Chapter VI - Useless State and Local Boards

[ 184] Useless State and Local Boards Here follows the classification: Governor Secretary of State Comptroller Treasurer Attorney General State Engineer Harbor Masters EXECUTIVE State Department of Health Department of High ways Commissioner of Land Office Militia Naval Militia State Troopers Port Wardens Supt. of State Prisons Supt•.of Public Build. ings Supt. of Public Works. Port of New York Authority " EDUCATIONAL AND PROMOTIONAL Experimental Sta-N. Y. State Normal SchoolAlbany " Brockport Buffalo Cortland Fredonia Geneseo New Paltz Oneonta Oswego Callsburg Potsdam Trustees Cornell University Dept. of Labor & Industrial Commissioner Nautical School State Schoolof Agriculture, Delhi N. Y. State College of Forestry State Dept. of Education, University ofN. Y Agricultural tion State School of Agriculture, Al fred State College of Agriculture, Cornell State Fair Commission State School of Clay Working & Ceramics State Institute of Applied Agri culture State School of Agriculture, Morrisville State School of Agriculture, St.

Lawrence State Schoolof Agriculture &Do mestic Science, Schoharie State Architect Superintendent of Banks Superintendent of Insurance Board of Law Examiners Board of Medical Examiners State Board of Pharmacy Public Service Commission SUPERVISORY Transit Commission State Racing Commission State Licensing Board for Engineers State Athletic Commission State Motion Picture Commission State Board of Embalming Examin·· ers State Commission for Blind State Board of Charities Fiscal Supt. of State Charities CHARITI~S State Hospital Commission State Hospital for Insane, Binghamton " Brooklyn Buffalo [ 185 1 Too Much Government-Too Much Taxation " State Hospital for Insane, Central Islip "(Homeopathic) Gowanda " Hudson River Kings Park Manhattan Middletown Rochester St. Lawrence Utica " Willard Commission to Provide Hospitals for Dis charged Soldiers, Sailors and Marines State Advisory Commission for Rehabili tation of Handicapped Persons Institute for Improvement Instr. Deaf Mutes St. Joseph's Inst. Impr. Instr. (Female) Mutes St. Joseph's Inst. Impr. Instr. (Male) Mut.es Central N. Y. Inst. for Deaf Mutes, Rome Rochester School for Deaf Mutes Northern N. Y. Inst. for Deaf Mutes, Malone Albany School for Deaf Mutes, Albany N. Y. State Lecouteulx for Deaf Mutes CHARITIES-Continued State Commission for Men tal Defectives Newark State School for Mental Defectives Syracuse State School for Mental Defectives Rome State School for Mental Defectives Craig Colony for Epilep tics, Sonyea Letchworth Village. Thiells N. Y. State Hospital for Crippled and Defective Children N. Y. State Hospital for Incipient Pulmonary Tu berculosis N. Y. State Hospital for Soldiers and Sailors, Bath N. Y. State Women's Relief Corps Home, Oxford N. Y. State School for the Blind N. Y. State Institute for Deaf and Dumb LANDS, PARKS, ROADS, ETC.

