owned and operated. The citizens are proud of their municipal undertakings, and when the question of buying the street railways came up in November, 1918, they voted for the purchase by about three and a half to one.
The deal was a hasty one and did not allow time for a thoroughgoing valuation of the property, but a valuation by accountants of the Public Service Commission, begun but not completed, showed it to be worth in the neighborhood of the purchase price, and the city officials, in a statement to the voters just previous to the election, gave its value as $16,102,946. I am inclined to believe that, considering the state of the business at that time and the growing difficulties in which traction interests all over the country


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found themselves, the price paid was too high, but I approve the judgment of one member of the Seattle city council, quoted as asserting that he could not see that the lines exceed eight millions in value, but that he believed the elimination of the traction company from local affairs was worth the difference and he would vote for the purchase. The price was probably lower than any valuation which could have been agreed upon as a basis for a serv-ice-at-cost franchise.
THE COURSE OF MUNICIPAL OPERATION IN SEATTLE
Had the railways remained in the hands of their former owners, a raise in fares was imminent, and fares had been advanced in all other larger cities in the state. The Seattle railways under municipal ownership are burdened with a heavy obligation of debt liquidation which private ownership would not have entailed, but the new management, instead of raising rates at once, allowed their optimism to get the better of their judgment, asserting that their new utility would meet its obligations with a five-cent fare. Their system is virtually capitalized at $17,215,000, of which $16,440,000 is represented by utility bonds which are a first lien upon receipts, and not only must they pay 5 per cent interest on this sum, but they must also meet the principal in a series of annual payments of $833,000, beginning March 1, 1921.
It soon became evident that in spite of a number of economies, fares would have to be advanced, and while this subject was being discussed a municipal election came on. The management of the street railways was the chief issue and the result was a change of administration. The report of operation issued at the close of 1919,
covering the first nine months of municipal ownership, showed that with a rather liberal allowance for depreciation the lines had run behind $517,000. The cash fare was raised to ten cents, with metal tokens sold on the cars at four for a quarter. The mayor in signing the ordinance said he believed the advance was not sufficient. Wages of carmen have advanced from 64 to 80 per cent over those paid in 1918, under private ownership. The gross loss for the first four months of 1920 including depreciation, was $468,000. There are rumors afloat that illegitimate means were used to influence the sale and the city council, at the request of the new mayor, has voted $10,000 as a fund for probing the transaction.
It is too soon to make a reasonable forecast of the outcome of Seattle’s latest experiment in municipal ownership. Inadequate financing was forced upon the city by reason of constitutional debt limitation. It must pay for its purchase in eighteen years and at the same time build up a depreciation reserve of over twelve millions, thus placing an enormous burden upon its street car patrons in this generation in order to turn over to the citizens of twenty years hence a street railway fully paid for and adequately maintained. It is a feat which no private company would undertake. A service-at-cost franchise would have called only for the payment of operation, depreciation and interest, and unless there is careful management the fares may be higher during this twenty-year period than they might have been under service at cost. Seattle has not an ideal form of government for carrying on the business of utility management, yet its publicly owned water-works and electric light and power plant have been efficiently managed, and the high-class men who are at their heads as superintendents, have been there many


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years, through many changing political administrations. The civic spirit in Seattle is high and I believe that public ownership has a better opportunity there than in many cities which have more modern forms of government.
CAN PUBLIC OPERATION BE EFFICIENT?
We are inclined to base our judgment on public ownership upon the presumption that privately owned utilities are always well managed, and that the reverse is true of all municipal undertakings. That this is a fallacy any intelligent student who is open-minded will affirm. Many of the municipally owned utilities have passed through this post-war period "without asking for rate increases and are solvent. I know of no city which has owned and operated any utility for ten years or more, in which there has not been a great saving to its people by reason of reduced rates, not only for its own service, but by reason of its competition with privately owned utilities which have thereby been induced to reduce their rates. Municipal ownership is not often credited with any advantage for this reason, and yet I can name cities in which public ownership would have been of the greatest advantage even if the publicly owned plant had never turned a wheel. The tendency in municipal plants is to pay off and cancel funded debt obligations; that of privately owned plants is to increase them. Under municipal ownership the chief incentive of operation is
to give service; under private ownership it is to make profits. The tendency under private ownership is to a brand of political activity that, in my opinion, is infinitely worse than any “politics” that may creep into management under public ownership. The people in every city in the state of Washington will be heartily thankful for any curtailment of the evil political domination of the state legislature by the former Seattle traction interests which results from municipal ownership in that fine city.
It is my firm opinion that service at cost is a transition state, a temporary expedient, and one which will be in the long run unsatisfactory to both the owners of street railways and the public. To the owners, it will be just a tightening of the chain of public regulation which curtails more and more their freedom of operation, but it will be sought in order to fix a value which may form a basis for public purchase later. The voters will ultimately awaken to the necessity of a better form of city government, in which the officials have more authority and more responsibility, and of a more lively interest in government on their own part, and when these things have been accomplished, they will insist upon the ownership of their public utilities and their operation on the basis of the greatest good to the greatest number, and the banishment from municipal life of those evil forces, which have done so much to corrupt city government in America.


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NATIONAL MUNICIPAL REVIEW VOL. X, No. 2 FEBRUARY, 1921 TOTAL No. 56 THE PROSPECTIVE CONSOLIDATION WITH THE A. C. A. FROM THE LEAGUE’S STANDPOINT BY RICHARD S. CHILDS A VARIETY of facts made a union of the American Civic Association and the National Municipal League opportune at this time. The personnel of the American Civic Association staff was changing. We had a monthly magazine which could, and did, cover much of their subject territory, and yet reached only 18 per cent of their members. They had no magazine but had a variety of pamphlets that we could use and some of which we need. Mr. Woodruff, our honorary secretary, is their vicepresident and Mr. McFarland, their president, is our vice-president. A roster of their active spirits and attendants at conventions would make any National Municipal League member feel entirely at home. Our recent co-operation with the city-planning fraternity whereby our REVIEW became the official organ of the City-Planning Conference increased still further our overlapping of active personnel. Mr. McFarland, who has from the first been the moving spirit of the American Civic Association, was in a mood to welcome the relief which union would bring to his overburdened energy. The National Municipal League was disposed to alter its name and that of the REVIEW, for the word “Municipal” was a misnomer in view of our interest in state and county problems, and for a year the council had been equipped with authority from the Cleveland convention to change the names. This reduced on our side the problem of institutional pride in an old name and made the project for a new composite name much more acceptable to us. On the other hand the American Civic Association is easily satisfied with any variation that includes their salient word “Civic.” A more urgent reason lay in the existing duplication. The American Civic Association Geld included city planning, zoning, municipal art commissions, park and playground questions, and all the external physical problems of government which are included roughly in the old phrase “City Beautiful.” For years the League had been lapping over into that field for the natural reason that our members, as local civic reformers, were a choice audience for that propaganda. 67

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68 NATIONAL MUNICIPAL REVIEW [February Topics, speakers and even some papers, at the conventions of the two organizations, were frequently identical. Both had pamphlets on the subject of “Zoning” and there was one narrow escape from an almost simultaneous duplication of expensive pamphlets on “Billboard Control.” Some economies could be achieved by union in handling membership detail and still more by enabling the American Civic Association to reach its membership by a monthly magazine instead of by special letters and pamphlets. Accordingly a “trial marriage ” was arranged and approved unanimously at the Indianapolis convention. Overlapping councils were chosen. The REVIEW is made the official organ of the American Civic Association. That is all for the present. The American Civic Association retains its office in Washington where Miss Marlean James replaces Miss Eleanor Marshall, who seems to like a certain fortunate man better than she does the office. A joint convention isscheduled for 1921 at whichidentical governing boards can be elected and a composite name adopted. A manifest result is the addition of, we hope, fully a thousand subscribers to our magazine out of the 1400 American Civic Association members who are not already subscribers, bringing our edition up to 4,000. The American Civic Association members are being billed for the REVIEW, their new official organ, for the unexpired terms of their American Civic Association membership. The new American Civic Association minimum dues will be $5 plus $2.50 optional for the magazine. Higher classes of American Civic Association membership will include the magazine without the surcharge. If the consolidation is completed at the 1921 convention-and there is no visible opposition-the organization thus united will be the one big general association of the United States devoted to civic affairs, and more than ever the natural clearing-house for service and inspiration to those who press for progress in the local fields. BRACKETING THE NATIONAL MUNICIPAL LEAGUE WITH THE AMERICAN CIVIC ASSOCIATION BY J. HORACE McFARLAND The President of the American Civic Association discusses the proposed consolidation with the National Municipal League. Both have .. .. .. .. .. .. .. .,. .. .. been pioneer organizations. :: .. THE readers of this publication need no introduction to theNationa1 Municipal League, nor is it in point here to recount its achievements or its history. A recent inquiry showed that less than 20 per cent of the membership of the National Municipal League had also membership in the American Civic Association. In view of the expressed desire on the part of the League to sit close to the association for mutual advantage, and with the possibility of an eventual consolidation, it seems therefore now most desirable to acquaint the readers of the NATIONAL MUNICIPAL REVIEW with that civic organization.

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19211 BRACKETING THE NATIONAL MUNICIAPL LEAGUE 69 The American Civic Association was formed in 1904 through the merging of the American Park and Outdoor Art Association and the American League for Civic Improvement. The merged organization began business with high hopes and a considerable debt. The latter, it may be said in passing, increased considerably before it was extinguished completely, and is now only a memory of need, courage and accomplishment. The hopes remain, and are increasing as the years go by and the opportunities open. Organized upon a very simple basis permitting quick and concentrated operation the American Civic Association found its hands full of things to do and its membership instinct with the desire to do them immediately. In those days mosquitoes were still a pest which it was expected should be endured, and flies were accepted similarly. Encouraging the organization devoted to the singing nuisance, that soon passed into the category of avoidable troubles, while the fly was swatted nationally because of the campaign organized by the association. Poles, wires, avoidable black smoke, and the abuses of excessive outdoor advertising were tackled with courage and with mixed results. Most of the wires in populous places have gone underground, much of the black smoke has been economically consumed, but the billboards are yet with us,. In 1905, at its first annual meeting after organization, the American Civic Association internationalized the ownership of Niagara Falls and began the movement which five years later resulted in a definite measure of protection to the great cataract through the negotiation of a treaty with Great 'Britain. The picturesque campaigns it waged, in which several successive presidents of the United States did good service, are now history, but the need for continuing the effort in the face of a determined proposition to further skin the cataract of its power possibilities to the damage of its aweinspiring dignity and beauty, is very real. It occurred to the officials of the American Civic Association that the national parks were worth at least one whole desk in Washington. Comprising as they did ten years ago a great territory, more than equal in extent to the two smaller states of the Union, they were handled casually and incidentally in the federa1 government in part of the time of men devoted to other efforts in the war department, the interior department and the department of agriculture. There was no national park service, and the parks themselves were not well managed. Insisting on the need for nationalizing the national parks, and interesting in them several successive presidents and secretaries of the interior, has resulted, directly through the efforts begun by the American Civic Association, in the establishment of the present efficient national park service, under which these splendid and unreplaceable resources of the nation are now being used by the people who own them with pleasure and advantage. At the moment vigorous warfare is being waged in defense of the national parks, which have become so valuable to all the nation that, as usual, some few citizens of the nation desire to possess for their own selfish advantage the waterpower and the irrigation reservoir sites that would turn aside these areas from their designed beneficent use. Steadily the aim of the American Civic Association to make American communities better places to live in has brought about the promotion of community betterment. It brought the playground movement to where a national organization could take it up

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70 NATIONAL MUNICIPAL REVIEW [February and efficiently forward it alone. Making city planning known to the nation resulted similarly in the formation and promotion of a city planning conference which now does good work. Zoning in protection of living conditions and property values has been promoted toward a consistent and continuous practice. Housing has been fostered where it had relation to the community plan, always in harmony and without conflict with the national organizations devoted particularly to that all-important subject. The method of operation of the American Civic Association, which does not seek to establish minor branches but welcomes to membership all forward-looking organizations and individuals; its avoidance of wasteful reports; its presentation to the press of the nation of succinct, readable items concerning important things doing and needing to be done; its direct work on congress when need arises; its history of keeping clear of entangling alliances not related to making the community a better place to live in-all have combined to give this organization not only a strong hold on the American public but a wide sweep of influence. It is this organization which now gladly stands behind the National Municipal League. In its work it has always felt the need for the detail of administration effort which is the peculiar function of the League, just as the latter has found its work shortcircuited without reference to housing, parks and playgrounds, the abolition of poles and wires, the mitigation of black smoke and the reduction of billboards. This, then, is the bracketing of the two organizations, which it is believed ought to result in larger influence for both, and, what is very much more important, in larger good for America. COMMISSION GOVERNMENT LOSING GROUND IN ST. PAUL BY T. L. HINCKLEY AFTER six years of commission government St. Paul, the capital city of Minnesota, is somewhat disillusioned. The complaint against commission rule is the familiar one of lack of coordination of activities. In the opinion of many, this has resulted in duplication of effort and rivalry between department heads, with consequent increased costs of administration. It is also stated that there has been so much patching of the original commission charter, that many of its provisions have been nullified, and that a new instrument is preferable to more amendments. A further reproach is contained in the assertion that although department heads have conceded the presence of a certain amount of duplication and admit that a general over-hauling of system would be highly beneficial, still, until very recently, no steps have been taken to bring this about. As this goes to press word has been received of a survey of the city administration which is soon to be arranged, a step which may be viewed as an acknowledgement of the justice of this criticism. Friends of the commission explain that a large portion of the increased costs of administration are due to the unprecedented increases in labor

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19211 GOVERNMENT LOSING GROUND IN ST. PAUL 71 and materials charges, not to mention such things as the recent adoption of the two-platoon system by special vote of the people. As to elimination of waste, a leading official of the city government has stated that possibly the “slack” in city business methods may amount to $100,000 annually, a sum worth going after, whenever the people vote the funds necessary for a special investigation. From the foregoing it will be seen that the financial side of the question has been the most emphasized in whatever public discussion has taken place. The advantages of a more responsible type of government, the councilmanager type, for example, have been urged frequently by the press, but it cannot be said that popular interest has as yet assumed the proportions of a general demand. A charter commission has been at work upon the general problem for some time, and recently an outline draft of a proposed new charter was published. This was stated to be a modified city-manager ” plan, but an examination of its provisions seems to Ld classify it rather as a modified federal plan, the mayor being charged with many of the duties of a city manager. Regardless of its precise type, this draft is understood to represent the views of many who fear that the voters would reject a clean-cut councilmanager charter. It is impossibIe to predict just what turn charter revision in St. Paul will take. The best informed opinion is favorable to the council-manager system, but, as indicated, there is no general demand as yet for this reform. Dr. A. R. Hatton recently addressed the influential St. Paul Association on the general subject of charter reform, but no final action has been taken on the matter. In the meantime, amendment of the present charter continues, there being two such amendments voted in by the citizens at the last election. Until other steps are taken, the passage of additional amendments is the only remedy for charter ills; but it is safe to say that with the passage of more amendments the feeling grows that a different form of government will prove moie eEcient. RESULT OF SOLDIER BONUS REFERENDA’ BY RUTH MONTGOMERY Sub-librarian, Legislative Reference Section, Nm York State Library FIVE states have been added to the list of those giving a bonus to their world war veterans, Maine, New Jersey, New York, Rhode Island and Washington. The laws of these states require the approval by the electors of any bond issue. For this reason it was necessary to submit the propositions for the soldier bonus to the voters. New York, Washington and New For an earlier article on this subject see NATIONAL MUNICIPAL REVIEW for October, 1920. Jersey did this in the November elections, Maine and Rhode Island earlier. In New York, at least, and probably elsewhere, considerable objection developed both within the American Legion and outside. In one small New York community with approximately 1,000 electors, only 80 votes were cast for the proposition; however, final returns will give the bonus an enormous majority. The most telling argument used against the proposition was the increased burden of taxation.

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72 NATIONAL MUNICIPAL REVIEW [February Distributing the various amounts over ten to twenty years makes the burden very light on each individual. The laws of Maine and Rhode Island, as approved, provide for the payment of $100 to all veterans regardless of the length of service. New Jersey and New York base their payments on the number of months of service, $10 for each month, fixing as a maximum $100 in New Jersey and $250 in New York. New York having the largest population naturally has the biggest task, her amount being fixed at $45,000,000. Rhode Island comes at the other end with $2,500,000, and in between New Jersey with $18,000,000, Maine with $3,000,000. The machinery for carrying the law into effect is provided for in each state except New York. The operation of that law must wait until the 1921 legislature provides a board for its administration. This will no doubt affect the number to be benefited, because one requirement is residence in the state when the law becomes effective. Departing from the usual exofficio board, consisting of the military and financial heads of the states, Rhode Island has a civilian board in charge. In addition to these states, vie now note a law in Washington which was approved in the November election. It provides for a bonus of $15 for every month of service between April 6, 1917, and November 11, 1919, to be paid to all Washington men and women, or their heirs, in the military, naval and air service of the United States and its allies. Exception is made in those persons receiving bonuses from other states, or any compensation in addition to the regular army and navy pay, unless the amount received does not equal the bonus, then they are entitled to thc difference. The state auditor with the aid of the adjutant-general is the adininistrative officer. The money will come from an issue of 6 per cent bonds, totalling $1 1,000,000, with an additional issue authorized if necessary. These bonds must be retired within twenty years, the retirement fund to be raised by an annual tax of one mill on the dollar of taxable property. This bond issue is in the hands of the state board of finance. THE SOCIAL UNIT ENDED IN CINCINNATI BY WARWICK BLACK Cincinnati Municipal Reference Bureau THE history of the closing days of the Social Unit experiment in Cincinnati completes the cycle of articles and criticisms that have been issued from time to time concerning this much talked of endeavor. In the September number of the REVIEW, there appeared a most comprehensive paper on the project, considering it from its main and original angle, as an experiment in government, rather than as a social service scheme. The final chapters, however, show how much of the former plan had been abandoned, and how more and more the idea was developed along social rather than political lines. It ceased to be the workshop of the political scientist and became that of the social worker. The ha1 decision for the abandonment of the Social Unit was in nowise hasty, rather the contrary, the last step in a sure, gradual process of disintegration. After the mayor and

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19211 THE SOCIAL UNIT ENDED IN CINCINNATI 73 his colleagues had taken a firm stand in opposition to this new “socialistic” phenomenon that had appeared rather suddenly in our midst, the question of its continued usefulness, if not its very life was a matter of time only. Financial stringencies added further complications, and soon the Unit was in the position of not knowing from whence the next dollar would come. For a while the discrepancies were tided over by gifts from funds of other organizations, which delegated to the Unit, in the Mohawk-Brighton district, work for which they would otherwise be responsible. Among these organizations was the Visiting Nurses’ Association, and others of a similar nature. Proiiipted by the threat of the withdrawal of large contributions, the Council of Social Agencies, which controlled the funds of these organizations, decided not to allow any transference from one agency to another. This exclusion of the Unit from any participation in the benefits either direct or indirect, of the Council of Social Agencies, forced the directors to conduct a separate campaign which did not end advantageously for the cause they sponsored. It was soon evident that the experiment could not proceed on its own momentum, and that steps preparatory to closing were in order. Accordingly, in July of this year, a final summary was published by the executive head of the organization. The middle of November saw the &st definite step of actual disbanding, when arrangements were made for the Baby Milk Fund Association to take over the infant and child welfare work, since this organization had previously functioned in the Mohawk-Brighton district before superseded by the Social Unit. A few days later came the announcement that the final bulletin had been issued, and that various phases of the work had been turned over to several organizations, including besides the Baby Milk Fund Association, the Visiting Nurses’ Association, and the Anti-Tuberculosis League. For the time being, the Unit will continue a few functions, such as the health station, which will be open certain days of the week; the nutrition classes, and the dental clinic. At the time of closing there were under the care of the Social Unit 352 babies, 498 pre-school children, as well as 30 adult bedside cases, and 150 active and contact tuberculosis cases, out of a district comprising about 12,000 people. A concluding estimate of its work cannot be made until we are further away from the beclouding details of the project, but certainly it is safe to say that while it did not contribute greatly in its original field, that of government, it did contribute much in the field of social betterment, and it remains to be seen whether the organizations now assuming its functions can manage them as efficiently, and with the same degree of satisfaction to those concerned as did the Social Unit. It has given us, as Mr. Phillips, Executive Secretary of the National Social Unit Organization, says, “Increased eficiency in social service, achieved through centralization which has amounted in the field of public health alone from 300-1,200 per cent; the increased participation in the affairs of the neighborhood on the part of the people; of supplementing public effort with the assistance of members of technical groups and the growth of the spirit of true neighborliness.”

