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14
The Commoner
VOL. 14, NO. 6
vill make it necessary for the larger
cities always to levy some taxes to
add to rocolpta from their profit
earning services. But they will not
have to carry the doublo load which
American city dwollors carry direct
taxoM to tho city hall, indirect taxes
to tho nonresident private owners of
tho profit-earning services. And just
what that indirect tax amounts to
can bo inferred from tho single fact
that reduction of car fares in Clove
land, a city of 720,000, from 5 cents
to 8 conts, saves the city riders of
that city $4,000,000 a year.
GOOD-SERVICE, LOW RENTS, LOW
PRICES FOR PEOPLE
Right now the largor European
cities are borrowing money freely,
like other ambitious business houses,
but like those houses, and unlike
most American cities, they are in
vesting the borrowed capital, nearly
ovory dollar of it, in profit-producing
properties, taking over theso proper
ties gas and Jectric lighting plants
and street railways from private
owners. Moat of them are going into
land investments on a large scale.
Not only the kind of non-revenuc-producing
land investments Ameri
can cities make so generously (and
wisely), such as parks and play
grounds; they make investments of
this kind, but they also invest in.
lands for profit, just as any private
citizen might do. They buy harbor
sites and suburban tracts, improve
thorn and lease the ground or rent
tho buildings to private 'business
companies or to homeseekers. Ex
cept in the caso of the gas, electricity,
Water and street car services (tele
phones are a national service over
there), these enterprising cities do
no"t try to monopolize any line of
business. They merely assert their
right and duty, acting for tho large
majority of tho pooplo who lack
means and skill to compete personal
ly with the rich and tho shrewd, to
compete with these favored ones for
the general welfare. Tho majority
get the benefit of this competition in
good service, low rents and low
prices.
Berlin, Hamburg, Dusseldorf, Mu
nich and Glasgow aro typical. Ber
lin's bonded debt is $114,617,549,
most of it represented by profit-earning
property. Berlin's revenue from
city properties last year gas, works,
waterworks, canalization and farms,
cattlo market, abattoirs, meat inspec
tion, market halls, street railroad,
puouc warenouses and harbors was,
In round numbers, $39,000,000; its
outlay on them, for construction,
operation, maintenance and amortiz
ation of debt, $36,000,000, leaving a
net gain of $3,000,000.
Dusseldorf's debt is $42,000,000,
cared for like Berlin's. Munich owes
$66,400,000, and is paying it off out
of tho surplus earning of street rail
ways, electrical works, gas works,
waterworks, vineyards and wine
vaults and other profit-earning serv
ices. Hamburg's $179,000,000 debt is
represented mainly by a vast and
profitable harbor property, which the
city is acquiring debt free out of its
eurplus earnings.
Glasgow city corporation owns
property worth $122,980,225. Its
net debt is $40,755,840. Its profit
earning properties street railways,
gas, electricity and waterworks, mar
kets and farms are worth far more
than its net debt. Glasgow is using
tho surplus earnings of its paying
services to wipo out its debt and
cleanse its slums, building decont
tenements and lodging houses oper
ated at cost in place of disease and
crime-breeding tenements privately
owned and operated for profit.
So tho tale might run over half a
hundred of tho largest cities of the
old. world, where worried taxpayers
began years ago taking city govern
ments out of the hands of spoils
hunters and putting them in charge
of trained business men.
U. S. CITIES HAVE LITTLE REVENUE-PRODUCING
PROPERTY
Co-operating with the Post-Dispatch's
staff and special correspond
ents in 20 American cities, I tried to
learn (a) what portion of tho bond
ed debt had been invested in perma-
nnnf Imnrnvnmpnts: (b) hOW much
of it had been invested in properties
calculated to earn a profit sumcient
to repay the debt incurred to buy or
build them. It appears tho records
of many American cities are vague
on these points. The substance of the
replies is that a very large majority
of the borrowed millions have been
put into permanent property, but not
revenue-earning property It is a
matter of common knowledge that
most of our cities hcive invested mil
lions on bond money in improve
ments, Biich as paving, buildings,
etc., unlikely to last until the bonds
comn due.