Palisades Park Newtown Battlefield Niagara Park Buildings, Watkins Glen Commissioners Herkimer Home Allegheny State Park Commission Roosevelt Memorial Commission Pla~tsburgh Centenary CommisGrounds & Sion Enfield Trees Reservation Bronx Parkway Bridge & Tunnel Commission Gettysburg Monument Trustees of Public Kingston Schuyler Mansion Trustees Washington Headquarters Trus tees Commission on Sites, Buildings Fire Island Park Canal Board Commissioners of Canal Fund TRANSPORTATION Long Island Waterway Improvement Board River Regulating District Commission on Canadian Boundary Waters r 186 ] Useless State and Local Boards PENAL AND REFORMATORY N. Y. State Reformatory, Elmira N. Y. State Agricultural & IndusN. Y. State Reformatory for Women trial School. Industry Western House of Refuge . N. Y. State Training School for N. Y. State Institution for Defective Girls, Hudson Delinquents State Commission of Prisons State Board of Classification Court of Claims JUDICIARY Supreme Court County Courts CONSULTATIVE Pension Commission Hospital Development Commission N. Y. State Bonus Commission Commission to Examine Laws on Child Welfare Board of Child Welfare, Mothers' Allowance Com. Judiciary & Bar on Rules of Civil Practice Com. Legislation, Judiciary &. Bar on Article 6 of Constitutional Amendment Civil Service Commission Conservation Commission N Y Water Power Commission Public Health Council Ultimate System of State & County Highways Legislative Bill Drafting Com mission Armory Commission Commission for Uniform Legisla tion State Probation Commission MISCELLANEOUS State Board of Canvassers Board of Geographic Names Commission for Examination of Voting Machines Onoridaga Indians, Onondaga Onondaga Indians, Tonawanda Seneca INDIANS St. Regis Thomas Indian School Commission on Indian Affairs LIBRARIES Legislative Law Library, Albany, Elmira and 27 other cities LEGISLATIVE Miscellaneous Reporter 'Budget Commission STATE TAX DEPARTMENT State Board of Equalization Board of Estimate and Control [ 187 ] Too Much Government-Too Much Taxation Such is the complexity of the governmental activ ities of the State of New York. The State of Massa chusetts not long ago reorganized and concentrated what might be called its legitimate state activities, and more than 100 State Boards and Commissions, of various kinds, into 20 Departments, with great self gratulation and popular approval. I have not been able to find out how many useless bureaus were cut out; but have no doubt that the. reorganization was greatly needed. I append a reduced zinc-etching from the Official Diagram of this reorganization.

In order to get within the page size of this book, it had to be photographed down so small that the finer legends of the chart cannot be. read without a magnifying glass; if even with one. But it is of no earthly use that the reader should bother him self to try to decipher them. He can see at a glance the exceeding complexity of the business under taken by that state, and the vast organization re quired for it, even at the best; which is the only purpose to be served by reprod ueing the diagram at all. Minute as the print here shown is, it is suffi cient to illustrate the point I would make. What is true of Massachusetts is true of every state in the Union. There is not one of them that is not actually doing more kinds of business than any indus trial corporation ever succeeded in doing well. Doubtless many of these undertakings are important, but the effort should be to cut out every single one that is not absolutely necessary and unattainable ex...

cept by government action. Many of the states had established Boards of Railroad and Warehouse Commissioners before the [ 188] DIAGRAM OF DEPARTME~TAL ORGANIZATION UNDER CHAPTER 350 •.GENERAt ACTS 1919 ..... 00 '"....... OEPAIlT.. tN~ 0' M-.~;;;::UL~~~~\r-. ::~::: ~;:'::.I ~':r ~:~: ~?-":'mI-.~ -~1;;:, Ol"'~ ~........ ... ~ t.::~ DEP"'R~"t;. ..~ Of I:-..~~·.I.. $2= ;E: ~ u;u ,.,.. c-..~. ~!:~ =-" .~= --= OEPAIlT"'ENT 0 • • CO:"":'RATIONS'''''DTA~::ON D.t:.'~ .•..,. ~l'''~ ~~.. ~ ~frl ,,'O•. ~ ...~ -" ~."..=.~~ Maximum Salar)' "no authority to eppo.nt ~uOo,.dln.t. o,ff'I'"el·!. nnd enl~l()y"'~~ DEPARTMENT 010 ~ ...~:~.L1e :~RK.:".... ,.1'~• •1IfII.~. II&VtstoM OI~ • ..... w..-s ..... ".i:= :z.:: Prep3~d tty tho Ofliea ", 'til .. Sup<'rvisor of A..... inistr.tion s: ~ ~ t: CI') ~ ~ ~ ~ ~ ~ ~ t'-t<::> ~ ~ ~ ~ ~ ~ Too Much Government-Too Much Taxation passage of the Interstate Commerce Law and the advent of national regulation. The State Boards were a consequence of the Granger agitation of the early 70'S; and of the Munn & Scott decision, making grain elevators in effect a part of the transportation system of the country. Before that, an investor put his money into a railway, an elevator, or public service corporation, ashe would into a private affair, a mine or a grocery; quite free to make all he could, and to tax the traffic all it would bear. This freedom led to the rapid development of the Western rail ways, streetcar systems, and the like; and with them that of the West itself. The Granger move ment-that is, the organization of the farmers into local and state Granges-came along in the 70's, and started, I think, in Wisconsin, where LaFollettes and other eccentricities grow and flourish. At any rate, the movement was most heard of in that state.