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RECORD OF LEGISLATIVE ACCOMPLISHMENT 1920 BY ELINOR M. EPPICH Training School Jor Public Service, New Ywlc GOVERNMENTAL REORGANIZATION DURING 1920 eleven states (Georgia, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, New Jersey, New York, Rhode Island, South Carolina, Virginia) held regular sessions of their legislatures, twelve (Oregon, Indiana, Wyoming, Nevada, Idaho, Arizona, West Virginia, New Mexico, Washington, Texas, Kansas, Delaware) held special sessions, and one (Ohio) held a second session of its 1919 assembly. Of these states eight passed laws or resolutions or proposed constitutional amendments affecting the organization of government. The resolution passed by the Washington state legislature is the most comprehensive. It provides that the governor, with the assistance of the attorney-general, prepare and submit to the next regular session a civil administrative code providing for the vesting of all executive functions of the state in a limited number of departments. In New York the constitutional amendments, recommended by the reconstruction commission appointed by Governor Smith, failed, but three alternative measures, one of which incorporates provisions to practically the same effect as those of the commission, were adopted and will come before the next legislature for second approval. By this amendment the present one hundred and eighty-seven boards, commissions and bureaus are consolidated into twentyone departments, most of whose heads are appointed by the governor with the consent of the senate. In Indiana several constitutional amendments were proposed which must be acted upon by the legislature of 1921, and may thereafter be referred to the electors. Three of them fix the terms of various officers at four years, and two provide for the appointment rather than the election of two state officers, namely, the clerk of the supreme court and the superintendent of public instruction. Ohio passed a measure extending the term of county auditors from two to four years. A constitutional amendment proposed by the legislature of Indiana was the only measure adopted by a 1920 legislature which provided for an executive budget. The attempt of the reconstruction commission of New York to obtain an executive budget failed, although a legislative budget was provided for. An unsuccessful attempt was made in South Carolina to repeal the executive budget system adopted in 1919. Two states, Virginia and Maryland, passed acts providing for state purchasing departments. The law of Maryland creates a central purchasing bureau, while that of Virginia creates a commission to provide for and designate a state purchasing agent. In the field of municipal government, the legislature of Maryland has passed a law providing for a single police commissioner for the city of Baltimore instead of the police board. In Rhode Island the Tiverton police commission

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19211 LEGISLATIVE ACCOMPLISHMENT 1920 75 was abolished and the police power placed in the hands of the town council. Massachusetts has made mandatory the audit of accounts of all cities and towns at least once in three years by the director of the division of accounts. HOME RULE AND PUBLIC UTILITIES Maryland advanced the cause of municipal home rule by granting to the voters of Baltimore city the right to change their form of government. They are also authorized to decide whether the police commissioner shall be appointed by the governor or by the mayor. In Massachusetts town governments “progressive changes are facilitated by a bill authorizing their independent action.”l The senate of New York failed to pass the home rule amendment endorsed by the New York state conference of mayors and recommended by the governor. The Downing bill, giving the board .of estimate and apportionment power to fur county salaries in New York city, also failed. Kentucky has made it possible for the smaller cities in the state to have commission form of government if they so desire. South Carolina was the only state to pass legislation to allow municipal corporations to buy and sell public utilities. This act, which is an amendment of a law of 1912, provides for municipalities to buy and sell water works, gas works, and electric light works. In New York legislation to permit municipalities to acquire, own, operate and control public utilities failed, and likewise in Ohio a bill failed which authorized municipal corporations to issue bonds to purchase, construct and acquire by condemnation a Review of Legislation of the session of lQ%o, by Speaker Joseph E. Warner of the Massachusetts House of Representatives. transportation system. Ohio was saved by the governor’s veto from a measure giving the public utilities commission, where deemed by it necessary to prevent injury to any public utility or street railway in any emergency, authority temporarily to alter, amend or suspend any existing rates or schedules prescribed in contract or franchise. A measure somewhat like it failed in the New York legislature providing that the public service commission might regulate rates notwithstanding franchise or other agreements. Rhode Island passed an act to allow towns to contribute to costs of trolley service lines within their respective limits. The tendency of the 1920 legislatures was toward public regulation of public vehicles. Maryland placed taxicabs under the control of the public service commission; Rhode Island placed jitneys and buses under the public utilities commission; South Carolina included steamboat lines and truck lines in the common carriers regulated by the railroad commission; Texas defines natural gas companies as virtual monopolies and subjects them to the power of the railroad commission, and Virginia empowers the state corporation commission to regulate the delivery of power, heat, light or water by public utility corporations. PUBLIC DEBT Massachusetts, as a state, has adhered to the pay-as-you-go policy, but other states seem to have been confronted with the necessity for expanding their debts. Even in Massachusetts the legislature granted to certain towns authority to exceed their debt limit. New Jersey increased the limit on net indebtedness of counties from 2 to 4 per cent of ratables; New York excluded school bonds from city debt limits; Maryland has authorized drain

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76 NATIONAL MUNICIPAL REVIEW [February age commissioners to issue bonds; the legislature of Oregon proposed a constitutional amendment increasing the limit of state indebtedness for permanent roads to 4 per cent instead of 2, and the legislature of Georgia passed an act to amend the state constitution to allow West Point to increase its bonded debt. The Ohio legislature passed an act to lift the interest and sinking fund levies, on account of bonds issued prior to January 20, 1920, from out of the limitations provided by the Smith one per cent law into the fifteen mill limitation. The question must be submitted to the voters of the individual municipalities. TAXATION As with debt so with taxation, legislatures have been compelled to look beyond present provisions for money to meet the increasing costs of government. Washington has increased the maximum tax levy to five mills instead of three, and has also increased the maximum tax levy for public schools; Rhode Island has passed an act allowing cities and towns to increase their tax assessment from l+ to 23 per cent of their rata.ble property valuation; Maryland has increased the maximum rate in three counties; while Texas at the November election passed a constitutional amendment removing all limits from taxation for local school purposes. Oregon submitted to the people measures providing for additional tax levies for the support of schools. Ohio has made drastic increases in existing taxes, the tax paid by wholesale cigarette dealers being increased as much as from thirty dollars to two hundred dollars annually. Kentucky has placed a tax on gasoline; Massachusetts a special tax of three-fourths of 1 per cent on net incomes of corporations; the Indiana legislature proposed a constitutional amendment authorizing the levy of an income tax. Four important taxing measures failed in the Ohio legislature. These provided for taxes on net incomes, on gross receipts of transfer, truck and transportation companies, on the production of coal, oil, gas and other minerals mined in the state, and a license tax for sale OF drugs. In Rhode Island an act failed which proposed an additional tax of six cents on each one hundred dollars of ratable property valuation for payment of current expenses. One state, Indiana, provided for a revision of its tax laws. A measure providing for the reform of taxation methods failed in Washington. The legislature of Indiana proposed a constitutional amendment authorizing the general assembly to provide by law for a system of taxation in order to simplify the present constitutional provision. This must be acted on by the legislature of 1921 and may thereafter be referred to the electors. CIVIL SERVICE The legislature of Maryland adopted the merit system during its 1920 session. The law exempts many officers from the classified service, but gives the governor of the state the power to classify them. Enforcement is in the hands of a single commissioner appointed by the governor for a six-year term.' Maryland provided for the pensioning of members of the fire and police departments of Baltimore county; Massachusetts for the pensioning of members of the police department of Boston; New Jersey for Supplement, p. 73. Political Science Q7iurtmZy, September, 1940,

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19211 PARKS OR IRRIGATION RESERVOIRS 77 the pensioning of firemen and policemen of municipalities; and New York passed a bill to bring about greater uniformity in the New York city pension system. This measure is expected to take care of all civilian employes other than those of the uniformed forces. Maryland has included among those to be given preference in the civil service, army and navy nurses. Three states, Massachusetts, New Jersey and Ohio, passed veteran preference measures. The New Jersey law provides for credit marks in civil service examinations to be given to United States soldiers, sailors or marines who served in any war, and requires appointment if among the first three certified. The Ohio law provides that any Red Cross nurse or soldier, sailor or marine may file with the civil service commission a certificate of service and honorable discharge, whereupon his name shall be placed on the eligible list by the commission, from which list he may be appointed to any position in the civil service of the state for which he is qualified. NATIONAL PARKS OR IRRIGATION RESERVOIRS-WHICH? BY J. HORACE McFARLAND President, American Civic Association Measures pending in congress authorize the flooding of parts of Yellowstone Park in favor of private interests. Secretary Payne, however, has announced thai the water from these lakes can be utilized after it leaves the park without detriment to this national recreation center. .. .. .. .. .. .. .. .. .. .* .. .. .. .. .. .. AT a meeting of the Great Falls Commercial Club, of Great Falls, Montana, held Friday, October 15, 1920, a circular headed “The National Parks in Imminent Peril, ” as sent out by the American Civic Association, received attention. The result of that attention was the taking of the following action: After considerable discussion on this matter the directors of the Great Falls Commercial Club expressed themselves as heartily in accordance with the use of the reservoirs as irrigation and power sites, being strongly opposed to the wishes of your communication. This matter will be taken up with the various commercial clubs in this state toward the encouragement of the use of these waters for the purposes of irrigation and power for the betterment of our state. It is thus seen that the point of view of commercial organizations of the states surrounding the Yellowstone National Park was that these great areas are not parks, but reservoirs. To be sure, in 1872 congress set aside a part of the area which nature had long before set aside, for the use of the people as a park, and indeed as a museum of natural wonders. Evidently the Great Falls Commercial Club, at first, regarded this action as merely a convenient way in which the property was kept out of the open public domain. Now that somebody needs the water either for irrigation or for power, this action of congress must, of course, be set aside and the water in this park, or any other park must be

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78 NATIONAL MUNICIPAL REVIEW [February put to what will at once be called Such was the idea of this organization of business men. Being business men, they were amenable to facts and argument, and a little later, after hearing from the American Civic Association, the Great Falls Commercial Club rescinded its action, notifying the senators and congressmen of its state of its changed point of view. practical use. ” L‘ PARTS OF YELLOWSTONE TO BE FLOODED The Great Falls organization was thinking of a proposition for the damming of Yellowstone Lake at its outlet so as to raise its level either seven feet or twenty-nine feet, in proportion to the amount that can be put over on congress. This impounded water, rising to the determined level as the snow melts in late winter and early spring, would then be drawn down during the summer for irrigation and for power. Such action would, of course, leave the sloping shores that had been flooded in the same condition of mud and destruction as the shores of Jackson Lake, a few miles to the south, now are in consequence of the same action. Nevertheless, various congressmen and promoters insist that no harm can happen by the damming of the Yellowstone Lake or any other lake, and that, indeed, the beauty of the lakes is enhanced by impounding in them more water. The general Yellowstone scheme goes far beyond the great and beautiful lake that bears the name of the park. It includes all the bodies of water to the west and the south. Heart Lake is an appropriately named small lake, Lewis Lake farther west is larger, and Shoshone Lake still larger. These are to be united by a general scheme of flumes, tunnels, pipe lines, conduits, poles and wires, so that they may serve both for power and irrigation not only in Montana to the north but in Idaho to the south. That is, this was the scheme when John Barton Payne succeeded to the Interior portfolio and his firm stand and vigorous English became a factor. The three smaller lakes were given up for the time being, although the necessary engineering data had been gathered, and the flooding height of the Yellowstone Lake was reduced from twenty-nine feet to seven feet in the bill which Senator Walsh of Montana introduced upon the reassembling of congress in December last. In the southwest corner of the Yellowstone Park there is a region shown on the topographic survey as the “Falls River Basin.” It is indicated as marshy. Early this year a bill permitting the erection of a dam, or several dams, at the southern border of Yellowstone Park slipped through the senate without comment and was on the unanimous consent calendar in the house under the leadership of the Honorable Addison T. Smith of Idaho, when we were waked up to its importance. Objection was made, and by vigorous action Mr. Smith’s bill was prevented from coming up on passage. At a hearing held in May, when Mr. Smith sought to obtain a rule which would have confined discussion of this proposition-the entering wedge for the destruction of the Yellowstone-to one hour, he and his friends made such a poor showing that they were nearly laughed out of the committee room. But the scheme still remains. The bill is still on the house calendar. It was brought up immediately upon the reassembling of congress, but because the people have begun to wake up to the danger to their park property, enough congressmen have objected to its consideration to diminish the menace of its passage in this congress.

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19211 PARKS OR IRRIGATION RESERVOIRS 79 Mr. Smith has personally informed me that he expects to introduce a similar bill in the next congress after March 4th. He hopes the people will forget, and let him get his scheme through. During the summer Mr. William C. Gregg, a New Jersey manufacturer, who for many years made it his pleasure to visit the little known regions of the Yellowstone Park, went into this Falls River Basin properly equipped to investigate it. He found that instead of being, as was alleged by the promoters of the irrigation scheme, an unpleasant marsh, it was a succession of grassy meadows, set with lovely streams and bordered with impressive waterfalls on a plateauwhich, of course, would furnish the cheaper part of the proposed impounding reservoir. Mr. Gregg made many photographs, and thus brought away indisputable evidence of the wrong ,of the project. The location, by the way, is less than twenty-five miles from Old Faithful Inn, and Mr. Gregg and his family found no hardships in reaching it on horseback. It is a significant comment on the persistence and intelligence of the Idaho congressman that at a hearing on another unrelated bill held January 6, he soundly abused Mr. Gregg for daring to investigate the Fall River Basin in a belief that the map made in 1878 might not be accurate now. “Who dares to doubt a government map,” shouted Mr. Smith, even while his associates were looking with interest at photographs proving its error in 1920. THE VALUE OF NATIONAL PARKS This is only the beginning of what is undoubtedly a concerted assault on the nation’s possessions in parks. The question arises as to whether or not these areas ought to be preserved as parks or whether they are required for economic development of the surrounding territory. The first inquiry, then, is as to the value of national parks, or, for that matter, as to the value of any park. It is not proper here to enter into an e1aborat.e argument, but it will be a rash publicist who asserts with any expectation of supporting his assertion that a park is not a necessity, that it does not perform a beneficent function, that it does not wholly justify itself if well administered in its directly favorable effect upon the economic life and production of the community which it serves. The national parks have another quality than that of simply recreation. Each one of them includes some rare natural phenomenon, and some include many such wonders. The Yellowstone, for example, not only has the geysers, all of awe-inspiring quality, the mud volcanoes, the paintpots, and other similar evidences of nature’s resourcefulness, but it has the Grand Canyon of the Yellowstone, possessing a quality all its own. It has glass cliffs, it has petrified forests, and in addition it has great and lovely open areas set with mountains towering to ten thousand feet and more, and bordered by ranges carrying eternal snow. The Fall River Basin includes a lovely valley, ideal for camping. Similarly, the other national parks have each their own wonders which we have heretofore thought were worth preserving. The glaciers characteristic of Glacier Park, the atmospheric phenomena of the Grand Canyon of the Colorado, the exquisite waterfalls of the Yosemite, the reserved tree monarchs in General Grant and Sequoia parks, and all the rest of the wonders in all the parks, go far beyond the primary recreational use as memorials of the nation’s possessions.

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80 NATIONAL MUNICIPAL REVIEW [February There is a vast financial potentiality in these areas, which, belonging to all the people, are beginning to be used by many of them. In 1920 some thirteen thousand automobiles, very largely of the Ford type and coming from the neighboring states, toured into the Yellowstone with camping parties to take their pleasure in the nation’s great pleasure-ground. With less than two hundred miles of developed roads in more than three thousand miles of its area of wonderland, the use of the Yellowstone is barely beginning. Each use is accompanied by a relatively large expenditure which the traveler and visitor makes to the benefit, in a commercial way, of all with whom he comes in contact of service from his home until he reaches it again. Niagara, for example, is admitted now to earn, independent of the power that has been stolen from its majesty, beyond thirty-five million dollars annually in travel revenue. IRRIGATION POSSIBLE WITHOUT INJURY TO YELLOWSTONE But what is the economic possibility in these parks which justifies the western promoters in opposing the idea of keeping the parks in their integrity? It happens that there is competent evidence in this direction. At the hearings held in connection with the Smith bill referred to it was developed that between five hundred and one thousand farmers, organized into twenty-four corporations, were operating irrigation projects in Idaho, south of the Yellowstone Park. These farmers had had five successive good crops, but in 1919, a year of slack water, they either lost their crops almost altogether or had them materially reduced. It was felt, therefore, that there ought to be assurance against any such recurrence by reaching into the Yellowstone National Park, so that the property of one hundred millions of people might be given over to the uses of a bare thousand of them to assure continuously profitable crops! No suggestion has been made that the cost of food would be decreased by such action. There is no suggestion of public benefit. Pndeed, it has since appeared that in this very region, not twenty miles from the proposed dam, “dry” farmers have been continuously successful in raising large crops for twenty years. It is therefore insisted that the economic use is a selfish use, that it appertains to but comparatitely few of the people who actually own the parks, and that consequently such diversion is unfair as well as practically sacrilegious. But there remains a still more definite showing of the mong of these propositions. Secretary Payne visited the Yellowstone during the summer of 1920, and, as he writes, “gave a hearing to persons interested in this project. . . . I ;pointed out to them that it was very much more desirable from every standpoint that the dam for reclamation should be built outside of the park. The water flow in the vicinity of the Yankee Jim Canyon is more than twice as great as at the mouth of Yellomstone Lake. . . . The value of water for power and reclamation purposes I fully appreciate; but since the water does not remain in the park, means may always be found to utilize the water after it leaves the park to the same and often to a greater extent than if the effort was made to use it in the park. ” It should be noted that Judge Payne is the head of that branch of the government’s activities which has to do with reclamation and irrigation. It is obvious that cheapness of development is the only excuse, if one believes

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192211 PHILADELPHIA’S “MANDAMUS EVIL” 81 his statements, for these assaults on the national parks. Yet another danger remains. The federal water power act, approved June 11, 1980, specifically permits the filing of claims on water for power purposes in any park or other reservation set aside by the government. Under this claims had been made on many of the nation’s most precious scenic possessions. The attitude of the newly formed federal water power conmission was that congress did not intend to destroy the national parks, and this commission, including the secretaries of war, agriculture and interior, has declined to consider these applications until after congress has had an opportunity to correct the obvious error committed. If this error is not corrected, then an added and greater danger is imposed upon the national parks. Senator Jones of Washington has introduced and had reported out of committee a bill removing the parks and monuments from the provisions of the water power bill. Mr. Esch of Wisconsin has introduced an identical bill in the house. At a hearing on January 6 Secretaries Payne, Baker and Meredith urged the passage of this legislation, citing the applications that had been held in abeyance in the hope that congress would act. If we are to have national parks instead of irrigation and power reservoirs, if the mere one per cent of the public domain thus set aside is to remain in natural beauty and integrity of scenery, our citizens will need to make very plain to their congressmen and senators that determination. Private interest never sleeps; public interest often nods. Park security depends upon wakefulness and vigilancePHILADELPHIA’S “MANDAMUS EVIL’’ BY CLARENCE G. SHENTON, LL.M.l The city treasury of Philadelphia must pay millions of dollars annually to meet obligations over which, the city government has no control. :: .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. NOT content with establishing numerous governmental agencies in Philadelphia and saddling the cost of maintaining them on the city treasury, the people of Pennsylvania have in many cases adopted an exceedingly vexatious method of having the cost determined. They have given local agencies power to finance themselves out of city funds. Most to be desired, of course, is a system under which the city’s legislative and tax-levying body, the council, would have complete control over the city treasury. As this is at present unattainable, Philadelphia would be more nearly content-its 1 Of the Philadelphia bar; staff member of the Bureau of Municipal Research of Philadelphia. 2 plight at any rate would be no worse than that of hundreds of other municipalities throughout the land-if, in addition to its council, the legislature were the only body with authority to spend its money. As it is, millions of dollars are disbursed annually by the city to satisfy contractual obligations -including the wages of an army of employes-the amounts of which are not fixed by the legislature nor controlled by council. UNRESTRAINED AGENCY Broad powers to determine what shall be spent for the maintenance of the courts are vested in the judges.

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88 NATIONAL MUNICIPAL REVIEW [February The president judge of the municipal court is authorized to appoint “such tipstaves or employes as are reasonably necessary,” and their number and compensation are to be fixed by a majority of the judges of the court. The president judge is also authorized to appoint a chief probation oscer “and such additional probation officers and employes as he may determine, at salaries not to exceed $2,500 .a year.” Other statutes give judges power to fix the number or compensation, or both, of janitors, stenographers, detectives, etc. The constitution provides that the prothonotary shall appoint such assistants as may be necessary and authorized by the courts of common pleas of Philadelphia county, and that the clerk of the orphans’ court may appoint assistant clerks with the approval of the court. The city and county of Philadelphia are coterminous. The legislature has “consolidated” them, but only in a half-hearted way. There is but one treasury. Taxes paid into it are levied by the city council alone, and disbursements from it, except as the result of suit, can be made only pursuant to appropriations by council. Yet, superimposed upon the city government is a county government, headed by a board of commissioners, in whom are vested most of the usual powers of county commissioners to commit the county to financial obligations. The Philadelphia county prison is managed by a board of inspectors appointed by the courts of common pleas. This board has authority to fix the salaries of all persons employed in the institution, to contract for supplies, and to determine the “quantum and kind of food to be furnished to each person.” The county commissioners are authorized to draw their warrant on the “county treasury” for “any deficiency in keeping and maintaining said prison.” A board of managers, appointed by judges, has authority to establish houses of detention for delinquent children-one house for each twentyfive children. The powers of the board are as comprehensive as those of the board of prison inspectors mentioned above. A recent act of assembly authorized the creation of a house of detention for untried prisoners which is to be administered in the same way. Considerations of space forbid anything like a complete enumeration. There are other agencies with similar powers, and the agencies mentioned have powers which have not been enlarged upon. A list of the moneyspending powers of the county commissioners would itself make a longer story than can be detailed here. MA4NDAMUSING” THE TREASURY cc If council appropriates funds to satisfy the obligations incurred by the agencies in question, payment is not difficult to secure. If there are no appropriated funds against which the agencies can draw warrants, the employe or other claimant to whom promises have been made brings suit against the city. As there is seldom any doubt that the services have been rendered, and that the law of the state makes the city liable for the amount which has been promised, there is usually no point in contesting the case. The city solicitor therefore brings the city into court amicably, agrees to the facts, waives a jury trial, and, except in rare instances, makes no argument on the law. Judgment against the city is the result. The plaintiff then proceeds under an act of assembly which authorizes the court to issue a writ-known as a ‘‘ madamus ”-commanding the city

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19211 PHILADELPHIA’S “MANDAMUS EVIL” 83 treasurer to pay the judgment, with interest and costs, out of any unappropriated moneys in his possession, and if there be none such, out of the Srst moneys received for the use of the city. The writ differs from a common law mandamus in that the statute expressly contemplates the possibility of its issuance against an empty treasury. If because of lack of unappropriated funds the writ is not satisfied when presented to the treasurer, it is registered as of the date of presentation, and draws interest at 6 per cent until paid. Claimants not desiring to wait for the city to be in funds to pay their writs have had no di5culty in selling them at par to the banks, which usually regard them as especially choice securities. A PARADISE FOR POLITICIANS The opportunities which the situation affords for 44playing politics” and mystifying the electorate cannot be overestimated by the most fertile imagination. Responsibility for the spending of the city’s money is so widely diffused that efforts of the taxpayer to see to the careful disposition of his contribution cannot succeed. Agencies with the “ mandamus power ” are more extravagant than they would dare to be if embarrassed by the necessity of levying taxes to meet their expenditures; and council, which levies all the taxes, can justly disclaim responsibility for a large but indefinite part of the levy. Although the system is known to be wasteful, the waste cannot be measured. There is no way to estimate what could be saved if all municipal agencies were required to live within appropriations of council. The amount by which an agency exceeds its appropriation has no significance in this connection. Council usually has the choice of making what it considers an unjustifiably large appropriation, or of cutting the figure to a point which it considers proper, with the certain knowledge that the balance will nevertheless be collected by mandamus. Confronted by this embarrassing alternative, council has generally surrendered and appropriated the amount demanded. There are times when observers suspect that an opportunity to bow to the mandamus power is welcomed by councilmen as a convenient way to get what they or their political friends want, without assuming any responsibility. Accordingly, the fact that an agency with the mandamus power lives within its appropriation does not mean that the agency has been economically managed. Conversely, the fact that the agency exceeds its appropriation may just as well mean that council has failed or refused to give due consideration to the necessities of the agency as that it has been extravagantly administered. The use of the writ of mandamus to collect salaries of appointees of judges is peculiarly objectionable. The impression is abroad in Philadelphia that judges are above the law; that they are arbitrarily asserting superiority over the legislative and executive branches of the government. While, in a strict legal sense, their use of the mandamus perhaps does not justify this, nevertheless the spectacle of a judge appointing an employe, fixing his salary, sitting as judge and jury in a suit to collect the salary, rendering judgment in favor of his own appointee, and commanding the city to satisfy the judgment, is not edifying. THE REMEDY DIFFICULT Attempts to abate the nuisance will no doubt be met by formidable resistance from many of its beneficiaries.