Kansas City and Chicago have con
spicuously avoided bonding them
selves for street improvements by
preferring to assess the cost against
abutting or nearby property, collect
ing, that is, from the owners of such
property to defray the expense of the
improvement, a part of the prop
erty's increased value due to the im
provement. The story of New York's bonded
debt is naturally the most interest
ing, not to say appalling. What it
represents in the way of graft, waste
and stupidity has become worldwide
scandal. New York's city officials,
answering questions put to them, ex
plain that the city owns properties
Central and Bronx parks, for ex
ample worth much more than the
not debt of $9J4,698,986. Properties
bought with New York's bond issues
aro reported:
Waterworks $183,470,117.76
Rapid transit sub
ways 94,135,416.77
Docks and ferries.. 112,067,683.38
Schools and sites... 116,745,098.01
Libraries and sites.. 12,006,609.18
Parks and nlav-
grounds .. .. 64,178,887.38
Bridges (and new
city office building
erected by bridge
department) 108,663,204.87
uther public build
ings '86,929,925.14
Total $778,196,333.60
This leaves a balance of $167,502,
653.33 of the bonded debt with no
permanent improvements to show
for it. Take at least 20 per cent of
the $778,196,333.60 recorded as hav
ing been invested in permanent im
provements, for politicians', contract
ors', land agents' and other graft,
and .add it to the $167,502,653.33,
and you have a fair estimate of the
portion of New York's net bonded
debt of nearly $946,000,000 which
represents waste, graft and tempor
ary betterments of about one-third
of tho whole vast sum. whfoh nonr.
ly as large as tho net bonded debt of
the United States government.
This is one of the items which
political instead of competent busi
ness management of our cities has
cost the worried taxpayer. No won
der ho is worried!
growing big city, not only safeguard
the health and pleasure of the citi
zens, but give the community a share
of the unearned increment, on which
some of our cities, if they do not
soon adopt a more rational basis of
business operations, may be forced
to realize in order to pay their debts.
New York's properties, bought
with bond issues, and calculated to
earn enough revenue to pay for
themselves, are the docks and ferries,
waterworks and rapid transit sub
ways, costing $389,673,217.78, or
something over one-third of the net
bonded debt.
New York's so long mismanaged
city government has piled up a bond
ed debt of $180 for each man, wom
an and child of the population; on
which, in 1912, approximately $40,
000,000 interest was paid, or almost
$3 for each man. woman and child.
If it were possible for New York to
take over from their private owners
at fair cost price, the street. railways
(surface, underground and elevated)
the gas and electricity plants and the
telephones, and to have them honest
ly and intelligently managed, the
first city in America would be well
started on the road to the extinction
of its paralyzing public debt; could
cut charges for its paying services
gradually to half their present cost,
and would in due time become the
debt free owner of properties whose
surplus earnings would supply a
large partion of the city's needed
revenue.
Of Boston's net bonded debt of
$77,214,502.89 only $20,515,128.87
was invested in properties calculated
to earn enough to pay for them
selves. Of Philadelphia':, net debt of $99r
905,350, $75,000,000 is reported as
having been invested in the water
works a figure which fairly shrieks
the secret of Philadelphia's graft
ridden history.
Of Baltimore's $46,326,574.82 net
debt, $19,035,412.50 (most' of it put
into the waterworks) represents in
vestments .calculated to pay for
themselves.
Cincinnati's water works, built
with bonded money is valued at $18,
.000,000, but the comntrollor'a state
ment indicates that the $23,428,
695.33 quoted as "net debt" repre
sents only that portion of the city's
bonded debt "which is not self supporting."
Los Angeles' auditor claims a
value of $175,000,000 in city prop
erties, including the new aqueduct
and water system and harbor. How
ever, only $34,123,100 of bond issues
has been invested in it. The report
adds: "Of the Los Angeles city
property, 92.67 per cent is or soon
will bo revenue producing and only
7.33 per cent of it is ordinary city
non-revenue producing, or $2,653,
725, which covers sewers, schools,"
etc. A situation of which the won
der city of southern California may
well be proud, and which goes far
to explain its extraordinary growth
in population and wealth during the
past decade.