The Grangers in many Western states went for legis lation to control the railways and reduce rail rates, on the theory that corporations are creatures of the state, subject to regulation by the state-and that railways, which avail themselves of the right of eminent domain to procure their rights-of-way, were for that reason also beholden to the state and subject to its behest. The Grangers' argument was that the roads were owned by the rich devils in Wall Street, who were autocratic, and plunderers of the farmer; and they acted on the assumption that Western grains and farm products would net the farmers more if the railroads got less for transportation to the seaboard. They had not much difficulty in getting the passage of the necessary laws, but it took some time to try [ 19°] Useless State and Local Boards out test-cases made by the railways, and secure the final verdict of the Supreme Court of the United States, confirming their constitutionality.

Not long after came the Munn & Scott decision. Munn& Scott were receivers and shippers of grain who had built a grain elevator in Chicago between a spur of one of the great railways and the waters of the Chicago River. Cars could come up on one side of the elevator and unload into it; and the grain could be stored there, to be spouted later into the hold of a vessel on the other side. The business was, as a matter of fact, as private as that of any other warehouse, for the storage of household furniture, for instance, that possessed convenient receiving and loading facilities. Nevertheless, under Granger pres sure, the legislatures passed laws making the ware housemen, as it were, common carriers; upon the rather vague ground that they had put their property into the path of commerce between rail and water carriers in such a manner that it became fraught with a public interest. Once more the Supreme Court of the United States (which, by the way, always reflects public opinion) confirmed the constitutionality of those laws. Since those decisions, railways and ware houses, and, of late years, public utilities, have been subjected by the various states to the supervision and regulation of boards and commissions.

In the case of the Interstate Commerce Commis sion, as already noted, this supervision has been of no very perceptible benefit to the public; but, on the other hand, has been of great annoyance and ex pense to those directly interested, whether carriers, warehousemen, or shippers. Of late years, under [ 191 ] Too Much Government-Too Much Taxation repeated decisions of U. S. Supreme Court, the In terstate Commerce Commission has gradually taken the reins of regulation from the State Railway Com missions, not only as to interstate, but even as to intrastate rates. This, of course, has gradually lessened the importance of the State Commissions; but there is constant friction between the national and state authority, with occasional flare-up.. Of course the United States are bound to prevail, so that the State Boards are falling into more or less "innocuous desuetude," so far as rates are con cerned. They are still competent to establish technical rules and local rates, good only so far as the state line; and I believe that occasionally they greatly bother the railways which cross state lines, as most of them do. There are also what President Roosevelt called "twilight zones" in railroad practice, the regulation of which does not belong either to the state or national governments. All in all, the state Railway and Warehouse Commissions are about as useless as so many vermiform appendices. The best thing that could happen to the states would be to cut them out.

Still more recently in many states, Public Utility Commissions have been established to regulate rates and service of corporations furnishing water, gas, electric light and power, telephones, etc., in cities and towns. These commissions perhaps serve to better purpose than railway and warehousecommis sions; for in many cases, and especially with all street railways, the corporations controlled are neces sarily monopolies. The population served by them has no competitor to go to when disgruntled with [ 192 ] Useless State and Local .Boards service rendered by an ill-mannered employee. It must willy-nilly deal with the monopoly, and is con sequently in a chronic state of antagonism against it. A friend of mine used to say to me while I was a public utility president, "No man is broad enough to run a monopoly," and there was a good deal of truth in this. I know, by personal experience, that no matter how fairly or faithfully a man works for the joint interest of his stockholders and the public, he never gets much credit from the latter. He can, however, .if he is actually doing the sq uare thing, get along pretty well with a reasonably honest Public Utility Commission and at the same time, the public feels that it is being protected from a conscienceless corporation. Practically, the exist ence of the Commission makes very little difference in the quality and cost of service to the public which the corporation can furnish, consistently with rea sonable profit. The natural business interest of all parties invariably coincides in the long run; and the prices accepted by the public, which are generally accepted by the Public Utility Commission, are the resultant of the customers' need of service on the one hand and of the corporation's need of profit on the other. Between the two, the Public Utility Com mission usually does the best it can, but claims the credit for everything. It is a political organization, bound to hold its job and save its face. A great many managers of public utility corporations think that it serves as a useful buffer to ward off the at tacks of free lances, demagogues, and reformers. Per haps they are right.