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84 NATIONAL MUNICIPAL REVIEW [February Assuming that this can be overcome, the line of attack is in most cases obvious. Agencies of the type of the Philadelphia county prison, which are non-judicial and owe their existence solely to legislative enactment, can, of course, be shorn of any or all of their powers by the legislature. A power which is expressly conferred by the constitution, like that of the courts of common pleas to authorize the appointment of assistants to the prothonotary, manifestly cannot be divested except by constitutional amendment. Probably, also, there is no satisfactory way to abrogate the money-spending powers of the Philadelphia county commissioners except by constitutional amendment ordaining or permitting the abolition of county government in counties which are coterminous with cities. The most interesting legal problem arises in connection with “mandamus powers” assumed by the courts without statutory or constitutional warrant, and those conferred upon the courts by legislative enactment. Strangely enough it cannot be asserted with assurance that these powers can be revoked by the legislature. This doubt results from the character of the opinions which have at times been expressed by courts as to their immunity from legislative control. “We think upon the outset,” said the supreme court of Idaho,’ “that without discussion or controversy, it must be admitted that the courts have the inherent power and authority to incur and order paid all such expenses as are necessary for the administration of the duties of the courts of justice.” Said the supreme court of Indiana:2 “Courts are an integral Schmelzel v. Ada County, 16 Ida. 32, 100 Pac. Commissioners v. Stout, 136 Ind. 53,35 N. E. 106 (1909). 683 (1893). The italics are the author’s. part of the government, deriving their powers directly from the constitution, in so jar as such powers are not inherent in the very nature of the judiciary.” (!) Declarations equally brave might be quoted in considerable numbers. Their tenor, in view of the problem at hand, has made necessary an analysis of the cases in which they occur. In the first, judges seem to derive satisfaction from announcing that, although no occasion is presented for the use of “inherent power,” they nevertheless have it. Such expressions are dicta, and need not be seriously considered.3 The second class includes cases in which courts make orders in matters concerning which statutes and constitutions are silent. Lycoining County v. Hall,4 sometimes cited as the leading case in this country on the subject of inherent judicial power, was a case of this sort. A Pennsylvania county court, considering it imperative that a jury in a capital case should be closely observed throughout the trial, directed that they be kept to,gether and provided with board and lodging at a public house at the expense of the county. Although no express provision of law authorized the order, the supreme court held that the county must pay the bill. The doctrine of this case has been extended in Philadelphia to the point where juries are given automobile outings at public e~pense.~ In cases of the third class the coiirts exercise powers which not only are not expressly conferred on them, but which are expressly denied to them by statutes. The right of judges to See, e.g., State v. Cunningham, 39 Mont. 165, 101 Pac. 962 (1909). The cases fall into three classes. 4 7 Watts (Pa.) 290. Term, 1920, No. 7451. See Gallagher v. Phila., C. P. No. 2, March

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19211 PHILADELPHIA’S “MANDAMUS EVIL” select certain of their assistants forms the usual issue in these cases. For example, the supreme court of Illinois has decided that the legislature cannot deprive judges of the right to appoint their probation officers.’ It was said that the appointment of probation officers is so essentially a judicial function that a statute depositing the right to select them elsewhere than with the judges is, under a constitution vesting the judicial power in the courts, an unconstitutional assumption of power by the legislature. In cases of the type last mentioned the courts do not go so far as to assert independence of the legislature with respect to the number of their appointees or the amounts which they are to be paid. Indeed, not a single case has been found in which a court of final appeal has itself attempted, or has permitted an inferior court, to spend money in defiance of an express and unequivocal statutory provision. In its bearing on the Philadelphia situation this fact may be significant. If the legislature can be prevailed upon to exercise for itself or delegate to council the final discretion as to what is to be spent on Philadelphia courts, the courts cannot refuse to be so limited without an unprecedented arrogation of power. Of course, no judge will ever admit that the legislature, by withholding financial support, can destroy a court which the people by their constitution have decreed shall exist. There is a point somewhere short of the annihilation of courts with constitutional status at which it would be held that the discretion of the legislature ends. Whether the supreme court of Pennsylvania would decide that the legislature’s discretion ends when it contravenes the desires of the judges, and that the judges must be the final arbiters as to what is necessary to Witterv. Commissioners, 256 Ill. 616 (191%). maintain the courts as the constitution contemplates that they shall be maintained, is a subject upon which it is impossible to do more than speculate. The Pennsylvania state treasury, like the federal treasury and most, if not all, of the state treasuries, is protected against disbursement without appropriation by constitutional prohibition and by the principle that a sovereign government cannot be sued without its consent. It is difficult to say whether these limitations would be effective if interpreted by a judiciary determined to make an issue of what it considered inadequate financial support. Sustained by a constitutional mandate for its existence a court could, with perhaps some show of reason, override constitutional obstacles which it considered threatened its existence. Apparently so desperate an issue has never arisen, and it is not likely that it will. The immunity enjoyed by state and federal treasuries, however, does not extend to municipalities. They can be sued without their consent, and forced to pay whether they appropriate or not. Here is a source from which courts, even those which are distinctively state and not local tribunals, can more easily obtain unappropriated funds than from state treasuries. Interesting possibilities are suggested by the case of McCalmont v. Allegheny County,2 in which the supreme court of Pennsylvania, holding session in a district comprising a number of counties, without authority of the legislature compelled the county in which it was sitting to pay certain of its expenses. The municipal court is one of ‘‘such other courts” as the constitution gives the legislature power to establish “from time to time.” Does it, by virtue of the constitutional warrant for its creation, possess constitutional 29 Pa. St. 417.

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86 NATIONAL MUNICIPAL REVIEW [February status and the accompanying inherent powers? The question, while interesting, is not likely to be of practical importance, since the undoubted power of the legislature to abolish the court makes it inconceivable that the right to revoke any of its powers would be disputed. PROSPECTS OF RELIEF Agitation on the subject of the L‘mandamus evil” has been running high in Philadelphia for the last year, but in view of the very complex political situation it is difficult to predict what relief, if any, can be obtained. Then, too, there exists in certain quarters a deep-seated reluctance to be identified with a movement looking toward curtailment of the prerogatives of the courts. No doubt efforts will be made during the 1921 session to have the legislature withdraw certain mandamus powers. Probably, however? most is to be expected from the proposed new constitution. The commission on constitutional amendment and revision, which has been working since December, 1919, has been quite sympathetic toward those who urge placing complete control of the city’s purse-strings in the city council, The bureau of municipal research, working in conjunction with a committee appointed by the mayor, prevailed upon the commission to recommend the adoption of the following provisions : No debt shall be contracted or liability incurred by any municipal commission, board, officer, employe or other agency, except in pursuance of an appropriation previously made therefor by the municipal government. ***** In any county whose boundaries coincide with or lie wholly within the boundaries of any city, all county officers, and judges, other than the judges of common pleas and orphans’ courts. and all state or county officers whose salaries or expenses are payable. in whole or in part, out of funds receivable by any city or county officer shall submit to the chief executive of the city, in the manner and the time required of city officers, estimates of the needs of their respective offices and courts. The city council or other body vested by law with the power of appropriation shall have the same control over appropriations for the support of such offices and courts as it has over appropriations for the support of city offices, except that the general assembly may fix the salaries of such 05cers and judges. In any such county any or all county offices may be abolished by law and the functions and powers pertaining to any such office may be transferred to any officer or officers of such city. As this is being written word comes that the commission has changed the wording of these sections to improve the style but with no intent to violate their substance. From what has been said, it will be appreciated that if the substance of these paragraphs can be made part of the fundamental law, the fight against the mandamus evil will have been won in Philadclphia, except for the powers of the orphans’ court and the courts of common pleas. Apparently the commission cannot be persuaded to recommend that these powers be disturbed. It may yet happen, therefore, that the right of the legislature to control the expenditures of courts with constitutional status will become a live issue in Pennsylvania.

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RECENT TENDENCIES IN PRIMARY ELECTION SYSTEMS BY CHARLES E. MERRIAM University of Chicago The writer, a keen practical observer of politics, believes that the direct primary has not yet had a reasonable test. It should be retained and certain other improvements introduced, notably the short ballot, the merit sqstem and the Massachusetts ballot, to insure satisfactory nominations. IN 1909 the writer published a history of primary elections in which were traced the tendencies in primary legislation and practice down to that date. Since that time there have been many changes in the nominating system, and it is now a matter of importance to appraise again the broad movements in the evolution of norninating methods. The operation of the primary laws, outside of the South where the direct system seems to be generally accepted, has proceeded amid many difficulties in the last decade. In the first place, the primary laws were in many cases the result of the work of the progressive Republicans who were particularly active and successful in the years around 1910. The split between the Progressives and the Republicans in 1912 left the stand-pat Republicans, in the main unfriendly to primary regulation, in complete control of the party. It was not until 1916 that the breach was covered and most of the Progressives returned. The primary was a product of insurgency, but the insurgents went out of the party about the time the new law was obtained, so that there was no adequate opportunity for a sufficient test of it. By 1917 the War had broken out, and the general tendency was to present a united front against the common foe. .. .. .. .. .. .. .. .. .. .. .. .. Factional divisions and even party divisions were minimized. There was much discussion of party union; and in a few local cases a combination of the major parties against the Socialists was actually carried out. In any case this was not a favorable time for trying out primary systems. In brief, we may conclude that the real test of the direct primary lies ahead of us, rather than behind us. The general tendencies of primary election procedure may be grouped under several divisions, in each of which distinctly different effects are evident. The primary in urban and local affairs, the primary in state affairs, the primary in presidential choices, show widely different charac teristics .I MUNICIPAL PRIMARIES In urban communities the overwhelming tendency was toward nonpartisan elections, from which national political parties were excluded as far as possible. Nominations were usually made by petition only, or in the socalled “ non-partisan primary,” which was in effect a double election system. The direct primary had never been demanded for cities by students either 1 My discussion of presidential primaries is omitted from this paper for lack of space. 87

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88 NATIONAL MUNICIPAL REVIEW IFebruary of parties or municipalities, and during this period it disappeared almost entirely, although there were notable survivals as in New York and Chicago. In the absence of effective national parties in cities, it was difficult to apply any form of a party primary law with any degree of success. The parties having adopted no general or uniform policy in regard to local affairs, each locality was left to shift for itself, and party allegiance became much weaker than in the case of national elections, although the party machinery was &ill in formal action. Elit in practice non-partisanship was established by the friendly collusion or connivance of party machines and bosses long beore the demand for non-partisan elections was made by the citizenship generally. As a result there came a local alignment differing from the national, sometimes brought about by custom or common consent and sometimes attempted by legislation providing nonpartisan ballots. One of the most conspicuous tendencies of the last ten years has been the spread of the nonpartisan system to the cities of the United States. There was, to be sure, no guaranty that this would eliminate the national party from the local election; but in many cases this was the result, while in others it tended to minimize the influence of the party in urban contests. Without attempting to discuss the large question of the relation of national parties to local affairs, it is sufficient to point out that a new tendency appeared in the growth of the nominating system, and that it was almost universally triumphant in municipal nominating systems. In some instances thenon-partisan method was applied to the election of judges, to the choice of school boards, and in Minnesota to members of the legislature. State and County Primaries In the case of state and other than urban local officials, the tendency toward the extension of the direct primary system continued its legislative march. The direct method of iioniination was taken up by state after state, until at the end of the period there were only a half dozen in which the direct primarywas not in general use either by party rule or by legislative enactment. A brief survey of the developments under the new system shows many interesting and significant situations. P indicated in 1909 that certain changes were necessary in order to make any nominating system, direct or indirect, regulated or unregulated, successful in its operation. Thcse were the shortening of the ballot, the adoption of the merit system in public administration and its enforcement, the return to the original form of the Austra!ian ballot without the party circle or emblem. Some progress has been made in all of these directions, but it cannot be said that they have been effected yet. The ballot has been shortened, notably in the cities, progress has been made in the direction of the merit system and in the supporting sentiment without which the law itself is ineffective, and some changes have been made in the way of modifying the blanket ballot. These conditions are as significant today as they were ten years ago, and still affect materially the success of all nominating systems. An examination of the actual developments under the direct primary shows that many of the arguments urged by the advocates of the new system and many of these advanced by its bitterest opponents were not wholly valid. On the other hand, there were many effects not generally anticipated. It was frequently charged that the direct primary would destroy the party system or would make party organiza

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19211 TENDENCIES I” PRIMARY ELECTION SYSTEMS 89 tion so ineffective that it could not survive. This was no doubt sincerely believed by many of those who opposed the direct primary. Some even expressed the fear that representative government would be undermined and overthrown. It is perfectly plain that parties still survive and the organization still goes on; and it is no longer seriously contended that party management is incompatible with this particular form of nomination. On the contrary we frequently encounter the argument that the direct primary strengthens the machine, and should therefore be repealed, although this must be taken with a grain of salt when coming, as it frequently does, from members of the organizations said to be so strengthened. It was believed by many that the direct primary mould result in discrimination on the part of the urban districts against the rural; that the mass vote of the cities would uniformly and inevitably overwhelm the more widely scattered rural vote; and that the agricultural sections would lose their influence in the selection of party candidates. This has not come true. There have been instances where the cities have taken more than their share of candidates and also vice versa, but as a rule this has not been the case; and the old argument from this point’ of view is now rarely encountered. THE PRE-PRIMARY SLATE On the other hand, the pre-primary slate has appeared more frequently than was anticipated either by the advocates or the opponents of the new primary plan. The possibility of this was pointed out by some students of the subject, but it was not generally realized that the organization or the machine might name the candidates in advance and then obtain the ratification of the slate proposed by them. In some cases this possibility has become a fact and a custom. In such cases the prim.ary has ceased to function as intended by its proponents. In many other instances there have been no slates at all, or if framed they have not obtained a uniform or even encouraging success. In other cases there have been two or more slates and the honors have been divided between them. When there is a long list of candidates to be chosen with much patronage at stake, it has been more easily possible to form and carry through a slate. The direct primary has not made automatically impossible the control of the nominating system by a ring or a machine, even of the corrupt type. To what extent the new system has influenced the choices made by the organization which still nominally controls is a question much more difficult to answer. The character of nominations is determined not only by open and successful resistance to organization nominees, but by the possibility and the probability of resistance which is anticipated or discounted or thwarted by the character of the nominations made by the organization itself. A wise machine will make many concessions in order to prevent the raising of the standard of revolt by an opposing faction or by unorganized insurgents. Resistance is generally more readily made under the direct primary than under the convention system. There is always a certain protest vote, and a certain disgruntled vote, and there are always groups within the apparently united machine that are ready to take advantage of any insurgency for the sake of advancing their own ends. Such resistance is more effectively registered by the popular vote than by the number of delegates elected.

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90 NATIONAL MUNICIPAL REVIEW [February The question whether better candidates are obtained cannot easily be answered, first because no sufficiently elaborate inquiry has been made to cover all the facts in thecase. That such an inquiry would be eminently useful, there can be no question. Very bad candidates have been selected under the direct primary system at times, and also very good, competent, honest and representative ones. That more than usually unfit candidates are selected because no one is directly responsible is not true as a general thing, although it may happen occasionally. But incredibly bad candidates have also been chosen by “responsible” conventions under adverse conditions, to phrase it mildly. On the whole it is dificult to see how the “bad” man would find it easier to obtain a nomination under the direct system than under the delegate plan, while it is clear that a “good” man may win a primary fight when he would be wholly lost sight of in a struggle for delegates and the collateral control of a convention nominating a whole series of other candidates. That there are many competent candidates who are excluded from office because of their unwillingness to go through a primary is a pleasant fiction without much basis in the actual facts of political life. Yet no competent and impartial observer will contend that the new nominating system has revolutionized the character of candidates with reference to their ability, their integrity or their representative character. This is a part of the great probIem of democracy, which cannot be so simply solved, and which will not be determined finally either by direct or indirect methods of selection. CAMPAIGN EXPENSES That the expense of campaigning tends to exclude worthy and favor undesirable types of candidates in the direct system can scarcely be sustained. It will be found that where there is a candidate of exceptional efficiency or one who stands for some broad general policy in which a large number of voters are interested, it is possible to raise the fund necessary for the reasonable conduct of the campaign; and if this fund is raised upon a democratic basis so much the better for the party and the candidate and the general public. Occasionally a candidate is available because of his “barrel,” yet the machine can always raise the necessary funds through the application of its own peculiar system of revenue. If no insurgent candidate is available except one who conditions the use of his funds on his own candidacy, little is lost for the community. Nor can it be forgotten that the conventions have often been controlled by small groups of men representing directly or indirectly wealth and privilege in concentrated form. If money was not spent, it was ready for spending. Furthermore, the elaborate and reckless use of funds is not beneficial to candidates, and may even be positively harmful, and often disastrous. The personally financed campaign of Governor Lowden and his related defeat for the presidential nomination is a striking illustration of the deceitfulness of riches. There is much insincerity and ignorance in the discussion of campaign funds, but there is little evidence to show and none to demonstrate that the use of wealth in direct primaries is more effective than in the capture and control of conventions. The abuses of the use of money should be checked and there should be publicity in regard to receipts and expenditures, but too. great confidence should not be placed in automatic devices for this purpose. They will not include the expensive

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19211 TENDENCIES IN PRIMARY ELECTION SYSTEMS 91 services of the “ organization, ” or of outside associations, or of the press. The confiding electorate that trusts to a statute for fencing out money or economic power from primaries and elections deserves its certain fate. It is also to be observed that some confusion has been caused by attributing the expense of public regulation of primaries to the direct system. If the primary is to be supervised by the state, whether it is direct or indirect, the public expense will be about the same in either cae. The outlay for rent of polling places, the payment of election officials, the printing of ballots, the provisions for canvass of votes are as great in one system as in the other. If all direct primary laws were repealed and the regulated delegate system retained, the public expense would not be materially reduced. And if there are real contests under the delegate system the expense of the campaign is not much altered. Some money might be saved by having neither primaries, conventions nor elections; but more would be lost. One of the “Unforeseen Tendencies” observed by Godkin in his incisive study of this subject was the small vote under universal suffrage in many elections. This is still more true of party votes than of general elections. The direct primary has not always drawn out as large a vote as was predicted by its most enthusiastic advocates in the first days of its introduction. In the minority parties, whether in states or counties, the vote has often been very small, running down at times to a small fraction. In other cases, however, the vote has been much larger, rising to 50, 60, 7.5 per cent, or even higher. The direct primary cannot be relied upon to develop a 100 per cent vote. As compared with the old caucus system, it unquestionably brings more voters to the polls on the average, but the number still falls below the figure originally expected by some of its champions. THE PRE-PRIMARY CONVENTION In some instances an effort has been made to retain some form of a convention or a preliminary conference in state affairs. This has been done in some cases by those who were hostile to the whole primary movement and were seeking to undo it in the interest of the organization, as in Wisconsin and in New York, but in still other cases the move came from friends of strictly regulated primaries on the direct basis. From another point of view the Socialists paid little regard to the primary system, but made their own nominations through their conferences or through referendums of dues-paying members, subsequently ratified in the official primary. In Colorado a law was passed in 1910 providing for a pre-primary convention of delegates to consider and recommend party candidates. Those who received at least 10 per cent of the convention vote for any o6ce were placed upon the regular party primary ballot, but any other names might be put upon the ballot by petition, either with or without consideration by the convention. The action of the party in the primary was final, and might follow or disregard the recommendations of the convention. Governor Hughes made a strenuous effort to establish an official “designation” plan in New York, but was unable to carry it through. The theory of his measure was, briefly, that the responsible organization in charge of the parky should meet and present its choice for party office, but that other names might also be filed and printed on the ballot along with the choices of the organization.

