ficient depth for the slips, which was a heavy expense not ordinarily incurred. This was followed by the construction of a masonry bulkhead wall and the erection of piers. The total outlay connected with this improvement was $7,536,841.60, upon which the annual interest charge is $244,947-35. The rentals received amount to $370,206.52, which shows an annual profit of $125,259.17.

Ordinarily the city does not have to acquire the upland property abutting on the water front, so that this improvement makes the least favorable financial showing for the Dock Department that could be exhibited. Nevertheless, the annual profit is sufficient to redeem the bonds issued in thirty-five years, at the end of which time the city will be probably $10,000,000 richer by the operation.

To adhere slavishly to the fetish of a constitutional provision in the light of such a showing as this is to shut the door of fate in the face of our city's future. If New York City is to occupy the position of commercial supremacy to which its past history and its natural advantages entitle it, we must reason about these matters like intelligent adults, and not like children still enmeshed in the prejudices of early teaching.

Our constitutions should be amended so as to except from the limitation on the indebtedness of cities bonds issued to provide for improvements-which, while governmental in their character are, nevertheless, essentially business enterprises-and from the operation of which profits can be derived sufficient to provide a speedy amortization of the indebtedness temporarily incurred.

MUNICIPAL FRANCHISES

CHARLES RICHARDSON

It is only during the last few years that any considerable portion of the residents of American cities have begun to realize the immense value and importance of their local franchises.

Long before the attention of the people was called to the subject shrewd financiers, professional politicians, and party bosses had foreseen the harvests of wealth and political power to be reaped by those who could control the giving of municipal franchises. The financiers saw vast returns for small outlays, and unlimited opportunities for stock watering, stock gambling, and the manipulation of market prices. The professional politicians saw how they could control their workers and henchmen by obtaining for them special privileges, patronage, or profitable employment from companies depending on municipal favor. The party bosses reckoned upon lavish contributions from the treasuries of such companies, and the political support of the thousands who would own or deal in their stocks and securities.

The process of capturing franchises from the agents of the people has progressed so rapidly that in some cities there seems to be but little left for the public to control. In many places the local government is so bound and helpless, and so entirely dominated by the public service corporations which it has created and nourished, that many of the voters now regard it as powerless to promote their interests and unworthy of their respect or support. The lack of wisdom and foresight which has been shown

120

by most of our cities in connection with their franchises may be fairly likened to that of a tribe of Indians selling for a few beads the lands which would have yielded them an ample and permanent support.

It is not necessary to enlarge here upon the immense present and prospective value of municipal franchises or the enormous profits which they have already been made to yield. The facts are familiar or accessible to all, and may be assumed for the purposes of this paper.

The properties and services which are the subjects of such franchises differ widely in character and consequence. Some, like a general water supply, are practically indispensable and monopolistic in their nature, while others, such as a turnpike road, may be merely desirable and subject to much competition.

The principles which should guide us in dealing with such a great variety of assets and duties may be applicable to all, but the importance of applying them will vary in proportion to the importance of the property to be managed or the duty to be performed. An error in regard to the water supply may be disastrous to the health, business, and growth of a great city, but a mistake in relation to a turnpike road may be of small consequence.

The methods which have been most advocated for the management of municipal properties and services may be classified under two heads, viz.:

Those which are equivalent to a lease for a period of years, and

Those which involve the direct control and operation by the local government.

The principal arguments in favor of the lease system may be stated briefly as follows:

First-That it is the quickest and easiest method for a city to obtain large sums of money or large annual revenues without borrowing, and that the success of this method will be in proportion to the length of the periods for which the franchises are granted.

Second-That with city management there is sure to be a great deal of fraud and corruption in the procurement of labor and materials.

Third-That municipal officials and legislators are so generally ignorant, negligent, or corrupt that they are incapable of conducting the public business with intelligence, efficiency, and

economy.

Fourth-That by carefully drawn leases and agreements the city's interests can be fully protected and its revenue assured and increased.

Fifth-That under our form of government the requirements of party politics and the frequent changing of public employees make it impossible for the people to secure as good service at as reasonable rates as a private corporation.

Sixth-That under municipal operation the employees and patronage will be used for political, partisan, or factional purposes, to such an extent that the spoils system will be greatly strengthened, and it will become much more difficult for the people to overthrow a political machine.

The advocates of municipal ownership and operation reply to these arguments:

First-That even if we should ignore the influence of a full treasury in encouraging folly and extravagance, it would still be true that neither the raising of money nor obtaining an income can justify a city in depriving its citizens and their posterity of the

control of matters essential for their own service and protection, or in selling important privileges for much less than they are worth, or in granting them to persons whose private interests will thus be made adverse to those of the public.

Second-That as such arrangements are practically certain to be unfair to the city, the evils which they will inflict upon the people will be much greater if the grants are made for long periods than if they are limited to short terms.

Third-That in aggregate amounts and in multiplicity and variety of direct and indirect methods the bribery and corruption chargeable to corporations seeking and enjoying municipal franchises are undoubtedly far in excess of the totals of similar evils from all other sources combined, and that the way to abolish bribery is to abolish the corporations which do the bribing, by adopting the policy of municipal operation in every conceivable

case.

Fourth-That if the city's representatives are unfit to conduct a business from year to year, it would be the height of folly to intrust them with the vastly more difficult and responsible task of selecting and installing a management which could not be changed for a long period of years.

Fifth-That in making a lease for fifty years the bribes are much larger, and the necessity for expert knowledge, shrewdness, sagacity, foresight, and honesty is much greater, so that the damage resulting from the lack of suitable qualifications in the city's representatives is likely to be very much more than fifty times what it may be under a management that is limited to a single year and can then be changed by the voters if it is unsatisfactory. Sixth-That under existing conditions the chances of any city obtaining a fifty years' or other long term agreement which will