Seattle reports "no sinking funds."
Seattle has invested $12,920,980 of
its $15,297,380 net debt in building
or buying city property. Its water
works is now valued at $11,098,
249.12; its municipal electric light
and power plant at $3,918,780.33.
Minneapolis, with net debt of $14 .
516,896.84, reports: "Total value of
all city properties, including water
works and municipal light and power
station, land, buildings and equip
ment, $48,992,625.93 total bonas
issued for acquiring land, buildings,
equipment, $21,013,900."
Louisville reports $4,000,000 worth
of sewers and a $1,000,000 city hos
pital built with borrowed money;
also the water works, earning over
$300,000 a year net, which surplus
it is proposed to devote to the public
schools and the University of Louis
ville, although some citizens argue
for a reduction of water rates. The
water works is the only citv nronartv
yielding a revenue. It ia valued at
$8,896,812.57. The city owned 9,000
shares of stock in the gas company,
which it-sold for- $1,387,000 and
spent on sewers, to facilitate a recent
merger of all the Louisville light and
heating companies into the Louisville
Gas and Electric company. Louis
ville is the only city in the list which
appears to be going backward with
reference to municipal ownership.
Milwaukee reports: "It is prac
tically impossible to figure out the
properties bought to date with bonds,
under the present bookkeeping meth
ods." The city's properties, paid for
with bonds, are today valued at $43,-
uuu.ODO. The only revenue produc
ing property is the water works,
worth $8,000,000 and earning $250,
000 net yearly.
$180 BONDED DEBT FOR EACH
PERSON IN NEW YORK CITY
New York's parks, to buy which
bonds amounting to $64,178,887.68
were issued, i re officially reported to
be worth today, at the valuation of
adjacent property, over $300,000,000
and would possibly bring that much
if knocked down at a receiver's sale
Park investments, in or around a
HOW ST. LOUIS CAN EXPAND
Qrtron01"8; With net debt of $23,
806,690 and a net debt of but $15 -
494,432 for purposes of computing
the limit of authorized bonded in
debtedness, is in excellent position to
borrow, up to $14,456,878, under
the present assessment, for further
public improvements. St. Louis has
12715.975.40 (city hall, fire and
polico. stations, markets and other in
stitutions) to show for Jts. $23,806,
690.50 of net tended debt. St. Louis'
water works, now worth $20,919
795, raises St. Louis', total .of perma
IVl ?KT?!?t8. built op bought
oob. over 3.300-
BONDED DEBT GOOD INVEST
MENT Detroit, with only $8,375,291.12
of bonded debt, reports $35,000,000
worth of city property (present
value) bought or built with bonded
money. The city's only revenue pro
ducing property, however, is the
waterworks, controlled by a commis
sion independent of the city govern
ment. Of the properties bought by
the city government with borrowed
money, none is a producer of reve
nue. Kansas City, Mo., reports: "The
values of city properties bought or
ouut with bond issues to date are
difficult to segregate. Bonds have
been issued for sewers, levees, via
ducts, bridges and traffic ways, and
for park and playground improve
ments on land acquired by condem
nation. Bonds were issued for about
$4,500,000 for the water works,
which earns a net profit over operat
ing cost and amortization of $500,
000 yearly. The cnnnrAl hnsnital.
the municipal farm and tuberculosis
hospital at Leeds and t.h Isolation
hospital, for which bonds were issued
are valued at about $1,000,000.
ine water works, with an actual
valuation of $7,000,000, is paying 6
per cent on a valuation of $11,000,
000; the city market, for which
$300,000 of bonds were issued, is
paying for itself, as are the city
wharf, costing $75,000; the muni
cipal paving plant, costing $50,000,
and the municipal farm, costing
$100,000 all built with bond
money.".
Parsing
Up in Alaska there used to bo a
district attorney' who was1 long on
native oratory, but short on educa
tion. Onco while prosecuting a big
case, coming to tho finish -of .his argu
ment, he leaned across the Tail and
mado this plea: "All I asts of you
gentlemen of tho jury, is that you
now retire and meto out jeBtice as
sho deserves to bo mt!" St.. Louis
Mirror,
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