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92 NATIONAL MUNICIPAL REVIEW [February The final selection of candidates would then be made by the party voters in a succeeding direct primary. This is not unlike the process that actually occurs in many places, but it was sought by this plan to provide legal machinery, and if possible bring home a little more closely the official responsibility. In South Dakota the Richards law was adopted after long discussion in 1917. This was an elaborate statute providing in great detail for the calling of a pre-primary convention, for the selection or recommendation of candidates, for the conduct of the primary itself, including provision for joint discussion by candidates, for the recall of party officials, and other interesting features. It was an ingenious and somewhat complicated system, but not unworkable, although much dislilted by many of the voters. It is by far the most elaborate attempt to organize party leadership and popular party control through a statutory system that has yet been proposed or attempted. SOME ALTERATIONS LIKELY TO BE MADE On the whole, there seems to be in state politics a widespread desire to retain some of the features of the party conference, but at the same time a still stronger desire on the part of the rank and file to make sure that they possess in last analysis the right to name the candidates. The reconciliation of these elements has nowhere been worked out in such a form as to command a general acceptance by the various elements in the major parties. There is some discontent with the primary, although this is stronger in the East than in the West, and does not figure in the South. The organizations would repeal the law if they had the power, and would not imperil their position thereby; but the mass of the voters apparently have no intention of returning to the old delegate system with which they were familiar twenty years ago and under which they suff ered grievous misrepresentation. The difficulties and disappointments of the direct primary system are fresh in our minds, but when we recall the alternative of the old system we are likely to recoil from it. The gerrymander of districts, the logrolling for nominations, the bribery and undue influencing of delegates, the domination by combinations of bosses and special privilege, the helplessness of the average voter under the old convention plan has been for the moment obscured. When we begin to compare the old system with the new, however, it is unlikely that there will be general acquiescence in a quiet abandonment of the direct primary and return to the old method of indirect and unregulated choice. Adjustments and adaptations of the primary laws are likely to be made, but the adoption of the short ballot is fundamental to all of them. The suggestion has been made that a system of party enrollment be adopted. This is now the law in a number of states, but in many communities would not be desired. The enrollment tends to exclude many voters who are members of the particular party, but who for various reasons do not care to affiliate formally with any party. There are thousands of these voters, and they are often very influential in obtaining the best type of nomination. Their exclusion would be unfortunate. This is especially true as women without traditional party affiliations are coming into the field of primary activity. Again, all enrollment systems must be made flexible enough to allow for party change. But just here serious difficulties are encountered. Either change is so easy as to make the sys

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19211 TENDENCIES IN PRIMARY ELECTION SYSTEMS 93 tern ineffective, or enrollment must be set so far ahead of the appearance of the issues on which parties may divide that those who belong in the party are excluded. Official pre-primary designation has also been suggested as a desirable amendment of the primary law, with the provision that if there are no opposing nominees there shall be no primary. Selection of party slates of candidates before the primary is now a common practice in many places. But it has not changed the general character of the candidates of the party, as may readily be shown in concrete cases. In Chicago, for example, the majority faction controlling the county committee suggests a list of candidates, and any other faction then suggests another slate, or other candidates may file and contest with the majority or the minority faction. To make a statutory requirement that there be an official designation of candidates would not change the situation, except that opposing candidates would be branded “rebels,” and would be held responsible for the expense of the primary which otherwise would not be held. All of which would help the organization. However, a general provision that there be no primary if there is only one set of nominations, whether official or unofficial, would be of value, and mould not discriminate against any list of candidates. PARTIES WEAK ON RESPONSIBLE LEADERSHIP There is great need for better organization of party leadership. It is evident that the party is under-organized on the side of policies and principles, and somewhat over-organized on the side of elections and office distribution. The writer’s analysis of party leadership, and a suggestion for a party council to remedy the situation, is omitted from this article for limitations of space. The urgent need of better organization of parties for purposes of consultation and conference, interchange of views, discussion of party technique and propaganda, and the opportunity for those personal contacts so important and useful to leaders and managers in other groups, cannot be denied. On thc contrary, every effort should be made to develop the party in the directions of intelligent deliberation over questions of public policy, and the development of genuine leadership. If the party is really to function as an agency for the formulation and expression of policies and leadership, there must be devised ways and means for this purpose. Obviously the stock “convention” does not correspond to the conference and council of other groups with common aims. The party’s official and governmental representatives, its leading candidates, its technical managers, its unofficial leaders, might readily be brought together in conference from time to time, if it be desired to do so, and if there were a genuine demand for the better organization of this side of the party’s life. In the absence of any adequate organization of the policy determining side of parties, it is likely that the party activities will be treated as primarily a part of the electoral process, and be governed accordingly. The spectacle of public regulation of the details of party organization, and even of the tests of party membership can be explained only on the ground of the ineffectiveness of the party on the side of principles and policies, and of its leadership of the community in this direction. I should like to see the party conference tried both in state and nation (although not by mandatory statutory requirement) ; and the

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94 NATIONAL MUNICIPAL REVIEW [February assembly of the party leaders and managers in genuine consideration of the major issues of public policy and of party techique. Possibly such conferences might be purely perfunctory and ineffective, but if so would this not throw an interesting light on the character of the party and its actual function in the state? THE SHORT BALLOT INDISPENSABLE My observation leads me to believe that the short ballot is indispensable to any satisfactory system of party nominations, and that there will be continuing and justified dissatisfaction until this is brought about. In t,he meantime it seems to me that the elements of a sound policy are: the nonpartisan election of local officials and of judges; the continuance of t.he direct primary for state offices; the development of supplementary agencies for party consultation and conference (but not by statutory methods.)' But I believe it is of the very greatest importance to conduct a comprehensive inquiry into the whole nominating system and to obtain the best judg1 My discussion of presidential nominations is omitted here. ment on the facts that the mature experience and careful reflection of many minds can produce. A possible agency for this purpose would be a committee or commission appointed by each of the parties with direction to review the facts regarding party conditiOns and to present recommendations for the consideration of the public and the party. If no changes are needed or possible, the value of such a report would be very great in allaying popular discontent and if, on the other hand, alterations are necessary, such a body could indicate lines of modification which if they met with general approval might be adopted and made effective. If the parties will not do this, it might be undertaken by some other agency such as the League of Woman Voters, which would have the advantage of approaching the question without established prejudices; or the Institute for Governmental Research; or the American Political Science Association; or some private endowment in whose conclusions the public might have confidence. The fact that changes in party organization and method are made slowly is only an additional argument for starting the work without delay.

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COUNTY GOVERNMENT IN OREGON-A GROWING PROBLEM BY HENRY E. REED Assessor of Multnomah County, Portland, Oregon An urban county with eighty taxing authorities instead of two, ramshackle rural counties that resist business methods, and arbitrary tax limits by constitutional amendment as the current attempt at a cure! EVERY once in awhile the people of Multnomah county, startled by the confusing complexity of local government, propose what seems to them the logical solution, the consolidation of all agencies into one body, to be called, say, the City and County of Portland. At such times, as Pericles said in his oration on the “Causes of Athenian Greatness,” “there is visible in the same persons an attention to their own private concerns and those of the public; and in others engaged in the labors of life there is competent skill in the affairs of government.” While the subject is fresh it is discussed with vigor and a degree of intelligence, but soon the interest wanes and no more is heard of the matter until some incident of public administration causes it to bob up again. Then it passes through the same endless chain of rediscovery, analysis, argument pro and cm, and lethargy. The issue is a vital one, but there is no organized endeavor to instruct the people upon the advantages of unified government, no positive programme to work to, and the result is inevitable, nothing definite accomplished. With this brief introduction, I will leave Multnomah county’s chief concern-unification of governmentwhile I give an historical outline of the origin and powers of counties in Oregon, and review the important constitutional and statutory enactments pertaining to them. HOW THE COUNTIES BEGAN While the vast area west of the Rocky Mountains and northward from present California to Latitude 54 degrees and 40 minutes was jointly occupied by the United States and Great Britain, the rugged settlers organized in 1843 a provisional government and called it Oregon territory. Some 400,000 or 500,000 square miles, the exact size depending upon what was considered the northern boundary of the United States, were divided into four districts. In 1845 the legislature changed the designation of “districts” to “counties,” which was continued by the territorial and state governments. Thus, for seventy-five years, the county has been the principal agency of the state in the Oregon scheme of government. The state constitution, effective in 1859, recognized the existing counties, and provided that no new county might be created with less than 400 square miles of area, or 1,200 population. Each county was required to elect, biennially, a clerk, a treasurer, a sheriff, a coroner and a surveyor, and was authorized to elect or appoint any additional officers that might be necessary. County debts or liabilities 95

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96 NATIONAL MUNICIPAL REVIEW [February (Article 11, Section 10) were limited to $5,000, except to suppress insurrection or to repel invasion. In 1912 this section was amended to permit a further debt of 2 per cent of the assessed valuation of all property to build permanent roads, and in 1919 the road limit was increased to 6 per cent. In two cases decided years ago, the supreme court, construing the $5,000 county debt limit as it stood from 1859 to 1916, held “that, in the administration of its affairs, debts OF a certain class were thrust upon the county by operation of law, and were not within the constitutional limitation, such as salaries and fees of witnesses and jurors, and that the $5,000 limitation applied only to voluntary indebtedness.” The tax and indebtedness limitation amendment to the constitution, adopted in 1916, on which more will be said later, applied the $5,000 limitation to “debts heredter created in the performance of any duties or obligations imposed upon counties by the constitution or laws of the state, and any indebtedness created by any county in violation of such prohibition and any warrants for or other evidences of any such indebtedness . . . shall be void.” The effect of the tax and indebtedness limitation amendment upon the $5,000 county debt limitation, according to the recent ruling of the supreme court in School District No. 24 of Marion County vs. Smith, was to nullify the force of the old decisions of the court “as to a distinction or priority of debts of any class or character, and to bring all kinds of indebtedness within the constitutional limitation.” A PRIMITIVE GOVERNMENT FOR PRIMITIVE TIMES Under the earliest territorial laws of 1849, county business was transacted by the probate courts. Boards of county commissioners were first created and powers of counties defined in 1851. Present general powers of counties were fixed by act of the territorial legislature, effective May 1,1854. At that time there were fifteen counties, having an aggregate population of between 30,000 and 40,000. The chief pursuit of the people was agriculture, and their principal place of residence the Willamette Valley counties. Multnomah county was yet to be created, and he would have been bold, indeed, who would have visioned the complexities of the county’s problems at the present day. This act is Section 2861, Lord’s Oregon Laws, and it reads : Each county shall continue to be a body politic and corporate for the following purposes to wit: To sue and be sued; to purchase and hold for the use of the county lands lying within its own limits, and any personal estate; to make all necessary contracts; and to do all other necessary acts in relation to the property and concerns of the county. The few words above quoted, enacted into law under primitive conditions sixty-six years ago, comprehend the general grant of authority which the legislature has given to the counties. Time and again the supreme court, in passing upon some issue arising out of the relation between state and county, has ruled that the county is a mere agency of the state. In Yamhill County vs. Foster (53 Or. l24), the court held that “a county is not a private corporation, but a political agent of the state, created by law for governmental purposes, and charged with the performance of certain duties in behalf of the state.” To the same effect is Mackenzie vs. Douglas County (81 Or. 442) and School District vs. Smith, decided in the summer of 1920. In the Smith case the court denied the right of a county,

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19211 COUNTY GOVERNMENT IN OREGON 97 in levying a tax, to “nullify a mandatory act of the legislature through the exercise of discretionary power vested in it by other legislative acts.” The legislature set the counties adrift in 1854 and let them work unregulated for nearly sixty years. Laws defining the powers and duties of county boards and county officers fill the codes and session laws, but there is a dearth of legislation pertaining ‘to county finance. All that was required of counties was that they should, through their county boards, at some stated term in the year, levy taxes for their own support, and for any other purposes provided by law, and enter their determination at large in the records. It would be impossible to say, without making a detailed examination of the records of each county, to what extent the determination entered in the records partook of the nature of carefully prepared budgets. The duty was performed as well as might have been expected when the officials charged with its performance were not subject t.o the check of a superior power. It is perhaps true, in a general way, that for a long time after 1854, more than a half century, some sort of estimates were made each year, that the people understood them, and that the county boards faithfully adhered to them. Still, there are instances where no details of any sort are shown in the records, and only the rate of tax levy in mills for various purposes is entered. During this long period the big policeman idea of government obtained, the needs of the people were few, the cost of administration was light, and there were more watch dogs of the treasury at large then than there are now to challenge expense accounts. At no time during all these years did the legislature think it necessary to require county commissioners to furnish 4 a bond. In 1891, the legislature directed the county boards, sitting in January and July, to examine the books and papers relating to the financial affairs of county officers collecting and disbursing county funds; in other words, make a casual and unprofessional audit. This slipshod enactment was the law of the state for twenty-four years. During the great depression that followed the financial panic of 1893, all forms of governmental expense in Oregon were kept down to actual necessities. There was economy to the point of parsimony. A typical illustration of the caution that prevailed is furnished by Multnornah county where the total taxes levied on the assessment roll of 1900, when the state was prosperous, were actually 15 per cent lower than the levies on the 1896 roll, when the state was in the dumps. NEW COUNTY SERVICES Along about 1901 the people of Oregon began to drift definitely away from the big policeman concept of government. The political powers of the people were enlarged by the initiative and referendum, the direct primary, the corrupt practices act and the recall of public officers, and contemporaneously there sprung up a demand for more service from government. The good roads movement emerged early, followed by a train of new courthouses, libraries, poor farms, bridges, schoolhouses, public auditoriums, salary increases, etc. “All the old services in state, county and city were continued, new ones were undertaken, and new and old were conducted on a higher plane than formerly.” Public expense mounted under the pressure and with it taxes.. Total taxes levied in Oregon grew from $4,920,000 on the

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98 NATIONAL MUNICIFAL REVIEW [February 1902 roll to $15,300,000 on the 1912 roll. Levies on the 1912 roll for county purpose, including roads, but excluding schools, climbed to $7,725,000, or $250,000 more than was raised for all purposes in Oregon on the 1906 roll. The excitation of the pocket nerve brought a vigorous protest from the taxpayers. Much of the criticism was directed against the county boards, which enter all the levies but are not by any means responsible for them. There were charges of waste, extravagance, unbusinesslike methods in purchases of county supplies, unsystematic accounting, and even of dishonesty. A census bureau official, sent to Oregon to collect data upon the financial condition of the counties, was quoted as saying: “You people of Oregon must be very good natured to permit your county affairs to be handled in so loose a manner.” When the legislature met in 1913, the land boom which had prevailed for most of ten years had subsided, the business depression had set in, and there was a general sentiment in favor of laying upon county government the strong hand of the state. The legislative interest in the welfare of the taxpayer did not, however, extend to reduction of appropriations, for the money grants of the session were the largest in the history of the state up to that time. However, two very important acts were passed. They are summarized as follows: 1. County budgets.-Provides that no tax may be levied by a county unless a detailed estimate of the amouns proposed to be raised by taxation it prepared, published twice in a newspaper, and discussed with the taxpayers at a public meeting. At the hearing any taxpayer may be heard for or against any proposed levy. After the hearing the county board must make the levies, but these may not legally exceed the published estimates by 10 per cent. Expenditures may exceed the levy by 10 per cent to take care of emergencies. The county board may prepare the annual estimates or delegate this work to others. In Anderson vs. Hare (78 Or. 540) it was held that a substantial and not a technical compliance with the law is all that is required. 2. Uniform system of accounting.Directed the state insurance commissioner to install a uniform system of accounting in all departments expending state money and in all counties. The commissioner was vested with sweeping powers and could subpoena witnesses the same as a circuit judge. Beginning January 1, 1914, the commissioner was to make an annual audit of the books and accounts of each county, the cost thereof to be borne by the county concerned. The commissioner was empowered to call at any time for a report from any person or officer or employe of state or county government, whether or not such person actually handled money. All information gained from the audits and reports was to be published in convenient form for the information of the legislature and the taxpayers. THE REBELLION AGAINST IJXIFORM ACCOUNTING Budget making was accepted without protest, but uniform accounting raised a storm throughout the state. County government had never before in the history of Oregon felt the strong fist of the state in the pit of its stomach, and it rebelled. County officials had long followed their own systems of accounting and would not give them up. The idea of the state’s stepping in and telling them to adopt new methods was appalling. So, when the

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1021] COUNTY GOVERNMENT IN OREGON 99 legislature of 1015 met it was confronted with a vociferous demand to put uniform accounting out of business. That much abused word “economy” furnished the excuse. The legislature was wild on the subject and hit right and left, at good and bad alike. In an omnibus measure, repealing a large number of standing appropriations, it withdrew the financial support of the state from uniform accounting and then made bold and repealed the uniform accounting lam itself. “Uniform accounting, the safeguard and insurance of economy,” said one reviewer of the session’s work, “was struck down on the ground of economy. This much abused word economy was never more prostituted for political purpose by the last legislature than when, in the name of economy, they abolished systematic accounting. And the word economy was used by every unscrupulous, extravagant and loud-mouthed political legislator to cover his own selfish purposes.” Having wiped uniform accounting off the books, the legislature proceeded to square itself with the people by giving them (1) a law, superseding the layman audit of 1891, requiring county courts, under penalty of forfeiture of pay, to make a real audit annually of the records and affairs of each county officer handling county funds; and (2) a tax limitation law, named after its author, the Bingham Act, which was applied to all governmental agencies. Under the limitation law, no county, city, etc., could, in any year, unless authorized by vote of its electors, levy a greater tax than the largest amount levied in any one of two preceding years, plus 6 per cent. Statutory millage rates, also, were subjected to the limitation, but levies for bonded debt, outstanding warrants of prior issue, judgments and interest were not included. County assessors were directed to reduce any levy made in violation of law. The Bingham Act was in effect one year, when it was succeeded by the tax and indebtedness limitation amendment to the constitution, adopted by the people in November, 1916. By its terms, neither the state, nor any municipal corporation authorized to levy a tax, may, in any year, unless permitted by popular vote, so exercise its power as to raise a greater amount for purposes other than the payment of bonded debt and interest than the amount levied by it in the year immediately preceding for the same purposes, plus 6 per cent. If an increase beyond the 6 per cent is voted in any year it must be excluded in determining the levy-base for the following year. There is an indebtedness limitation clause, the effect of which has been heretofore referred to in this article. The restriction of the Bingham Act upon statutory millages was not carried into the constitutional amendment. The ta,x and indebtedness limitation amendment rode the bumps safely in the supreme court in July, 1990, in the case of School District No. 24 of Marion County vs. Smith, as county school superintendent. A legislative act of 1919 directed a county tax of ten dollars per person of school age for the county school fund. The Marion county board, in making up its budgets, levied the ten dollars, but certified that $1.75 of it was in excess of the limitation. In a test case in the Marion county circuit court, the excess was declared void. Thereupon, the school district sought to mandamus Smith to compel him to apportion to it the full ten dollars per capita. In deciding the issue, the supreme court distinguished between mandatory and discretionary taxes voted by the legislature. It held that the school tax

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100 NATIONAL MUNICIPAL REVIEW [February was a mandatory tax, and that all taxlevying bodies, in making their budgets, must first provide for mandatory taxes before levying the discretionary ones. “We hold,” said the court, thatas to the constitutional limitation the power of the county to levy a discretionary tax is subordinate to its mandatory duty to levy a tax under a specific act of the legislature.” In another place the court said that the six per cent limitation must be respected and enforced, and while it denied to the county boards the right to reduce a mandatory tax in favor of a discretionary tax, did not venture an opinion as to what might happen if the boards should have to distinguish between all mandatory taxes and still keep within the limitation-in other words, when, as in physics, two inelastic bodies come into collision. “ ! THE TAX SUPERVISING COMMISSION The legislature of 1919 again hearkened to the demand of the taxpayers for a further check upon counties and other tax-levying bodies and considered a measure having for its purpose the complete separation of the levying and the spending functions of government. Under the budget laws, the governing body, whether commission, council or board, prepares the estimates, hears the objections to them, makes the levies, and receives and disburses the money. The new proposal was to create a super body over a11 units of government, with power to pass upon the budgets, make the levies and hold the spending authorities to striclr accountability. In the last hours of the session, and after much log-rolling, a bill was put through creating a tax supervising and conservation commission in each county having a population of 100,000 or over. That meant Multnomah county, as it is the only county that can qualify in the matter of population. The measure would have been a good one for the state at large, but the upstate counties did not want it and slipped from under. When the legislature finished juggling with the bill its teeth had been drawn, and the commission created by it was given advisory jurisdiction, only, over all public bodies vested with the power of levying a tax. It can examine annual budgets, hold hearings upon them, report findings, and make recommendations, but “the power and authority to fix and levy taxes shall remain vested in the same authorities as now provided by law.” The commission is empowered to compile statistics of public indebtedness, interest and expenditures; to inquire into management and methods of accounting; and to advise with heads of government with the object of conserving the public money and increasing e6ciency. The chief weapon placed in its hands for the furtherance of its objects is newspaper publicity. The tax-supervising and conservation commission made its first report to Governor Olcott in January, 1920, and presented a mass of valuable information relating to taxes and administration. It stressed the point that in its advisory capacity it cannot accomplish anything tangible. It found that supervision of the numerous annual budgets of Multnomah county in the manner contemplated by the act creating the commission cannot be instituted and maintained without further legislation. Recommendations included the enactment of a competent budget law; constitutional and statutory changes to make possible centralized administration of tax-levying functions; audit and examination of accounts; concentration and uniformity of financial records; installation of cost-accounting methods; and classifi

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19211 COUNTY GOVERNMENT IN OREGON 101 cation of salaries in the public service with the right of continuous employes to progressive compensation. It is to be regretted that the coinmission did not see fit to recommend Multnomah county’s greatest needunification of government-and that it went out of its way to attack the county auditor by innuendo. It says that the administrative code, adopted by the county board in 1913, has remained inoperative, especially in its check and accountancy features, “because of official resistance where cooperation should have been willingly extended.” The so-called administrative code is a cumbrous document and was compiled by a man who knew nothing of county government in Oregon. In certain phases it conflicts with law, and in others it is manifestly unworkable. It was not worth the $1,000 that it cost. If Multnomah county had never had, nor ever heard of an administrative code, it is abundantly protected in all its financial operations by the law defining the duties of the county auditor, which is sufficiently broad to give the county any kind of a system of accounting it is willing to install and pay for. If the county board is not satisfied that the auditor is conducting his of6.ce in obedience to law, which he persistently claims he is doing, the board can refuse to audit his salary, or even mandamus him to bring him to time. Neither of these things has the board ever done. Furthermore, the county board can examine the auditor’s records, or it can appoint some one else to do the work. Neither of these things has the board ever done. Again, under a law of 1915, notwithstanding the strict duties imposed upon the auditor, it is the inescapable duty of the county board to make an annual audit of all county officers handling county money. The penalty for failure to perform this duty is forfeiture of salary. Although this law has been in effect for five years, the county board has never ordered an audit, nor have its members forfeited their salaries. Less disposition in certain quarters to criticize and antagonize the county auditor and more willingness to co-operate with him, less disposition to justify an expenditure seven years ago of $1,000 for an administrative code and more willingness to draft a new and better code, would be highly beneficial to county government in Multnomah county. The code of 1913 is far from being the last word on the subject of administration. A PROGRAM OF REFORM The reader who has followed this survey of the beginnings and development of county government in Oregon must be impressed with the thought that the whole system is in need of complete reorganization. It is. The legislature could not address itself to a more valuable subject than this very one of disentangling the county mess and whipping the entire structure into workable shape. Definite results can be accomplished by four enactments, in brief as follows: 1. County charter.-Counties should be permitted to incorporate under general laws, with powers defined by charter, the same as cities and towns now do, with power to say what officers they shall have, subject to certain constitutional requirements; and with power, also, to fix the salaries of their officers and employes. In general, counties should be vested with as large a degree of local self-government as is compatible with the right of the legislative assembly to pass a law effective everywhere in the state. 6. Uniform accountancy.-All coun

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102 NATIONAL MUNICIPAL REVIEW !February ties should be subject to a state law providing for uniform accountancy, a!ong the lines of the act of 1913, which was repealed in 1915. 3. Budget law.-The county budget law should be revised and strengthened and harmonized with the tax and indebtedness limitation amendment to the constitution. For example, the expenditure of 10 per cent beyond the final estimates, allowed by the present budget law, is of doubtful validity, if it creates an indebtedness in excess of $5,000, under the ruling of the supreme court in the recent Smith case in Marion county. 4. Tax supervision.-Each county should have a body like the existing tax-supervising and conservation commission of Multnomah county, but clothed with power to enable it to function effectively. The levying and the spending departments of government should be separated and each in its own sphere held to strict accountability. All of the foregoing measures can be enacted without constitutional amendments, unless it is desired to alter the title or tenure of certain county oEcers now required by the constitution. The reasoning of the supreme court in Lovejoy vs. the City of Portland will support these suggestions for county government reform. If the insurance business, which was the issue in the Lovejoy case, is of sufficient importance for the state to assume the exclusive regulation of it, then county government is of sufficient importance for the state to take hold of it and improve it. THE SUPREME NEED-UNIFICATION Multnomah county would participate in the benefits accruing from the betterment of county government at large, but for it the ultimate remedy is unification of its local governments. This step cannot be taken hastily. Constitutional authority for consolidation must first be obtained and this will take time. Next will come the drafting of the charter which will draw upon the best talent that the county possesses. Multnomah county is one of Oregon’s thirty-six counties. It is the smallest in size, but it leads all the others in population, wealth, manufacturing and shipping. Its gross area is 451 square miles, of which about 111 square miles are in the Bull Run timber reserve. The principal tax-levying corporations within its boundaries, not counting the county itself, are: Port of Portland 809% square miles; School District No. 1, of which the larger portion is within the corporate limits of Portland, SO square miles; the City of Portland and the Portland Dock Commission, each 66.3 square miles. The population of the county is nearly 876,000, or 35 per cent of the state’s total, compared with 12% per cent in 1870. There are 612 people to the square mile, a greater density than is present in Denmark, Holland, Japan or pre-war Germany. Portland has over 93 per cent of the population of the county and over 96 per cent of its assessable wealth. The industrial and commercial interests are extensive. One who sits before a map of Multnornah county, and traces its transportation systems and is impressed with its tightness, is struck with wonder that its people tolerate the annual levying of taxes by a large number of public bodies “acting independently of each other and actuated by no co-ordinating impulse.” Year in and year out, these bodies decide how much money they want from the taxpayers, make their levies and report them to the county board, which

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NOTES AND EVENTS I. GOVERNMENT AND ADMINISTRATION The Illinois Constitutional Convention Takes Long Recess.-The Illinois constitutional convention, after nearly a year of floundering, has taken a long recess, leaving the people of the state, who expected so much from this body, in doubt as to whether it will ever submit anything that will meet with the approval of the voters. The convention met in January, 1920, and was in session most of the time until July, when it took a recess until November. After rcconvening, and remaining in session for a few weeks, another recess was taken until September, 1921. Successful business men, bankers, and lawyers of high standing are prominent in the convention. Judged as individuals, the membership rates high. Collectively, the body has shown little ability thus far to function effectively. Most of the members have a strong sense of individuality, and commanding leaders have not appeared. There is no real group working for a definite program. Proposals thus far given tentative approval by the convention in committee of the whole form a rather confusing mixture of good and bad features. Apparently the majority intend to submit the new constitution to the people as one document, which many think means sure rejection. If the convention will submit its work to a popular vote by parts there is much more chance that some features will be adopted. There is much pessimism, both within the convention and among the people of Illinois, as to whether anything will be accomplished. Just prior to the last recess there was difficulty in keeping a quorum. The subjects arousing the most controversy were those of revenue, limitation of Chicago’s representation in the legislature, and the initiative and referendum. Many citizens of Illinois confidently expected that the convention would authorize a provision for the classification of property for purposes of taxation. The majority refused, however, to give sanction to this idea, but voted to leave in the constitution the requirement for the taxation of all property according to the rule of uniformity. The draft as approved in committee of the whole does stipulate, however, that there may be an income tax on intangible property as a substitute for other forms of taxation of such property. There is provision also for a graduated, progressive income tax with the proviso that the highest rate shall not be more than four times the lowest rate. At the time the delegates were elected, the Hearst newspapers of Chicago were instrumental in securing a popular vote on the question as to whether the proposed new constitution should contain initiative and referendum provisions. The vote on this question was favorable in the state at large, including Chicago. The proposition failed to carry, however, in the part of the state outside of Chicago. When the principle of the initiative and referendum was rejected several members left saying they would not return, and the Hearst papers announced that the convention was dead. After bitter debate, the majority of the committee of the whole voted for drastic limitations upon Chicago’s representation in both houses of the state legislature. Thereupon, some of the Chicago members withdrew; others resigned committee memberships and announced that they would perform no more work so long as the attitude of the convention should remain what it was upon the question of limiting Chicago’s representation. The Chicago members, while contending for the principle of equality of rcpresentation in both houses of the legislature, stood willing to accept as a compromise some limitation in one house. While the convention contains some able advocates of the short ballot principle, the majority of the body is opposed to any move in favor of a shorter ballot. The provision concerning counties, as tentatively approved, though awkward in form, holds out hope for substantial progress in county government. After repeating various restrictions of the existing constitution that interfere with intelligent legislative action regarding counties, the proposal stipulates that notwithstanding such provisions the legislature may enact laws uniform as to classes of counties for the organization and government of counties, which shall 104

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19211 NOTES AND EVENTS 105 become effective when approved on local referendum. The convention approved the idea of giving Chicago broad constitutional home rule powers, with the right to frame and adopt its own charter. However, it refused to give home rule charter making powers to other cities of the state. There are provisions intended to authorize the consolidation of the governments of Chicago and Cook county, but it is doubtful whether in their present form they will serve their purpose. There are provisions ahout zoning and excess condemnation that are held to be fairly satisfactory. One interesting provision approved by the committee of the whole is that intended to give cities additional borrowing powers for the acquisition of local public utilities. The present constitution limits debts to 5 per cent of the assessed valuation of the taxable property. The proposal in question aims to authorize an additional indebtedness for municipal ownership purposes of 15 per cent of the value of the real estate. This additional debt-incurring power is accompanied by the condition, however, that the rates charged by municipally owned utilities shall be high enough to make the property self-sustaining. Everything that the convention has done to date is tentative. There is uncertainty as to what may be the course of action when it meets again next September. In some quarters the hope is expressed that the spirit of compromise may be invoked so as to secure agreement upon a program that can be expected to secure popular approval when the results shall be submitted to the people. * Emplopment Standardization in Philadelphia. -It will be recalled from Mr. Woodruff’s article in the July, 1920, number of the REVIEW, that the actual work on employment standardization in Philadelphia was begun on April 17, 1920. For the technical work the civil service commission had retained Griffenhagen and Associates, Ltd., a private consulting firm from Chicago. In order to enable the mayor and the city council to incorporate the new standard titles and the new standard rates of pay in the bndget for 1921, the date for the completion of the civil service commission’s report was fixed by council at October 1. The commission. in turn, required in its contract with the private consulting firm that the latter should fle its report by September 15. Both the private consulting firm and the commission reported the body of their recommendations well within their respective time limits. To facilitate the application of the commission’s recommendations to next year’s municipal pay-roll, the mayor, on August la, issued instructions to all departments asking them to embody the new standard titles of positions and the new standard rates of pay in their budget estimates for personal service. These instructions in the main were faithfully carried out and the departmental estimates were forwarded to the mayor. On October 13, when the mayor transmitted his budget to council, he announced that in order to stay within next year’s revenue under the existing tax rate, it had been necessary to lay aside the recommendations of the civil service commission with regard to salary increases, and that “with a few minor exceptions” only policemen and firemen were to receive a substantial increase in pay. The new standard titles also had been stricken from the budget estimates and the old titles had been restored. In effect, this was a complete repudiation by the mayor of the recommendations of the civil service commission. The only hope for their adoption thereafter lay with council. Almost at the outset the sentiment in council appeared to be unfavorable to the recommendations. Although Philadelphia city employes are at present grossly underpaid, there is at this time such strong popular feeling against higher taxes that council declined to assume responsibility for the immediate 10 per cent increase in the cost of personal service which the adoption of the standard rates of pay would have entailed. The mere fact that the mayor had thrown his influence against the recommendations also proved a big obstacle in the way. It was not surprising, therefore, that on December 6 council took definite action continuing the existing schedule of titles and salaries and postponing the whole problem of classification and standardization until next year. The only general increases in compensation enacted during the budget deliberations applied to the uniformed police and fire forces, the rank and file of which were given a flat rate of five dollars a day regardless of their length of service. WILLJAM C. BEYER.~ 1 Assistant Director, Bureau of Municipal Research of Philadelphia.

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106 NATIONAL MUNICIPAL REVIEW [February Reorganization of the Federal DepartmentsOn December 14, 1920, the House of Representatives finally passed S. J. 191, which had been passed by the Senate on May 10, in the last session. The joint resolution, which became a law automatically after ten days in which the President failed to veto it, will create a joint committee of six, three from the Senate and three from the House, “to make a survey of the administrative services of the government for the purpose of securing all pertinent facts concerning their powers and duties, their distribution among the several executive departments, and their overlapping and duplication of authority; also to determine what distribution of activities should be made among the several services, with a view to the proper correlation of the same.” It is provided that the committee shall report from time to time both to the Senate and to the House and prepare and submit bills; but final report of the committee is required by the second Monday in December, 1922. The committee is specifically authorized to go into the executive 05ces with the right of examining all records and, presumably, all persons, therein. It is generally admitted that the Federal departments and commissions could be grouped more advantageously and a good deal of work has already been carried on in the way of securing and collating information by civic bodies, semi-official groups and by the United States Bureau of E5ciency. It came somewhat as a surprise to those who had followed this work that, judging by the debate in the House, the sponsors for the joint resolution apparently had it in mind to conduct some such detailed survey as had been carried on by the Joint Committee on Reclassification, which employed an army of experts, commandeered the time of hundreds of clerks employed in executive departments and expended a generous appropriation of public money in the preparation of its voluminous report. The date set for the final report on reorganization two years hence would indicate the scale on which it is proposed to proceed. HARLEAN JAMES. * Philadelphia Votes for $33,ooo,ooo Jmprovemerits.-At the November election the voters of Philadelphia voted upon a $33,000,000 loan ordinance for permanent improvements. The loan was carried by four to one. Among the interesting items are those having to do with buildings that are to front upon the Fairmount Parkway, the new diagonal thoroughfare which itself cost $17,000,000. The items include $1,500,000 for the art museum which, with previous loans, makes $3,500,000 available. There is included $1,000,000 for the public library, which makes a total of $4,750,000 available. The new building for the municipal court is provided for to the extent of $1,000,000 which is to be added to $900,000 already made available. Toward the acquisition of property for the construction of the city hall annex $1,000,000 is available. Philadelphia has opened the Delaware Avenue, an important riparian thoroughfare along the water front, which at its narrowest portion is now 150 feet wide. The Loan bill provided for carrying this improvement both north and south, a total of $1,550,000. For various parkways and parks the voters approved $2,750,000, this including especially playgrounds and parks in the congested section of the city. Philadelphia has been building a new elevated system and is preparing to extend and improve its water supply and among the items are $G,SOO,OOO for these two purposes. There is also included $3,500,000 for construction of wharves and docks. The emphatic note of all recent city planning in America is accomplishment and in such improvements as the Fairmount Parkway and Delaware Avenue, Philadelphia has an honorable place among the leaders. * Ontario Committee Reports on P. R.-The committee of the Ontario legislature appointed to study and make recommendations in regard to proportional representation has just submitted its report, approved by a good majority of the members. The report recommends: (1) The experimental use of the Hare system of P. R. in two cities (Hamilton, and Toronto being suggested) and two large semi-rural constituencies for members of the provincial legislature; (a) The use of the Hare system in singlemember districts (the “alternative vote”) for the remainder of the legislature; and (3) Legislation making the Hare system of P. R. optional for Ontario cities. This report may be regarded as a result of the successful trial of P. R. in the Winnipeg provincial elections last June, at which Mi. A. S. Winchester was present as representative of the Ontario government. ANDREW WRIGHT CRAWFORD.

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19211 NOTES AND EVENTS 107 Zoning in Milwaukee.-Readers of the REVIEW will be glad to hear that the admirable zoning ordinance, prepared for Milwaukee under the guidance of ArLhur C. Carney of Cambridge, Mass., as consultant, has been adopted by the city. The ordinance, while along the usual lines, adopts some of the newer methods of regulation. There are four use districts,residence, business, commercial and light manufacturing, and industrial. There is a limitation, varying in the various area districts, of the number of families permitted to the acre or fraction of the acre, as in the Newark ordinance and one or two others of recent date. There are no one family house districts, all residential structures being allowed in the residential districts. The enforcement of the ordinance is in the hands of the building inspector, as it should be. The city has no authority to establish a board of appeals, but will ask the next legislature to grant them this power. * County Home Rule in California.-Santa Clara county, California, the seat of Stanford University and the center of the prune industry of the county, is considering the adoption of a freeholders’ charter. Following the lead of San Bernadino, Los Angeles, Tehama and Butte counties, which have home-rule charters, and San Francisco, which has city and county consolidation, Santa Clara county with San Jose as its county seat, has discussed both plans and will proceed with a freeholders’ commission to draw up a home-rule charter. No consolidation is possible under a borough system of city and county government, because of the extent of area and the diversity of interests. No separation of the county is possible at present because of constitutional and statute provisions which cannot be avoided. This leaves the home-rule plan with a consolidation of offices and a resdjustment of functions and duties, as the only possible alternative, and the one most generally accepted by city and county organizations. EDWIX A. COTTRELL. * Minnesota to Tax Iron Ore.-One of the issues in the state of Minnesota for a number of years has been the special taxation of iron ore. A tonnage tax bill has been introduced into every session of the legislature except one since 1907. Such a bill was vetoed by Governor Johnson in 1909 and another was vetoed by Governor Burnquist in 1919. This matter was one of the main issues in the recent state election. It is now generally believed that a special tax for state purposes will be levied upon iron ore at the session of the Minnesota legislature which meets in January. Such a tax would relieve, to some extent, the burden upon Minnesota municipalities. 11. MlSCELLANEOUS English Housing Notes.-Last October, Mr. Lloyd George explained to the British Parliament that the house shortage in England at the present time numbers 500,000. Also he added 100,000 houses are needed annually to take care of the regular increase. A ten years’ program therefore would call for a million houses. Since the new housing act was passed and England began her scheme of subventions and subsidies to house builders not much actual progress has been made. In October the minister of health, Dr. Addison, gave out public figures to show that in something less than two years only 7,000 houses had been built. although 50,000 more were in various states of erection. The Prime Minister wishes to dilute the building trades with unskilled workers in order, as he says, to build more houses. The unions’ reply is, that so many men are employed on luxury building such as cinemas, garages, and the like, that there are not enough workers for the houses. From what can be learned their contention seems true. The most interesting development at present is the award of a contract for 400 houses to the London Building Guilds. These houses are to be built at Walthamstow, a suburb of London, and involve the sum of 400,000 pounds. The guild of course builds without profit and if the housing shortage of England can be solved ’ by the mere building of houses it seems likely that the building guilds will have to be depended upon to carry out the work. The Wholesale Cooperative Society works jointly with the guilds in supplying materials at the lowest possible price and in the case of Walthamstow, the Co-operative Insurance Company insures the contract up to 20 per cent of its value. News comes that the city of Sheffield has completed its own civic survey-the first to be made by any English municipality. The results have been translated into diagrams which have been

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108 NATIONAL MUNICIPAL REVIEW February hung in the town hall so that the people can get a really clear understanding of how ShefEeld came to be what it is, and where it is going. The growth and direction of population, the influences of transportation are revealed and great emphasis is given to the difficulty of carrying out such complex problems as housing betterment. The pcople of Sheffield are shown that before bouses arc built it is necessary to know where to build them, although the importance of gaining this knowledge is never considered in America from the broad standpoint of the common welfare. The She5eld diagrams reveal the city as a jumbled lot of unrelated and inconvenient groupings which is of course what hap pens to all cities under the present and haphazard method of growth. We are not informed as to whether the Sheffield diagrams present a study in land values but it is very interesting to note that the city of Manchester is proposing as one of the fundamental steps towards a solution of its great housing problem, a 5 per cent capital tax on land values. It is true that the corporation of Manchester has decided that its great public services shall be run hereafter as nearly as possible at cost and not for a profit. “Perhaps the Council would not have come to this Spartan conclusion,” says the Manchester Guardian, “if they had not seen an avenue of relief opening through the capital tax of 5 per cent on land values.” Of course this tax would only bear upon unused building sites although the scheme proposed would involve the untaxing of buildings and improvements “to the extent of the reduction of the rate.” The Guadian believes “that the greatest and simplest reform in housing would be simply to lower if not to sweep away the tax on building.” This is of course the theory of the single taxers, but at present it remains a theory only. Under the present price and profit system of industry, the guilds believe that the untaxing of buildings is not the only answer. CHARLES 14. WHITAKER. * City-Planning Notes.4ne of the newest cities to start city-planning work is Poughkeepsie, where the president of the Chamber of Commerce has appointed a city-plan committee. In Indiana, the movement for city planning is practically state-wide. In Indianapolis, Terre Haute, South Bend, Elkhart, Fort Wayne, Muncie. Marion, Anderson, Mishawaka, there is definite city-planning interest manifested. In Marion and Elkhart a city plan, or at least some phases of it are being prepared. In Indianapolis and Terre Haute there is a city$an committee, and in most of the other cities there is a city-plan committee of the Chamber of Commerce. All this interest is now being crystallized in an effort to pass a city-planning and zoning bill at the present session of the legislature. The Indianapolis committee is known as the Committee of One Hundred, and was appoiuted by the president of the Chamber of Commerce. St. Paul, Minnesota, will continue the cityplanning program under way. The work is now well started, and Messrs. Bennett & Parsons, Consultant City Planners, will make their preliminary pIan report on a general street plan the first of the year. The city council has appropriated for work in 1991-$93,000, and a balance of $10,500 in the present year’s funds has been reappropriated, $8,500 for a zoning survey, and $%,000 for a survey of street railway facilities, and a report on rerouting. Mr. George H. Herrold, secretary of the Plat Commission, is also managing director and engineer for the St. Paul City-Planning Board, thus making it possible to correlate the work of these two bodies and control the development in the entire county area surrounding the city. * Meeting of Governmental Research Conference.-The sixth annual meeting of the Governmental Research Conference took place at Indianapolis on November 17 and 18, some of its sessions being held jointly with the National Municipal League. Forty-six members were present from fifteen different bureaus. The sessions of the conference were devoted mainly to discussions of civil service and accounting, and to the more effective organization of the research movement. The old committees on civil service and the budget section of the model state constitution of the National Municipal League were continued: new committees were established on budget classification, the budget section of city charters, the purchasing section, the accounting section and the bonding section, of charters, statistics of city debt, and the organization of boards of education. The following officers were chosen for the coming year: James W. Routh of Rochester, Chairman; Robert E. Tracy of Indianapolis, Vice-chairman; and Lent D. Upson of Detroit, Secretary and Treasurer.

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BOSTON-THE PUBLIC TRUSTEE PLAN BY JAMES F. JACKSON Chairman, Board of Trustees, Boston Elevated Railway Chapter 159 of the acts of the legislature of Massachusetts of 1918, known as the Public Control Act, went into effect on the first day of July in that year. It arranged what is practically a lease of the Boston Elevated Railway for the term of ten years to the state of Massachusetts representing for that purpose Boston and certain suburban cities and towns which the railway serves. Five trustees to be appointed by the governor of the state and to hold o5ce for the ten years of the lease were given absolute control over the management and operation of the railway. The rental was to be paid in fixed dividends upon outstanding stock at 5 per cent for the first two years, at 53 per cent for the next two years and at 6 per cent for the balance of the term. This act grew out of the vain struggle under private management to furnish service upon a five-cent fare, a struggle that even under pre-war prices and conditions had grown more and more desperate until the payment of dividends was suspended and the effort to maintain the property practically abandoned. The problem was no longer a question of profits for stockholders but of the existence of the service upon a system prostrated by lack of capital and revenue. The legislature could have met the situation in any one of four ways. It could have allowed the railway to go into the hands of a receiver with the consequent expense, delay and uncertainties; or it could come to the aid of private management with relief from burdens and with guarantee of credit; or it could commit itself completely to the theory of public ownership; or it could take the less radical step of an experiment with public control of the railway under temporary lease from its owners. It chose the last of these courses. WHY THE TRUSTEE PLAN WAS ADOPTED Three factors in the situation undoubtedly had influence in bringing about this decision. The first was the fact that the usefulness of the street railway had come to be fully understood. It was appreciated as never before that the street car is not alone the poor man's carriage but that of the public official, the man of business, the professional mandirectly or indirectly the carriage on which everyone relies and for which no jitney or other kind of electric omnibus can be substituted. It must be preserved. The second was the fact that this metropolitan railway represented an honest investment under a public supervision that had prevented excessive issue of stock or bonds and that, therefore, there was no call for reorganization to eliminate watered stockThe third was the fact that the new capital which was indispensable ton sustain this service must be obtained by buying it at market prices as other necessities are bought, in other words that investment must have its secure return. To the legislative mind the problem for experience to solve was whether or 111

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11% NATIONAL MUNICIPAL not a public management couId be efficient, that is conducted without waste and without loss of ambition or pride in achievement. It was thought that a trial was worth while. The basic plan for this experiment was that which I believe is the best for any street railway enterprise-a service at cost-meaning of course proper or necessary cost. In assuming their duties the trustees took over a railway that covered 535.326 miles of track, 475.717 miles of it surface track, 30.080 miles in subways and 29.529 miles upon elevated structure. Much of the surface track was of light construction and badly worn, a large part of the rolling stock in poor repair and of obsolete type. The power plant was in process of development and repair shops and car barns utterly inadequate. The total investment in this railway system was $93,612,211.21 represented by outstanding stock and bonds in about equal proportion. The aggregate cost of the subways and tunnels under lease to this company was $35,033,506.11. The Cambridge subway was then included in the corporate property at its cost of $7,868,000 but last winter this subway was transferred to the state practically at cost and leased to the company as the other subways had been leased at construction. MORE REVENUE NEEDED The act directed the trustees to reinstate the railway in good operating condition. To do this additional capital and additional revenue must be immediately obtained. As a measure for providing a first installment of the needed capital the act authorized an issue of preferred stock to the amount of $2,000,000. To secure operating revenue the act directed the trustees to put in force fares that would make the REVIEW SUPPLEMENT [Feb. service self-supporting and provided that meanwhile deficits incurred should be met from taxation in the cities and towns served by the railway, the amounts so advanced to be repaid whenever operating revenue should exceed operating cost.. The new capital was immediately used in part payment for 250 modern cars. Successive advances in fare followed. A seven-cent fare was put in effect in August and in October gave way to an eight-cent fare which after a trial of seven months also proved inadequate. At the close of the year ending on June 30, 1919, receipts had failed to meet expenses by approximately five million dollars which amount was raised by taxation in the cities and towns served. The ten-cent fare now in force was introduced in July, 1919. Losses under it continued in decreasing amount for two months, but in September this fare began to produce revenue sufficient to meet expenses and eventually to absorb the earlier deficits so that on June 30, 1920, the trustees were able to report that operating receipts for the year had met operating costs including all fixed charges and a reserve to depreciation. In summer months the expense for street work is always large and receipts are always smaller than in other months, traffic falling below average. These conditions prevailed as usual in July, August and September of this year. The expected operating deficit for those months was realized but unless some extraordinary event intervenes this will be readily absorbed before next July leaving at the close of this year as at the end of last year no deficit. There is a natural interest about the effect of higher fares upon traffic. OUT experience has shown that there has been a gain in total revenue but a loss in the number of passengers carried.

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19211 BOSTON-THE PUBLIC TRUSTEE PLAN 113 Under the ten-cent fare this loss at first amounted to 12 per cent of the traffic but gradually diminished to 10 per cent. To use figures the number of passengers carried under a five-cent fare for the month of October, 1917, was 32,854,04.7. Under the ten-cent fare in October, 1920, the number was 29,382,315. Had there been during this time no unusually large increase in operating costs over those prevailing in the days of private management, receipts would have met expenditures at a fare considerably below ten cents. As everyone knows, however, prices had risen upon every hand at a tremendous pace. This was featured most strikingly through advances in wages. The average number of employes upon this railway is 10,000. In the spring of 1918 an advance in wages took place the effect of which was felt throughout the first year of public control. In that year a further advance took place and last year a third. The aggregate increase in operating cost on this account has been approximately $7,000,000. To-day more than half of every fare goes to compensation of employes. The higher cost of coal has been another leading feature of increases in operating cost. Owing to a favorable contract that expired last July this advance has been seriously felt by us only during the last four months. As our yearly consumption of coal approximates 300,000 tons the additional expense this year would reach at present rates $2,000,000. One item of expenditure is a reserve to depreciation amounting to $2,000,000. This is annually set aside from fares to provide for renewals and replacements. Proper charges to depreciation are made not to build up the property to the full measure of original investment for the benefit of stockholders, but to maintain it in good operating condition for the benefit of the public. This means that the old-fashioned notion of maintaining a railway by hand to mouth methods with large expenditures in prosperous years and small expenditures or none at all in the lean years is a thing of the past. Sound policy to-day takes care that out of every day’s receipts something is put aside to meet the wear and tear that is constantly taking place. The lack of this precaution accounts in large part for the disasters which have overtaken so many street railway enterprises. ZONE FARES OR FLAT RATE? Boston has a single flat fare. It is a tradition and also the profound belief of many that this distributes the population, attracting people from congested centers into the outlying suburbs and that in so doing it establishes more healthful living conditions. Many families have undoubtedly established their homes in these suburbs in the coddent belief that this single flat fare would never be disturbed. But there are in Boston enthusiastic advocates of zone fares as more equitable and just in making the cost of riding proportionate to some extent with the distance the passenger is carried. The trustees are studying the comparative merits of the two systems in the light of experience in this and other countries. Experiments have been recently made with a five-cent fare upon lines where the run is short and where practically no competition with the general ten-cent fare is involved. Some of these experiments have proved failures but two of the lines are now in successf ul operation. Nothing is more idle than an attempt to compare street railway service in one city with that in another without

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114 NATIONAL MUNICIPAL the knowledge that is necessary to enable one to make proper allowance for distinguishing conditions that make the service dissimilar. These differing conditions vitally affect both the kind and the cost of transportation. Take a look at the situation in Boston. The center of business is confined to a small area into and from which on an average forty to fifty thousand people daily ride upon the street cars at about the same hour in the morning and at night. The problem of furnishing proper accommodation is one that is difficult. We have here a transportation wheel with a hub becoming more and more inadequate to receive the spokes which enter it as the terminal for radiating lines. Street surface was long ago inadequate for general travel and the street cars were driven into subways. The first subway built in this country was built in Boston. The cost of constructing and maintaining these subways is borne under existing law by the car rider in rentals paid from fares into the public treasury. The exaction of this tax now means an annual payment of nearly $2,000,000 or one-half of a cent upon each ride. This is a relic from days when tolls were exacted for the use of highways. The street car is a public conveyance operated in Boston by public officials and the subway is a public highway. The automobilist uses highways specially adapted at great cost to his convenience without contribution from him to construction expense. What excuse is there for this discrimination in his favor and against the car rider? The investment in the Boston elevated system, including subways and tunnels, is $136,500,000. The average ride over this system is four and onehalf miles while the longest distance covered is nineteen miles. The average number of passengers carried daily in 1918 was 955,245; the average in REVIEW SUPPLEMENT IFeb. 1919 was 889,750. The average for October of this year was 947,816. The budget of expenditures for 1919 was $32,000,000. The budget for this year is $34,000,000. Upon assuming office the trustees immediately worked out a general plan of improvement involving a total outlay during a period of five years of about eighteen million dollars chargeable in about equal proportion to capital and replacement. Substantial progress has been made toward the consummation of this program bringing with it modern cars, improved track, larger accommodation and more frequent service. The trustees make no claim as to the success of the experiment in public control which is in their charge. One reason for saying little or nothing about what has been done is the ever present knowledge on their part that whatever it may be it is only a step toward the goal which they hope the service will finally reach. The board is organized with chairman and recording secretary, the former assuming the duties ordinarily performed by the president of a railway and the latter those ordinarily performed by the clerk of a board of directors. Committees of two are assigned to administrative departments and report from their several spheres of activity at the stated or special meetings of the board. The trustees in this way are keeping in close touch with all matters of administration. The operating staff has at its head our general manager, Edward Dana, who was appointed to that position in recognition of his fitness for its responsibilities. The coddence reposed in him has been amply justified in what he has accomplished, and his ability, energy and untiring devotion to the work and his harmonious relations with the trustees and with sub

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19811 BOSTON-THE PUBLIC TRUSTEE PLAN 115 ordinate officials and employes have proved invaluable. GUIDING PRINCIPLES OF ADMINISTRATION There are certain principles of administration that the trustees have adopted to which I will briefly refer. Roosevelt, as we know, was fond of referring to the square deal. If men would oftener take the trouble to get below the surface of life they would find that there is something in every one that responds to the call for it, for even handed justice. It is the saving grace in the world. But we can be sure that no such thing is possible where ignorance rules instead of knowledge. Every eBort then should be made to give out the truth, the whole truth and nothing but the truth with respect to all matters that are of interest to the travelling public. Nothing hinders the approach of railway service to the standard which it ought to reach so much as the lack of patience. We all fail to exercise it. We jump to conclusions without knowing the facts; we hand in our verdict without waiting for the evidence. How can we secure patience on the part of the public? In only one way, by publication of facts. Plain and complete and frequent information makes for the sound public opinion which is the safeguard of management. Street transportation must always be subject to unavoidable interruption. A car loaded with passengers anxious to reach office or home stops, and another car stops, and another, and another until the line is choked with cars carrying hundreds of impatient men and women. The use of every effort to let the crews and the passengers know perhaps that a truck has fallen across the track, or that a drawbridge is up, or that a rail is broken, or something wrong with the power is worth the cost at almost any price. With the information conductors can cope with the emergency and passengers will be as patient as we can fairly ask. Financial interests are entitled to know the whole truth. Credit cannot live without frank information. If this is given credit will follow as far as it ought to follow. Close relations should be established between management and employes. Acquaintance on the part of the men with receipts and expenditures with the reason for existing conditions and plans for their improvement and opportunity to make suggestion about them will tend to lessen indifference, create mutual confidence and awaken ambition and pride in work. Street car service for the most part is a personal undertaking. Its standing in the community depends chiefly upon the men who operate the cars. Directors or trustees or general managers may be wise in their day and generation and yet if their wisdom fails to establish team work with their employes it will be of little avail. Co-operation between the public and employes is vital to success. Both must contribute to it. Bad work by the employe is quickly condemned. Why not commend good work? The automobile is the carriage of the individual. The car is the carriage of a group of individuals, practically their automobile. If your chauffeur shows skill you compliment him. Why not say a word in commendation to motorman or conductor who does good work? Everyone knows the difference between the motorman whose skill makes the journey safe and agreeable and the motorman who stops and starts his car in a way that throws his passengers about or drives it at a pace that is

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116 NATIONAL MUNICIPAT, disagreeable if not dangerous. Everyone appreciates the conductor who is alert, helpful and pleasant. Why should passengers refuse to heed the request he makes of them in their own interest and that of all who ride? I have a last personal word. I have long been acquainted with the men who have had charge of the railways in Massachusetts and in New England. They have been men m-ho are held in the highest esteem in the communities where they live. Through the stress of all these years they have kept at their posts undismayed. The record is one of ability, loyalty to public interests and unblemished honor. Nor are they REVIEW SUPPLEMENT [Feb. unlike the men who have managed street railways elsewhere. Under the conditions which prevail to-day we may all of us feel a new zeal, a new confidence in the success of the work at which they have labored so long. My last word then is one of optimism. But the struggle is not over. Fares are not yet adjusted. There is the fight against the jitney and the contest with the private automobile; the search for new economies to meet higher costs of operation; the effort to restore credit and inspire new confidence in capital. So it is an up grade and a long pull that lies ahead, but the street car is bound to win. INDIANAPOLIS RETAINS THE FIVECENT FARE' BUT REJECTS SERVICE-AT-COST BY E. I. LEWIS Chairman. Public Service Commission of Indiana Your convention meets in Indianapolis, a community that believes in a five-cent street carfare. It hopes to retain it. Those of you who have come from Portland, Maine, and Portland, Oregon, from New Orleans and the Twin Cities, and from cities between, may experience in Indianapolis the pleasant reminiscence of the good old days of 'Editor's Note: At the time of the National Municipal League meeting in Indianapolis, there was pending before the Indiana Commission, as commented on by Mr. Lewis in his address, a petition of the Indianapolis Street Railway Company for a two cent transfer charge. This petition was acted upon December 18. 1920. and a one cent transfer charge was granted, the five cent basic fare being retained. The question of retaining or increasing this charge in the future will be answered in accordance with the anticipated changed conditions affecting both costs and revenue during 1921, as their effects are discerned. five-cent street car rides. With the desertion of Cleveland, the list of places where the all but forgotten sensation of buying a street car ride with one coin-unless it be a ten-cent piece-is approaching the point of near extinction. Delegates from Portland on the Atlantic Coast paid a ten-cent street carfare to get to the railroad station. If they stopped at any cities enroute, except New York whose five-cent fares are causing heavy deficits that cannot continue, they have paid seven, eight or ten cents for street car rides. In Boston it was ten cents, in Providence six, in Albany seven, in Buffalo seven, in Newark seven, in Philadelphia seven, in Baltimore seven, in Washington eight, in Pittsburgh ten, in Cleveland six, in Detroit six, in Toledo seven, in

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19211 INDIANAPOLIS RETAINS Columbus six, in Cincinnati eight cents. Those coming from Portland on the Pacific Coast paid eight cents to get to their station. If they stopped off enroute they paid a ten cent fare in Seattle, in Tacoma ten cents, in Spokane six, in San Francisco five, in Los Angeles five, in Salt Lake seven, in Denver six, in Topeka eight, in Omaha seven, in St. Paul six, in Minneapolis six, in New Orleans eight, in Louisville five, in Kansas City eight, in St. Louis seven, in Milwaukee seven, in Chicago eight cents. On July 1, 1920, I do not have the numerous changes upward since that date, if you had stopped off for a street car ride in any one of 69 municipalities, including such cities as Boston, Pittsburgh and Seattle, you would have paid ten cents for a street car ride; if in any one of 32 cities, eight or nine cents; if in any one of 178 cities, seven cents; if in any one of 176 cities, six cents; and, generally, there would have been extra charge for transfer or for continuation of ride from one zone into another zone. To-day 600 cities have street car cash fares in excess of five cents. While discovery of a place where one can actuadly buy 18 miles of riding for five cents is notable, it is not as remarkable as the discovery that the company is solvent and full of hope. Returning confidence in its future is indicated by higher bid prices for its securities. On July 1, 1920, there were 118 companies, with a total of 7,820 miles of track in receivership. Since July 1 there have been a number of receiverships added to this depressing total. Other companies, some of which have exhausted possibilities of eightand ten-cent fares, are showing hopeless tendencies. Fifty-six of those 118 receiverships occurred between June 1, 1919, and July 1, 1920. Obviously THE FIVE-CENT FARE 117 the departure from the five-cent fare has not been a complete success. As an institution the street railroad has the pallor of bankruptcy. A great deal of attention has been directed to rehabilitation, or one might say resuscitation, of the national system of steam railway transportation. Our congress has given its best efforts to that solution. Important as is the problem of the steam railroads, the fact remains that while they transport approximately one billion persons annually, the street railways transport fourteen or fifteen persons to every one carried by the steam roads. The day is past when financial distress of the street railway industry could be looked on as being only of concern to the industry. The growth of cities is, as never before, insistently demanding money for extensions. The fact that the voice calling for that money generally does not inspire confidence constitutes one of our most important municipal problems. THE COMPANY’S ATTITUDE TO THE When I was invited to appear on your programme it was to speak on “The Success of the five-cent fare in Indianapolis.” 1 suggested change of title to “The Five-Cent Fare in Indianapolis.” That does not imply that the five-cent fare has not been a success, but I believe that noone should speak of accomplished success until the, war’s readjustment period is past. We hope, and there seems to be good reason to expect, that two or three years from this time Indianapolis, when called on at one of your meetings, can respond to the toast “Indianapolis, the Five-Cent Street Carfare City.” I proceeded after making the change in title to block out what I would say. Since then, however, a changed condiFIVE-CENT FARE

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118 NATIONAL MUNICIPAL tion has come. The local street car company, by formal petition, has come to the Commission saying that the frenzied price raising in coal has caught it and reversed, with the beginning of fall, the favorable financial showings made up to that time. The company is asking for temporary relief, a transfer charge and readjustment of payments by interurban companies for trackage and terminal facilities, to tide them over this coal crisis. The significant feature of the petition, however, is that there is indicated no desire for a higher basic fare than five cents. What can be more remarkable than the experience of a public utility commissioner having gentlemen who two years ago sat on the front steps bemoaning the denial of a six-cent fare petition, coming around and saying “We need some temporary relief to get us past the exorbitant coal price era, but we want to hold fast to this five-cent fare.’’ These gentlemen are not in business for pleasure. They are intent on making money-a most commendable policy for public utilities notwithstanding occasional short-sighted comments to the contrary. Why do not these gentlemen who now say a temporary emergency faces them, petition for a six-cent fare? Because they have experienced a great awakening. It may all prove to be a mistake, but they now are of the opinion that a higher basic fare than five cents, at least in Indianapolis, would result in cutting down the most profitable part of any street railway company’s businessthat is, the short-haul patronage for which there is always the potential competition of that patronage’s own legs, as well as the appeal of jitneys. Facing the fact that within two weeks, I shall sit as one of the judges in this matter, I may not, with propriety, REVIEW SUPPLEMENT [Feb. go into some details that you might desire. However, I am entirely free to summarize the historic background of low fares in Indianapolis. From my angle of view it covers the substantial and fundamental phases of the subject. It is not necessary to go further back than the year 1918 when, on a decision of the supreme court of Indiana, the Public Service Commission assumed jurisdiction and eliminated fares of less than five cents. In December, 1918, the company came to the Commission for a six-cent fare. The Commission rejected the plea chiefly on four revelations that resulted from public hearings. WHY A PETITION FOR INCREASED FARE WAS REFUSED The first revelation was that the company was not collecting its earned revenues. The Commission reached this decision as a result of putting trained checkers on the cars. Their presence was not suspected. Officers of the company had testified that losses of earned revenues did not exceed 2 per cent, and were more nearly 1 per cent. The Commission’s inspectors showed a loss of 13.6 per cent on cars checked during a six day period. The Commission held that “It is futile to provide increased revenues for petitioner if it does not collect revenues already provided.” The introduction of pay-as-you-enter cars was the result of this investigation and decision. The second revelation was that the value of petitioner’s property did not warrant its financial obligations. The company presented an inventory and valuation totaling $28,634,210.83. If the Commission had ever let that valuation get by, Indianapolis would have been paying a seven-or eight-cent fare. I am very certain that officers of the company now will agree that the

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19211 INDIANAPOLIS RETAINS financial outlook under such conditions would not be as favorable as it is now. The hearing revealed values only a little in excess of half the twenty-eight million six hundred thousand dollars. No one, except local taxing officials, who have assessed the company at almost twenty million dollars, is now claiming avalue in excess of $16,000,000 or $16,500,000. When a service-atcost proposal was laid before the Commission this year the city and company practically agreed to a valuation of $15,000,000. From the date of its decision, the Commission has had the co-operation of officers and various groups of stock and bond holders in working out a voluntary reduction of obligations to a proper basis. A superimposed holding and operating company, the IndianapolisTraction and Terminal Company, was eliminated. Four million dollars of common stock for which there was no substantial background was wiped out, and two million one hundred and eighty of interest bearing bonds, held in sinking funds, were cancelled, thus reducing securities approximately $6,180,080. Also $1,000,000 of stock was made junior to such an extent that it cannot be considered a liability. Securities were thus reduced approximately 30 per cent. Indianapolis Street Railway stockholders who had been slumbering in comfortable berths with the assurance of guaranteed stock dividends, were called forth to operate their property and to assume the hazards of preferred stockholders. The third revelation was of a device that was not uncommon in the profitable days of unregulated street railroading. This device was a sinking fund for the retirement of bonds. The street car riders were not only to guarantee dividends to a nonoperating company, but were also to wipe out the bonded indebtedness. THE FIVE-CENT FARE 119 One hundred twenty thousand dollars annually was going into this sinking fund. Also, the bonds which, it would seem, should have been annually retired were continuing to draw interest: Payments to the sinking fund, and payment of interest on bonds held in the sinking fund, were amounting annually to almost $200,000 of money that was badly needed for property and service. When the Commission pointed out that this plan, simply analyzed, meant that the public was placed in the position of giving to the company not only sufficient fares to maintain and operate service, but also ultimately to give the company its property, and that such a plan was not at all consistent with regulation which, for emergency relief, the company was seeking to come under, there again was fine co-operation on the part of the bond and stockholders and officers. At least temporarily the sinking fund provisions are waived. Most advantageously to all concerned, the waiver provides that this money go into betterments. This means better security for bond and stockholders; better service for the rider. The fourth controlling revelation was that the community was drained dry of its young men, who were among the 4,000,000 away to war; that the absence of this vital part of the population, together with the absence of many young women and the depressions of war, had very nearly stopped social activities; that influenza epidemics, sweeping the nation, had all but suspended local shopping, theatre and moving picture traffic; and that locally industrial activity was not normal. The Commission, in its denial, took all these conditions into consideration. It accurately forecasted reassumption of normal life and greater traffic. The change came with a rush. In 1918

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120 NATIONAL MUNICII’AL the Indianapolis street cars transported 70,003,795 revenue passengers; in 1919 the traffic jumped to 84,051,850 passengers; in 1920 it will probably pass the 94,000,000 mark. Briefly then, in answering to my subject “The Five-Cent Fare in Indianapolis,” I would summarize by saying that its foundation lies in: (1) Elimination of unwarranted financial obligations; (2) Elimination of a holding company-and, incidentally. the elimination of absentee landIordism; (3) Awakening to the fact that the short haul passenger is the profitable passenger; (4) Collection of earned revenues; (5) Taking into calculation subnormal traffic conditions in the war period and correct forecasting of increased volume of traffic after 1918. (6) A healthy spirit of co-operation; (7) An intelligent handling of the whole (8) Better public relations. situation by the city; ADVANTAGES POSSESSED BY 1NDI.kNAPOLIS It is true that there are other conditions which contribute fundamentally to make it possible for Indianapolis to be, when the readjustment is past“The Five-Cent Street Carfare City.” These advantages are geographical and social. The street car company mines ‘a large amount of its own coal in gelds located near to Indianapolis and this means cheaper fuel costs than those faced by most companies. Wages and cost of living all through the war period have been at somewhat lower levels in Indianapolis than those prevailing in the zone of greatest war activities and excesses which reached back from the Atlantic seaboard through Buffalo, Pittsburgh, Youngstown, Cleveland, Detroit, to Chicago. This applied to street railroading. NOW, that the national period of readREVIEW SUPPLEMENT [Feb. justment has come, it is naturally to be presumed that this area will be least and last, affected. When the company came to the Commission its plea was that it was at bankruptcy’s door. Its tracks and pavements were in bad condition; the condition of its rolling stock was aggravatingly proclaimed by flat wheels; its finances were such, it was represented, as not even to permit the installation of rather inexpensive fare collecting boxes, or pay-as-you-enter equipment; its operating forces were not good; four much needed extensions were not forthcoming. There are, of course, critics and the impatient. Everything that is desired has not been accomplished. Cars are crowded during rush hours. But those who will stop to survey the situation, must agree that, under the reorganization, with a five-cent fare and universal transfer, and in face of the most adverse conditions the country has ever known, there has been in the short period of two years a decided change. All cars have been made pay-as-you-enter; new cars have been purchased and open cars have been converted into closed cars, and some of these are of exceptionally good type; the operating force is of higher standard; flat wheels have disappeared and general maintenance has greatly improved; three of the four extensions, the College avenue, the Shelby street, and the Premier motor car plant extensions, have been made, and the fourth, the Illinois street extension, is scheduled for next spring, unless the world upsets again. During this period the city has done a great work in street reconstruction and the street car company is struggling along with that. No one would presume to say all things are 100 per cent good, or even 90 per cent good. I am, however, asking you who live in six, eight and

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1921 J INDIANAPOLIS RETAINS THE FIVE-CENT FARE 121 ten cent street car cities and who have well in mind what your own cars and service and extension inadequacies are, do you really think there is very substantial ground for complaint from the five-cent car riders of Indianapolis or the city itself? I desire specifically to disavow any intention of saying that continuation of the five-cent fare would have been possible for all companies and cities. I am fully aware that it could not, for it has been our duty, as a public service commission, to put higher than a five-cent base fare into six Indiana cities. I do believe, however, that many cities did not try out the possibilities of the five-cent fare. Looking at the street car situation nationally, it appears that the peak has been reached in operating costs, and that the break is near at hand. StiU the skies are not clear. Industrial letting down will likely increase any baneful effect of high fares which may fundamentally, but not now obviously, exist. High fares are not going to get some street car companies past the sheriff for the reason that there have not been fundamental readjustments of financial obligations and elimination of needless superimposed operating companies. The aftermath of the war also is generally marked by heavy increases in local taxation. Papers last week announced the inauguration of the six-cent fare in Cleveland and gave as one of the reasons for the increase, at a time when prices are falling, a $150,000 increase in local taxation falling on the company. In Indianapolis at just the time when we began to look on favorable operating sheets the same burden fell. The whole subject of taxation-direct and indirect-of the conveyance of the masses of urban population loudly cries for careful study. Direct taxation, franchise tax and paving streets will, during the coming year call for almost eighteen per cent of the fare paid by Indianapolis street car riders. I would make a general observation that is applicable to the Indianapolis situation: When the water has been squeezed out, and securities represent, and are warranted by values of property put to public service, those financial obligations must be protected. Occasionally the shortsighted demand that these legitimate demands be passed or deferred. Laying aside all moral considerations what-especially to-day when all the world wildly is bidding for money for rehabilitation-can be so detrimental to a community as such a course? Indianapolis is typical of all cities. It is growing with marvelous rapidity, ten per cent every three years. Street car lines must be extended so it can expand. More and better cars must be provided to carry more citizens. More power house capacity must be had to move these cars. The chairman of the board of works of this city says that $1,500,000 to $2,000,000 must be spent by the local company next year to keep transportation apace with city growth. In this and all other cities, such heavy expenditures must constantly continue year after year. The great need of the street railway industry is credit. Where is this money to come from? From security holders who are unfairly dealt with? From bankers and other custodians and trustees of money who see legitimate obligations ignored? Or are the cities in a position to furnish the capital needed to keep local transportation abreast with their growth? SERVICE AT COST In April this year, the city of Indianapolis laid before the Commis

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122 NATIONAL MUNICIPAL sion a service-at-cost plan. It was designed to strengthen the credit of the local company. Officers of the company were most favorable to the plan. Most of the members of the Commission thought that at last the formula for the solution of the local street railway problem had been offered. I was enthusiastic. Mr. Samuel Ashby, corporation counsel for the city, had made a study of the Cleveland, Montreal, Boston and other service-atcost plans that-especially the Cincinnati plan-had been nationally proclaimed as being the latest and best thought. He had particularly studied the great problem of inspring incentive and initiative in the operating company. His plan incorporated-and I believe improved upon-the Cincinnati idea of giving the company higher return for lower fares. Efficiency was to be rewarded by maximum returns; inefficient operation was to be penalized. The plan suggested just what rate of return should apply to each step of fare. Mr. H. H. Hornbrook, attorney for the street car company, thought, with possible minor changes, the plan was good. It was agreed that it would be well personally to make the rounds of some of the nearby service-at-cost cities for the purposes of picking up suggestions and perfecting the plan so that when it was put into effect “The Indianapolis Service-at-Cost Plan” would supplant the Cleveland and Cincinnati plans as a national model. With high spirits we began our journey-Ashby, Hornbrook, and myself-all service-at-cost advocates. We did not limit ourselves to interviews with the companies, or the cities. We checked statements of one against the other, and then made independent investigations. It was not long until we began to be less assured that we had found a panacea. We came home to think it over. It REVIEW SUPPLEMENT [Feb. was mutually agreed to wait until business trips carried us, individually, within striking distance of more distant points for further investigation. In the meantime the Commission was being subjected to criticism, together with some hammering, for delaying the adoption of service-at-cost. The term had, as usual, made its popular appeal. After the three friendly investigators had come to a unanimous decision there still remained different points of view among the public service commissioners which, with sickness, resulted in further delay. The first of this month Mr. Ashby, author of the original proposal, filed with the Commission a motion to withdraw it. The company did not object. Recently the Commission, without a dissenting vote, acted in the affirmative on the motion. In his motion for withdrawal Mr. Ashby says: We have been unable to find or agree upon any plan of operation on the basis of service-at-cost which would furnish the incentive of private ownership in an operation of service-atcost. The result of our investigations generally has been to raise a most serious question and doubt as to the wisdom of the service-at-cost plan. The inevitable tendency seems to be for the operator or company readily to accept increased cost of operation with the view that it can be passed on to the public by higher fares. Such a course results in only adding to the burden of the public. Experience has demonstrated that any increase in fare above the normal fare, results in a very substantial reduction in the number of passengers carried, and has a tendency at the same time to increase the cost of operation, so that the financial results of the company under such a plan is unsatisfactory and in some cases disastrous. The experience of Cincinnati is a good illustration of the operation of the plan. The fare was increased from five cents to six cents and from six cents to seven cents, and from seven cents to eight cents, and during the comparatively short time in which the plan has been in operation the company has accumulated a

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19 INDIANAPOLIS RETAINS very large operating deficit of over $2,000,000. During practically the same time the Indianapolis Street Railway Company has been operating under the emergency order of the Commission at five cents. It has been able, as heretofore stated, to operate without a loss, its revenues have been more than its operating expenses and sufficient to pay a reasonable return on the fair value of its investment. I have little to add to his brief summary. The Commission does not pronounce the verdict of nostrum on service-at-cost, nor dogmatically cast it out of all future consideration. DANGERS AHEAD It must, however, be confessed that it is suspicious of it. We, at least, will wait to see whether it proves to be panacea or nostrum. Personally, I am apprehensive, I have heard popular acclaim of other epigrammatic panaceas. “Let the people rule” gave us the direct primary which seems not to have met all the expectations of its friends, or the expectations of all of its friends; “cost-plus” has been repudiated; “he kept us out of war,” only won an election. The remarkable thing to me is that service-at-cost did not appeal to every one. I recall numerous adverse comments. One is sufficient. When the hammering of the Commission to “save the company” by adopting the serviceat-cost proposal was at its height, an elevator operator said to me “What is the Commission going to do, Mr. Lewis?” I replied that I did not know. His answer surprised me: “Service-at-cost is the limit-put that in and the company can do anything and charge it up to the riders.” My elevator operator hit on the head one of the chief defects, and one which it seems to me is fundamental. For example: Coal is hard to get and the price is very high. A serviceTHE FIVE-CENT FARE 1 at-cost street car operator who already, as in most places, finds it impossible to earn the maximum return and is assured of the minimum which will cover fixed charges, is called on by a representative of a coal company. He has plenty of coal for sale-good coal at that. Why should this street car executive worry about its price? Why should he join in the night and day scramble of other public utility operators who do not have his sinecure, and who are struggling to get coal for a low price in order to pull them through and give their people some return on their investment? It is true that they may be able to buy coal at $4.00 a ton, but here is coal ofiered to him in his nice warm oEce at $6.00. It goes into operating costs. All right-serviceat-cost covers all operating costs. I fear that service-at-cost simply means that the lid is taken off. It is possible that some time in the future some workable plan incorporating incentive for eaciency and initiative will be worked out. While the Commission does not pass finally on service-at-cost, nevertheless it seems to most of us to run contrary to human nature, which, at least in business, requires opportunities of a struggle for gain. Psychologically, the blocking out of rates which shall apply if operating expenses increase, threatens to become an open invitation for laxity. There is still another possible defect. Service-at-cost is closely connected with city halls. Quite often city halls are closely connected with political organizations. Again, quite often political organizations are connected with various interests. When one ventures into the field of speculation of what may happen to service-at-cost after the novelty wears off, and after changes in management supplant men who may have pride in keeping their plants

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124 NATIONAL MUNICIPAL REVIEW SUPPLEMENT [Feb. up and their operating costs down, one finds that the possibilities rival those which have brought cost-plus into disrepute. It is possible, for example, that a coal operator, standing in with a highly politicalized city hall crowd, could obtain a contract for supplying coal to the service-at-cost utility at a price considerably in excess of a fair price. It is possible that real estate developers, operating through such a city hall, could cause the construction of losing lines to their projects. A tie between a political machine and the street railway would open the door to every sort of a dernogogue and agitator. These are only a few of the possible diseases that may attack service-at-cost in its maturity. I do not believe that, up to this time, they have developed to any great extent. I sincerely hope they will not develop. During the last campaign we have seen, notably in New York and Chicago, the street carfare made the football of politics. My inclinationsI am not saying that they may not be wrong, but nevertheless they are my inclinations reached after a study of public utilities on four continents during a period of twenty years-are that it is very desirable that public utilities be removed just as far as possible from the very conditions which I fear service-at-cost invites. I strongly believe in the policy of delegating regulation to men who will give their time and best thought to the subject and who are selected because of fitness for their work, and to the removal of such supervision and regulation from too close contact with local infiuences and prejudices, which we know by experience are sometimes narrow, blind and dogmatic. Such regulation permits of the accomplishment of those things enumerated herein, which have resulted in both the five-cent fare and solvency of the street car company in Indianapolis, and in Indiana, while all around are higher fares and wreckage. As a final thought, the theory of regulation of public utilities is serviceat-cost. Regulatory bodies determine rates by making them only sufficient to cover: 1. Operating costs. 2. The replacement of the wear and tear of the plant-depreciation. 3. Taxes-but not individual income taxes. 4. A fair and reasonable return upon the fair value of property used and useful in performing the public service. When you have based your rate on those foundations you have a serviceat-cos t . In behalf of such control, I would point to the fact that not one of the 118 electric railway receiverships in the country is in Indiana; that only six of the 600 cities having more than a fivecent fare are in this state, and that the electric railways in this state emerge from the trying ordeals of the war period and the more trying ordeals of the post-war period, solvent and full of hope.

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CLEVELAND--SERVICE-AT-COST AND EFFICIENT MANAGEMENT BY FIELDER SANDERS City Street Railroad Commissioner, Cleveland On Sunday, November 14, 1920, the rate of fare in Cleveland was automatically raised, under the Tayler “ Service-at-Cost ” grant, to a six-cent cash fare, nine tickets for fifty cents, one cent for transfer and no rebate. No objection was made by the city, because the stabilizing fund being below $300,000, under the franchise the company had the absolute right to raise its charges. The fare on March 1, 1910, at the inception of the Tayler grant was three cents cash, five tickets or fifteen cents, one cent for transfer and no rebate. It is, therefore, the fact that after more than ten years of operation under the Tayler grant, the fare paid by the car riders has almost doubled, the exact figure being the difference between 3.33 cents, the average fare paid in 1910 iii Cleveland, and 5.90 cents, the average fare which will be paid under the present rate, an increase of 77 per cent. This makes an examination of the franchise and a survey of the operation of the railway company, thereunder, peculiarly fitting at this time in determining whether service-at-cost has been a success or a failure, or to what extent it has been either. In my judgment it has certainly not proved a “Nostrum,” “a quack medicine,” but possibly has not quite approached a ‘‘Panacea” or “an absolute cure for all ills.” The street-railway situation in Cleveland for many years prior to 1910 was that of operation by private companies with the usual competition, and fivecent fare, with a slightly reduced ticket rate. These companies consolidated, the fare remaining at five cents on all lines, but with added transfer privileges for which no charge was made. This was followed by a bitter fight on the part of the city authorities for a lower fare, which after much warfare culminated in the present settlement. At the time of the adoption of the franchise, as for many years before, the carriders were paying five cent fare, eleven tickets for fifty cents with universal free transfers. It was claimed that, under proper management, with the proper franchise, the car riders could be carried for three cents. As a result of all the dickering back and forth it was determined that the car riders should not be carried at five cents nor at three cents, but at actual cost, whatever that might prove to be. The conclusion, therefore, of success or failure of the plan, must be predicated upon the purposes which the plan was intended to carry out, and be a finding as to whether those purposes have been carried out. The franchise boldly states in its preamble an ambitious programme, to wit: It is the common desire of the city and the company to have all the grants of street-railway rights then outstanding surrendered and renewed upon terms thereinafter recited, to the end that the rate of fare may be reduced, the transfer privileges made definite, and the right of the city as to regulation and possible acquisition made definite and certain, and that a complete readjustment of the street-railway situation should

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126 NATIONAL MUNICIPAL REVIEW SUPPLEMENT [Feb. methods. During the last half of the year 1919 and the first half of the year 1920, the city of Cleveland had a very lively controversy with the Cleveland Railway Company to determine the question whether the fixed return of 6 per cent provided in the original franchise should be changed to 7 per cent. This finally developed into a popular vote at a referendum, which resulted unfavorably to the company, as such matters usually do when placed before the public. But in the middle of the controversy a very extended hearing was had before a board of arbitrators. This board of arbitrators went into the financial condition of the company and all matters surrounding it very thoroughly. The hearing consumed macy weeks. Financial and streetrailway experts from all over the country testified, both in behalf of the city and in behalf of the company. The city lost the arbitration so far as the 7 per cent question was concerned, but in the decision of the board, the franchise, the management of the corrlpany and the actions of the city in its regulating capacity received a very illuminating commendation. The board said: The franchise and the amendments thereto have been shown by ten years of trial to be sound in principle, practical in operation, and of great benefit to the Cleveland Railway Company and its stockholders and to the public. It has kept the Cleveland Railway Company from exposure to the dangers and misfortunes that have overtaken other railway properties in most other large cities. The protective features of the franchise, together with the high standard of railway management and intelligent municipal supervision which the Cleveland Railway has had, have resulted in giving to Cleveland the best street-railway service at the lowest cost of any city in the United States. The testimony has taken a wide range. . . . The city street railroad administration has always been efficient and keen to the public interest, and there is no reason to believe that it will be otherwise in the future. . . . The evidence shows that this be made, upon terms that would secure to the owners of the property invested in the street-railway security as to their property, and a fair and fixed rate of return thereon, at the same time securing to the public the largest powers of regulation in the interest of public service, and the best street-railroad transportation at cost, consistent with the security of the property, and the certainty of a $xed return thereon, and no more. It will not be claimed by anyone that any of these declared objects of the franchise is or was anything but desirable and laudable, except that possibly, in view of the developments of the last two or three years, some may claim that a fixed rate of return, and no more, is not now in the best interests of the company and the public. I will refer to this particular claim again. It will also be admitted that, if these objects of the grant have been substantially carried out, a great civic benefit has resulted. The questions therefore before us are, Has the rate of fare been reduced, the transfer privilege made definite, the city’s regulation effective? Have the owners had security for their property, and have they had a fair and fixed rate of return, have the car riders had the best street-railway transportation at cost? If so, how has it been done, and what is there about the franchise, or the management, or the surrounding circumstances that has made such a conclusion possible? ARBITRATION BOARD ENDORSES TAYLER GRANT The question of the failure or success of a contract is ordinarily determined usually by the facts themselves, but sometimes by the opinion of experts who have gone over the facts and have drawn conclusions therefrom in the light of testimony and their experience. I desire to present in evidence an opinion first, which combines the two

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19211 CLEVELAND-SERVICE-AT-COST 127 railway property has been maintained at a high standard, that it justly enjoys the reputation of being the best managed, best equipped and most successful street-car enterprise in the country. We have been shown that a higher percentage of expenditure for maintenance and upkeep has been in force here than in any other cities. Experts have analyzed the situation and presented the conclusions to us, that by reason of efficient and intelligent executive management, and by reason of the high rate of upkeep and maintenance, a large appreciation in the value of the property has resulted. . . . The most important result of this hearing is the full and complete illumination of the question of the safety of the Cleveland Railway stock as an investment. A right understanding of the franchise discloses that the stock of the Cleveland Railway Company is safeguarded and protected so as to become a quasi-municipal investment. . . . We have no di5culty in reaching the conclusion that this stock is protected and safe to the investor. . . . This was the decision of ail unbiased court on the facts before it. THE TESTS OF FARES AND SERVICE Let me now briefly examine the facts themselves, of ten years of operation, to see if they show that the franchise has carried out its objects, if this particular service at cost has made good. Considering increased fare first, the objection that the fare has almost doubled under service at cost might be dismissed with the statement that every other commodity has doubled in price in the last ten years, and that it is only in accordance with the general economic trend of the last ten years that the price of a ride in Cleveland is now almost twice what it was in 1910. The wages of the trainmen operating the cars, for instance, have increased 158 per cent since 1910. But if that alone were said, we would be justified in concluding that the franchise has not been a moving factor in improving matters, but has simply ridden with the general trend of events. The fare at its inception was about two cents lower than the fare in other cities through the country, with one or two possible exceptions; it has stood through the years at the same ratio to rates general elsewhere, and, notwithstanding this last raise, it is still lower than most, and possibly still at the same ratio to the fares in other cities. One tremendous result of this low fare in Cleveland not to be forgotten is the fact that its car riders in eight years between 1910 and 1918 have saved more than thirty million dollars, over and above what they would have paid if the fare had continued to be five cents under the pre-existing private management as in other cities; or, in other words, they have saved for their own use an amount which, if it had been put in a sinking fund, would have purchased all of the railway company’s property in September, 1918. From the public’s standpoint, this one fact alone has justified the Tayler franchise. But that fact is only the more obvious of results obtained forthe carriders. Examining further, notwithstanding the low price of our service, statistics show that from 1910 to 1920, while the population in the city and suburbs increased 40 per cent and the number of fares paid increased 75 per cent, the service given in Cleveland has doubled. The Broadway, Euclid, Payne md St. Clair lines east of the river, and the Lorain and Detroit lines west of the river, the six heaviest trunk lines of the system, show in their headn-ays that during 1910, in the morning rush period, 7,790 seats per hour were furnished; 3,198 seats per hour on the base tables and 9,690 seats per hour in the evening rush period. The present headways on the same six lines furnish 15,700 seats per hour in the morning rush, 5,590 seats hourly on the base tables and 19,300 seats per hour in the evening rush, an increase of 102 per

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128 NATIONAL MUNICIPAL REVIEW SUPPLEMENT [Feb. cent in the morning rush, per cent on the base tables and 99 per cent in the evening rush. I am giving seats rather than headway because of the difference in the equipment. The number of passenger cars has increased from 955 in 1910 to 1,515 in 1920. Great changes in the character and size of the cars have been made. The average seating capacity of the old cars was about 38; the newest cars seat 58 and 60. The total seating capacity of the 1910 equipment was 36,100, of the 1920 equipment 74,800. The total standing capacity was 44,000 in 1910; in 1920 it is 80,460. So that while the number of cars has not doubled, the sea-king capacity has more than doubled, and the combined seating and standing capacity is almost double. In these ten years 3 of the 955 cars owned in 1910, nearly 40 per cent of the total, have been retired, so that there are now on the system, of 1,515 cars, only 580 that are more than ten years old. In the same period of time, the coinpany has developed a large number of additional lines within the city (a smaller number outside). In 1910 the railway operated 246 miles of track, exclusive of special work, track in car yards, etc. Today it operates 303 miles, an increase of 23 per cent. Most of this increase is in new trunk lines and new cross-town lines within the original limits of the city of Cleveland, although some of it represents pushing out into the country. In addition almost the entire layout of car houses, shops and power stations has been completely renewed. Many new most modern car stations have been built. The various power-generating stations have been abandoned, except one, which is on the programme for dismantling in the near future. Power is being purchased, and many new substations have been built or are under way for distributing purposes. The finest street-railway shops in the world have been built, at a cost of $1,300,000. The company has developed in the last three years an extensive plant for handling materials in its maintenance-ofway yards, and has added all kinds of improved conveyors, trucks and laborsaving machinery for doing its work. The 935 cars added to the system since 1910 have been in each instance of the latest and most efficient type, some of them built in the shops of the company by direct labor, others purchased. Of the original 246 miles of track existing in 1910, 162 miles have been renewed, about 66 per cent of the original trackage, and the average age of all the present tracks on the system is very close to nine years. The number of cars owned per mile of track has increased from 3.9 in 1910 to 5.05 in 1920. The fare remained at 3.33 cents until December 15, 1917, and since that time has been at varying rates, most of the time 5.33 cents. It is apparent from the foregoing brief summary, without going into detail, that the fare has been low, the service has been high, and that the property has been well kept up and highly improved, under service at cost a real railway has been developed, to an extent so noticeable as to merit and receive the commendation of every street-railway man who surveys it, and so diflerent from practice general elsewhere that many public addresses on this subject have summarized it by saying, “The railway has grown from a scrap heap in 1910 to the finest property in the United States in 1920.’’ ARE ALL PARTIES SATISFIED? Another and third way of testing whether a contract has carried out its purpose, in addition to the opinion of experts and the actual facts hereinbefore detailed, is to analyze the effect

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19211 CLEVELAND-SERVICE-AT-COST 129 which the contract has had upon the parties interested, with particular reference to their conduct under and general satisfaction with the contract. Satisfaction with an arrangement by all parties to it does not always prove that the arrangement is a good one calculaied for their mutual advantage, but satisfaction with an arrangement after a thorough trial over a period of years, after an exposition and public demonstration of claimed defects, is proof of the inherent soundness of the contract. The Tayler franchise has been criticized at various times because of the so-called lack of incentive in it, and possibly on lack of other matters, although no critic has ever been able to frame a franchise which in practice has worked better. I have at times made the same criticism myself. But notwithstanding the criticism, the people of Cleveland are satisfied. We know that to be so, because it happened that the first period of the grant expired on May 1, 1919, and it was necessary before that time for the city government either to renew the franchise for a further period of twenty-five years, thereby extending the expiration date ten years, or to permit the property to continue in the hands of the company without city control of the service, or to exercise its option to buy it and put in force municipal ownership. A series of meetings was held in the city council chamber over a period of six or seven weeks by the committee of council having the decision to make. The matter was widely advertised in the newspapers, and especially the fact that the grant was about to run out. Nevertheless, all the amendments that were offered to the grant as being desirable were suggested by the city street railroad commissioner. There was no public sentiment manifested for municipal ownership, or for any particular change in the grant, except on the part of a few councilmen and a few public officials who had been in very close relationship with the railway company and its day to day operation. No amendment was offered by any civic society of Cleveland, of which there are many and active, nor any newspaper, nor by the chamber of commerce, or any of the various clubs interested in public matters. The railway company refused to accept the amendments, said that it was satisfied with the franchise as it stood. It became immediately evident that the public also was satisfied with the franchise and the service under it. The result was that the council renewed the agreement in identical terms for a further period, and we are now operating thereunder. THE SIX PER CENT FIXED RETURN There is one serious problem now pending, arising in connection with the fixed return of 6 per cent for the stockholders,-a problem which is entirely likely to face the operators of the various new service-at-cost franchises, now being adopted. It is the difficulty of finding new money with which to finance extensions, betterments and permanent improvements. Extensions in Cleveland have always been financed by the sale of new stock. For more than a year it has been impossible to sell Cleveland Bailway 6 per cent stock at par in Cleveland, and the franchise forbids its being sold at less than par. The fate of all public utility stocks has been largely reflected in the market on Cleveland Railway stock, through no fault of its own. The management of the railway made an effort to raise the dividend rate on all their stock to 7 per cent, and failed at a popular vote. Although extensions are needed in Cleveland, the peopleevidently thought the 7 per cent remedy too drastic and

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130 NATIONAL MUNICIPAL far-reaching. So for the present we are standing still-just finishing the programme laid out a year and a half ago. Many solutions for the future needs of the company and city have been suggested and debated, and I have no doubt the problem will be worked out satisfactorily in a mutual spirit of co-operation, as have so many of our previous difficulties. THE SUCCESS EXPLAINED The question now arises, What is the reason for the obvious success of this plan? There are many reasons. The low capitalization at which the railway was taken over has had some effect, of course, but that effect has been very largely overrated. The added expense of a few millions to its aggregate capital value, with a return of 6 per cent thereon, distributed among the number of fares paid would have made an increase in the rate of fare so small as to be hardly noticeable. It would be expressed in tenths of a cent, less than a mill a ride. At the beginning of the grant, an addition of ten million dol1:trs to the capital value would have made a difference of only three tenths cent in each fare paid, and this, of course,would have decreased each year since. The low capitalization was far more efective in developing public conJidence in the honesty of the management and in the honesty of the arrangement than in any financial way. The whole secret of the success of the scheme has been the admirable combination of efficient and jealous management of the part of the company and its officials, of close municipal supervision, of harmony between the company and the public, of the confidence which the public has in the arrangement, and the ultimate fact resulting from all of these, that the company is financially strong, and able, up to a short time ago, to market any REVIEW SUPPLEMENT [Feb. amount of its securities with which to carry out the object of the street railway. All of these have been deciding factors in the success of the plan. THE CITY’S PART The city, through the council and the commissioner’s office, also guards its rights carefully. It maintains a complete department for the supervision of the company’s expenses of all kinds. It prescribes the quality and quantity of service. In the commissioner’s office a traffic department maintains, through a large force of inspectors, a continuous check of the traffic loads on the various lines of the city, and from time to time makes changes in the headways, in the running time, and in the cars on the various lines to more closely balance the service rendered with the service required. It makes all the studies and investigations for determining any changes necessary. The results are tabulated, and graphs are drawn showing the necessity or non-necessity for any changes. Changes are being made almost daily by orders to the company to put in force new headways and new schedules. In so doing the commissioner is able to tell from day to day whether the schedules which he prescribes are being run, and to see that the company does no more nor less than run the service prescribed. The traffic department also makes the seasonal changes due to the closing of parks and the opening and closing of factories, makes the changes in places of stopping necessitated by new conditions, makes changes in routes necessary to relieve congestion and to speed up service, and also advises with the operating department daily in the collection of fares, loading and unloading of passengers, the stationing of men to sell transfers outside the cars, the pre

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19211 CLEVELAND-SERVICE-AT-COST 131 payment areas, and all the details which make for excellency of service. The street railroad commissioner’s office, also, through its engineering department, keeps close supervision over the cost of improvements, renewals and ordinary repairs, and approves them in advance of expenditures. Not a bottle of ink is bought without the city passing on it and approving it first. In those matters we not only authorize and supervise the railway company from day to day, but we also advise with its officers and suggest changes and improvements. We maintain a day to day continuous audit. TIIE RAILWAY’S PART The railway officials have also had at heart not only the preservation and development of the property, but pride in themselves as successful managers. They have co-operated in every way in increasing the efficiency of the service. They have largely initiated a great many of the reforms which have made Cleveland street-car service a model of the country. They have adopted and carried out many of the suggestions made bjr the city. The result has been the employment of almost every new idea in street-railway operation, usually some years in advance of the rest of the country, such as the skip-stop, the speeding up of schedules, short-routing, cross-town lines, prepayment areas, pay-enter and pay-as-you-leave fare collection, the most modern-the-payas-you-pass-street car; the purchasing and distribution of power instead of costly generating plants; modern car shops, car stations and automaticpower substations; scientific and exactly sufficient schedules of service, the last word in maintenance-of-way equipment, materials and yards, labor-saving machinery of every kind, the scientific training of employes in a separate school and department equipped with machinery and instructors for that purpose, careful and strict discipline of the employes; in short, most of the advancements and improvements in street-railway management of the last ten years have originated or been tried in Cleveland. The peculiarly close combination of company management and city supervision has enabled Cleveland to devise and put in force every possible economy which tends to efficiency. DOES THE PLAN LACK INCENTIVE? I think that most of the criticism of the service-at-cost plan as developed in Cleveland in the last ten years, as to the lack of incentive, is really directed at the conditions of the franchise and not at the working out of the same as shown in actual operation. Cleveland is not under absentee ownership. Clevelanders own the company. The management in Cleveland are all heavy stockholders in the company and are directly interested; therefore it is not really management of paid service alone, but it is a management largely by stockholders themselves. Some of its success is due to that. In this management they have also the benefit of daily counsel and criticism, not monthly or annually such as is granted by public state commissions. Nor has the criticism been selfish, partisan or political criticism, such as has so often developed at the hands of political bodies and newspapers in other cities. TOM JOHNSON OPPOSED THE SLIDING SCALE In the meetings in March, 1909, between Tom L. Johnson, mayor of Cleveland, and Horace E. Andrews, president of the Cleveland Railway

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132 NATIONAL MUNICIPAL Company, and various councilmen, one of the councilmen suggested a sliding scale of interest, namely, that the lower the rate of fare the more interest could be paid on the investment. He said he thought there would be an incentive then for the stockholders to make the fare as low as possible, a saying which sounds very familiar now after eleven years. Mayor Johnson then replied, “And also quite an incentive to skimp the service; wouldn’t it? ” Mr. Andrews suggested the well-known gas company arrangement in England, and thought that it would be a fairly good arrangement, but Judge Tayler was firmly of the opinion that the company should have only a fair return on the money for the privileges granted by the city, and that it should not be subject to the hazards of operation. He was of the opinion that the railway company was entitled to earn only a fair return for the use of the streets, arid that if by ingenuity and economical devices adopted by the operators a reduction in fare was accomplished, and if thereby they obtained more than a fair return on the money, or, as he expressed it, an abnormal rate on their investment, there was something wrong somewhere. It seemed to the judge that it was fundamentally wrong to pay a man a bonus for doing that for which his salary is supposed to compensate him; that a bonus could not be a legitimate part of the cost, and that, therefore, this sort of an arrangement was service at more than cost; that the people are entitled, for the salary that they pay to the officers of the railway, to intelligent and efficient management, and that they ought not to be taxed any more. My own notion is that the idea is not only fundamentally wrong, but that practically it would not work because it creates an incentive on the part of the railway company to keep down REVIEW SUPPLEMENT [Feb. their expenses by skimping the service. Under the present service-at-cost plan the company has no desire and no incentive to skimp the service. They do not interfere in the slightest way with the full latitude of the city in exerting its power, and there is no desire on their part to do so, because it makes no difference to them, within the limits of their power to earn 6 per cent, how much or how little service is run. But I believe any temptation of an added dividend before their eyes, resulting from a reduction of cost which would make it advisable for the company to reduce its operating expense, would create a tendency on its part to encroach on the city’s prerogative as to service, by hampering and reducing the service in the many small ways by which they could do so without being caught by even an elaborate system of watching, and to render a cheaper and more unsatisfactory service even while ostensibly complying with the city’s order. Such an objective is bad. From the stockholder’s standpoint it is an incentive for the management not to keep the property up, because the lower the maintenance charges, of course, the lower the rate of fare andthe higher the return to the stockholders. It is also an incentive to keep down the maintenance by increasing the capitalization by charging repairs and replacements to capital, which could easily be done, thereby tending to make the enterprise top-heavy and reduce the physical value of the security which the stockholders have. This same thing would strike largely at the service given the car riders, because the first requisite of good service is a high class railroad, sufficiently maintained. Further than that, it increases the price which the city would have to pay on purchase and reduces the consideration for the price. A sliding scale of return based on a

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19211 CLEVELAND-SERVICE-AT-COST 133 sliding scale of fares, in my judgment is also theoretically wrong, because the stockholders of the company are compensated by dividends, the management of the company is compensated by salary; in other words, the price of money is one thing and the price of service is another. They have no immediate necessary connection. But if you are going to vary the price of money which the stockholders put into the company in the ratio of the rate of fare, or, in other words, the cost of service, the law of economics would, it seems to me, command the reverse of the suggested arrangement. I have heard it argued by financial experts (especially in the last arbitration) that there is no connection between a fair return on money,in other words, the price of the same, and the price of other commodities. Others have argued that theyrise and fall together. If there is any truth in the last argument that the price of money goes down and up as the price of commodities goes down and goes up, then as the cost of labor and materials used in the street railways, which largely determines the rate of fare, goes down, the return on the money invested should not go up. But, under the present incentive franchises, the return to the stockholders does go up as the fare goes down, instead of going down as it should if the above rule is correct. It is also likely to be a bad arrangement from a practical standpoint for the public. According to the judgment of almost everyone we have reached the peak of high prices. There is bound to be a decrease in the next five or ten years. They may not drop to the point at which they were in 1914. They may stay at a slightly higher level. After the Civil war it took from ten to fifteen years to bring the prices of everything down to where they were before the war. The same condition obtained after the Napoleonic wars in Europe. If history repeats itself, by 1930 we shall be back where we were in 1914. But even if that is not so, it is admitted that prices must decrease even if they do not come to the low level of 1914. If they do decrease, street-railway fares must and should go down. But under the sliding scale, what is the result from the public’s standpoint? As the costs go down, the expense of operating is going up by the extra amount which the stockholders secure, which tends again to keep the fares up. The fare in the last five years went up largely without the fault of the railway companies of the country, due to economic conditions, and I am satisfied that, without their action, without any credit to them, they will, by reason of the same law, go down in the next five to ten years. But even if you grant that all these conclusions are wrong, I think that any scheme of incentive so far suggested is open to the criticism of lack of effectiveness, because of the remoteness from and lack of direct application to the actual executives. I cannot help thinking from my experience of service at cost, from my knowledge of what has happened in the last five years, that after all the real incentive to efficient management is to give the man at the wheel, the man who actually operates, sufficient compensation to keep his best interest in his work, and then to have an efficient city administration to act as the watchdog, to criticize, advise and sit on his neck day by day, as is done in Cleveland, to see that he earns his salary. To recur to the question originally asked Panacea or Nostrum? We offer the Cleveland franchise, as a practical success, a sufficient remedy under its circumstances. Experience in Cleveland shows, in my judgment, that service at cost is not perfection, neither

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134 NATIONAL MUNICIPAL REVIEW SUPPLEMENT [Feb. is it a nostrum or quack medicine, whose hands it rests, and upon the that whether it is a panacea or not, public, who, if they have confidence in or how closely it approaches being a the arrangement, will make it a SUCpanacea, depends partly upon the cess or a failure. Many criticisms of franchise, but much more upon the the Cleveland plan can be made, perdevelopment of it, upon the people haps justly, but, as for Cleveland, who are charged with executing it, in Cleveland is satisfied. SERVICE AT COST VERSUS MUNICIPAL 0 WNERSHIP SEATTLE’S EXPERIENCE BY C. M. FASSETT Former dfuyor of Spokane. Staff Member American City Consultants The latest link in the constantly tightening chair of public regulation of utilities is found in the service-at-cost franchise. Beginning with the passage of the interstate commerce law by congress in 1887, public regulation has steadily, if slowly, increased the power of government over public utility corporations, gradually lifting them out of the class of private business which may be operated to suit the purpose of its owners, and enforcing in increasing measure a consideration of the needs and the purses of their patrons, the public. As in the case of the steamrailroads, this progressive regulative effort in the public utility business has grown up in response to the demand for the abolition and curtailment of certain specific practices of the owners and managers of utility properties, which an awakening sentiment had condemned as contrary to the interests of the public. PRIVATE MISMANAGEMENT Only in recent years has it been recognized that a public utility is a natural monopoly. In fact when utilities were unregulated, the only hope of the consumer for reasonable rates and tolerable service was in competition. The great municipal utilities which operate in the streets of American cities to-day are almost without exception, consolidations of companies which were originally started or soon developed as competitors. The growth of urban population was extremely rapid, but the demand for utility service was in greater ratio. In the decade 1900 to 1910 population in the continental United States increased 21 per cent, while the number of passengers carried one mile by the steam railroads more than doubled, and a like condition prevailed in municipal utilities. The pioneers in the utility business soon found that competition was the only interference with their profits, and consolidation of the competing companies was the logical answer. With their utilities consolidated the public soon felt the pressure of rate increases and service deterioration, complaints began to find their way into legislative bodies, and public regulation began to be attempted. Consolidation had not increased physical assets but had greatly increased capitalization, for not only had enor

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19211 COST VERSUS MUNICIPAL OWNERSHIP 135 mous prices been paid for the control of competing companies, but large bonuses went to pay the promoters and financiers who had brought the consolidation about. Then if the new concern showed profits above a fair dividend, further issues of stock appeared, the total capitalization being based upon the earning power of the utility in its years of greatest prosperity. It was not considered good business to apply excess profits to debt retirement, nor to large dividends on stock already issued. Either of these practices, if they became known, would have been the basis for a public demand for reduced rates or better service. Depreciation reserves were neglected, or if they were set aside at all it was merely as a ledger account, and the actual money was used for dividends on the heavily watered stock. The rates were all the traffic would bear and the service was as little as could be given without too much public protest. Growing cities suffered for much needed extensions of utility service which were not made because they would not show an immediate profit. Street cars were designed to carry the greatest number of standing passengers, and the arrogance of the utility magnate was reflected in the conduct of his lowest employe. His responsibility was to his stockholders. In order to ward off further competition and to defend themselves from attack, the utilities were forced to maintain lobbies in constant attendance upon legislative bodies, and to corrupt legislatures and city councils, and the story of these activities furnishes one of the saddest chapters in the history of municipal government in America. Extensive and expensive propaganda was used to influence public o5cials and leading citizens against His goal was more profits. public ownership and in favor of increases in rates, and the wells of public opinion were persistently and systematically poisoned. Occasionally there has existed an honestly managed and efficiently operated public utility in private ownership, and to these I apologize for the company in which I have found them. Of all the different utilities, street railway interests have been the chief offenders. Ten years ago a proposal to guarantee them net earnings of 6 per cent on the actual value of their properties would have met with derision; now it is the straw which they hope wi!l save them from drowning. Ten years ago one might search the files of their trade journals in vain for advocacy of public ownership; now you find it on every page. Ten years ago the proposal that a representative of the puhlic should be admitted to the counsels of the management. of the business would have been intolerable; to-day it has become an accepted part of the regulative scheme. Regulation began with the imposition of a franchise tax, usually based on gross earnings, This was wrong in principle in that it took revenue from citizens in proportion to their use of the utility, for the benefit of citizens in proportion to their taxes; it was justified only because we had not learned any better. We knew that the profits of the utilities were too great, and were groping to find the proper way in which to curtail them. The sharp advance in the cost of labor and materials brought about by the war, the competition of the automobile and jitney, and past methods of frenzied finance by which the street railways were held at the verge of bankruptcy, have now forced them into a desperate situation. Increased fares are a palliative which is likely only to postpone the crisis.

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136 NATIONAL MUNICIPAL REVIEW SUPPLEMENT [Feb. and whose product is losing hold on public favor. What is it worth? It is not difficult for engineers to arrive at the value of property of a going concern, one with a future, but to fix a fair value of a street railway at the present time is a task which staggers the ablest expert in the business. A trolley pole may be worth what it costs as a trolley pole, but what if it is only an encumbrance to the street? Are we taking an unjust advantage in offering its owner its junk value? The American public wants to be fair to the public utility interests, but it does not want to be cheated. It does not want to buy a work horse and get a dead carcass which has no value except the hide. THE EFFICACY OF SERVICE AT COST Two alternatives will save them from destruction: municipal oanership or service at cost. Both are now being tried and we will be better able to judge their comparative merit ten years from now than we are to-day. But the situation presses. The modern service-at-cost franchise puts an end to the evil practices of utility management which I have already outlined. It restrains financial sky rocketing, gives a reasonable control over management, provides for extensions and betterments, recognizes the street railway business as a natural monopoly, gives the public a little authority in the directorate, enforces adequate accounting, and retains to at least a small extent the alleged advantage of leaving the business in private management. But only to a small extent. The dominating motive of private ownership is a desire for profit, and business undertakings are attractive to business men largely in proportion to the chances of earnings beyond the legal rate of interest. If they can only earn 6 or '7 per cent they might as well invest in mortgage loans and go on a camping trip. Just now, however, the question with them is not future earnings, but the salvaging of the millions of capital which is threatened with obliteration. The crucial point in a service-at-cost franchise is the valuation of the property of the utility, and this is true also of proposals for municipal ownership. Here is a decaying business, but one which it is essential to the public good to keep going, at least until its successor has been developed. Here is a property with securities outstanding far in excess of any reasonable estimate of its real value. It is in much the same condition as a manufacturing concern whose processes are obsolete DIFFICULTIES IN MUNICIPAL OWNERSHIP Some cities have determined that they will themselves own and operate their street transportation business and are having a very interesting time. Many difficulties must be met and overcome. When the most of our state constitutions were written it was considered unsafe to allow much freedom to city governments. Honest men feared the entrance of the political unit into business, even the business of supplying the collective needs of its citizens, and the selfish interest of the utilities had an easy victory in denying the cities the right, or closing the avenues of opportunity, to engage in other businesses than those .which did not offer profit to private operation. In fixing constitutional debt limits, even in some so-called home rule states, the full debt limit could not be reached excepting for water supplies and sewers, or less frequently, for sewers, water and light plants. And behind the constitution stood the legislature, usually dominated by a combination of interests in which the utility corporations were fully protected.

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19211 COST VERSUS MUNICIPAL OWNERSHIP 137 But even if the law gave authority and opportunity, the very structure of city government, up to the last ten or fifteen years, was not adapted to the new proposal of public ownership. The public mind was not open to such business undertakings nor were the usual public officials competent to operate them or willing to undertake the new burden. A new light is dawning upon American municipal life, but the dawn comes slowly, and the greater number of cities are to-day in the condition I have just outlined. The electorate is heedless, the government is cumbersome and unresponsive, the officials are frequently changing, poorly paid and unexpert, employes receive appointment and hold jobs on account of election day services, wages and standards of efficiency are low, and “politics” is not the science of government but a disreputable game for spoils. For such a city public ownership of utilities is unthinkable as a hopeful business undertaking. Public regulation of privately owned utilities, having as its latest development the service-at-cost franchise, is as far as such a city should attempt to go. But no city government is as good or as bad as it might be. Extreme examples are rare. Cities are like the human beings which build them and inhabit them, containing much good in the worst, and some evil in the best of them. Bad impulses, in a city government as in the individual, are not only immoral, they are unintelligent, and when that fact is discovered and both reason and moral impulse get to work there is sure to be a change for the better. The decision between service at cost and municipal ownership in any city cannot be made on the basis of right and wrong; it must be influenced by local conditions, and particularly by the character of the city government. SEATTLE ACTS HASTILY Seattle has chosen to own and operate its street railways; it took them over by purchase on April 1, 1919, at a price of fifteen millions, paying for them with utility bonds, pledging the first application of the gross earnings to the payment of the interest and the gradual retirement of the principal in the term of twenty years. Seattle is a thriving city of 315,000 population. Its growth during the last decade was 33 per cent. Its population contains an unusually large proportion of intelligent, progressive, wide-awake Americans. Its government is the mayor-council form, the voters having defeated a city manager charter a few years ago. In addition to the recent purchase of its street railways it has owned and operated for many years its water works and an electric light and power plant, both of which have been very well managed and successful, and its Port district has splendidly equipped ocean terminals, warehouses, grain elevators and cold storage plants, all publicly owned and operated. The citizens are proud of their municipal undertakings, and when the question of buying the street railways came up in November, 1918, they voted for the purchase by about three and a half to one. The deal was a hasty one and did not allow time for a thoroughgoing valuation of the property, but a valuation by accountants of the Public Service Commission, begun but not completed, showed it to be worth in the neighborhood of the purchase price, and the city officials, in a statement to the voters just previous to the election, gave its value as $16,102,946. I am inclined to believe that, considering the state of the business at that time and the growing difficulties in which traction interests all over the country

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138 NATIONAL MUNICIPAL REVIEW SUPPLEMENT [Feb. found themselves, the price paid was too high, but I approve the judgment of one member of the Seattle city council, quoted as asserting that he could not see that the lines exceed eight millions in value, but that he believed the elimination of the traction company from local affairs was worth the difference and he would vote for the purchase. The price was probably lower than any valuation which could have been agreed upon as a basis for a service-at-cost franchise. THE COURSE OF MUNICIPAL OPERATION IN SEATTLE Mad the railways remained in the hands of their former owners, a raise in fares was imminent, and fares had been advanced in all other larger cities in the state. The Seattle railways under municipal ownership are burdened with a heavy obligation of debt liquidation which private ownership would not have entailed, but the new management, instead of raising rates at once, allowed their optimism to get the better of their judgment, asserting that their new utility would meet its obligations with a five-cent fare. Their system is virtually capitalized at $17,215,000, of which $16,440,000 is represented by utility bonds which are a first lien upon receipts, and not only must they pay 5 per cent interest on this sum, but they must also meet the principal in a series of annual payments of $833,000, beginning March 1, 1921. It soon became evident that in spite of a number of economies, fares would have to be advanced, and while this subject was being discussed a municipal election came on. The management of the street railways was the chief issue and the result was a change of administration. The report of operation issued at the close of 1919, covering the first nine months of municipal ownership, showed that with a rather liberal allowance for depreciation the lines had run behind $517,000. The cash fare was raised to ten cents, with metal tokens sold on the cars at four for a quarter. The mayor in signing the ordinance said he believed the advance was not sufficient. Wages of carmen have advanced from 64 to 80 per cent over those paid in 1918, under private ownership. The gross loss for the first four months of 1920 including depreciation, was $468,000. There are rumors afloat that illegitimate means were used to influence the sale and the city council, at the request of the new mayor, has voted $10,000 as a fund for probing the transaction. It is too soon to make a reasonable forecast of the outcome of Seattle’s latest experiment in municipal ownership. Inadequate financing was forced upon the city by reason of constitutional debt limitation. It must pay for its purchase in eighteen years and at the same time build up a depreciation reserve of over twelve millions, thus placing an enormous burden upon its street car patrons in this generation in order to turn over to the citizens of twenty years hence a street railway fully paid for and adequately maintained. It is a feat which no private company would undertake. A serviceat-cost franchise would have called only for the payment of operation, depreciation and interest, and unless there is careful management the fares may be higher during this twenty-year period than they might have been under service at cost. Seattle has not an ideal form of government for carrying on the business of utility management, yet its publicly owned water-works and electric light and power plant have been efficiently managed, and the highclass men who are at their heads as superintendents, have been there many

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19211 COST VERSUS MUNICIPAL OWNERSHIP 139 years, through many changing political administrations. The civic spirit in Seattle is high and I believe that public ownership has a better opportunity there than in many cities which have more modern forms of government. CAN PUBLIC OPERATION BE EFFICIENT? We are inclined to base our judgment on public ownership upon the presumption that privately owned utilities are always well managed, and that the reverse is true of all municipal undertakings. That this is a fallacy any intelligent student who is openminded will affirm. Many of the municipally owned utilities have passed through this post-war period without asking for rate increases and are SOIvent. I know of no city which bas owned and operated any utility for ten years or more, in which there has not been a great saving to its people by reason of reduced rates, not only for its own service, but by reason of its competition with privately oqned utilities which have thereby been induced to reduce their rates. Municipal ownership is not often credited with any advantage for this reason, and yet I can name cities in which public ownership would have been of the greatest advantage even if the publicly owned plant had never turned a wheel. The tendency in municipal plants is to pay off and cancel funded debt obligations; that of privately owned plants is to increase them. Under municipal ownership the chief incentive of operation is to give service; under private ownership it is to make profits. The tendency under private ownership is to a brand of political activity that, in my opinion, is infinitely worse than any “politics” that may creep into management under public ownership. The people in every city in the state of Washington will be heartily thankful for any curtailment of the evil political domination of the state legislature by the former Seattle traction interests which results from municipal ownership in that fine city. It is my firm opinion that service at cost is a transition state, a temporary expedient, and one which will be in the long run unsatisfactory to both the owners of street railways and the public. To the owners, it will be just a tightening of the chain of public regulation which curtails more and more their freedom of operation, but it will be sought in order to fix a value which may form a basis for public purchase later. The voters will ultimately awaken to the necessity of a better form of city government, in which the officials have more authority and more responsibility, and of a more lively interest in government on their own part, and when these things have been accomplished, they will insist upon the ownership of their public utilities and their operation on the basis of the greatest good to the greatest number, and the banishment from municipal life of those evil forces, which have done so much to corrupt city governmeni in America.