Nevertheless, a short story of two or three conspic uous public service corporations will show, first, that local governments are just as futile, stupid, and mis chievous when they interfere with business as is the [ 193 ] Too Much Government-Too Much Taxation National Government; and, second, that the public utility commissions merely go through certain mo tions just like the Interstate Commerce and Federal Trade commissions, to save salaries and appear ances. Chicago Gas. Take, for instance, my own ex perience with the Chicago Gas Trust Co. This was a corporation, of which I was president for a while, formed in 1877 by a composite group of Chicagoans, New Yorkers, and Philadelphians to hold the stocks of four subsidiaries, local gas companies which had been in fierce competition in that city. Two of them were old and strong, and by tacit agreement had never encroached upon each other's territory, but divided the city; the Chicago River forming the dividing line. The other two came later to introduce the then new process of making water gas, in com petition with the old coal gas. The newcomers both laid mains in the heart of the city east of the river, and competed vigorously with one of the old companies, leaving the other alone. The competi tion bankrupted the two new companies, and ex hausted .the surplus orone of the old ones; while the other had to make sympathetic reduction in the price of gas. Eventually the men who financed the two new concerns, in order to save themselves from total loss, had to buyout the old ones and stop de structive competition. Gas had fallen to $1.00 per thousand, and they raised its price to $1.25, which was half of its price when the fight started. The public were entirely satisfied and· paid the $1.25 without complaint; but the press and the reformers and the politicians. got after the combination hot foot. The city refused permits to open the streets, and mend leaky gas mains, so that frequent ex plosions occurred. The Council took action, can[ 194] Useless State and Local Boards ceIling the franchises granted to the two new com panies (the old ones were under old state charters not forfeitable), the Citizens Association brought suit at Common Law (this was before the enactment of the Sherman Law) to dissolve the Gas Trust Co. as a combination in restraint of trade; and after two years of litigation, carried to the State Supreme Court, it was so dissolved.

Meantime, the chairman of the Gas Committee of the City Council came to me with a proposal that the company should pay him, for private distribution among "the boys in the Council," 25 per cent. of the city's annual gas bill; which meant the distribution Of$I7S,ooo annually among them. When this was refused, he saw to it that no gas appropriations were passed for nearly two years; which made it impossi ble to collect for gas, lamp posts, etc., furnished the city. He also procured the passage of appropria tions for building a city electric street-lighting plant. By the second year the situation became so aggravated, the city owing the gas companies nearly $600,000, that I asked my directors to let me make a fight, cut off the gas, leave the city in the dark, and publicly give the reason why; or else to let me resign. They declined to fight and I resigned. One of the principal owners, now dead, then went to Spring field, during the following session of the legislature, and paid somebody (so runs the story) $300,000 for the passage of a special act permitting the consolida tion of the four companies and legitimatizing the whole situation. It is said, too, that something was paid the "boys" in the Council to hush them up.

Stories like that were frequent among the public utility men whom I knew, coming from many cities of the United States. Local government thoroughly understood what an Indiana statesman about that [ 195 ] Too Much Government-Too Much Taxation time called the art of "frying the fat out of the manu facturers." I was a hired president, not having had anything to do with the formation of the cor poration, or with the gas business prior to the fight. Just after my election, in a meeting of the Executive Committee, I was asked to sign some checks which had been overlooked by my predecessor until. too late for his signature. One of them was for $5,000, to the order of one of the directors, and, as all were properly vouched and initialed, .I signed them with out hesitation. A few days after, meeting the direc tor in question, I said to him, "By the way, what was that $5,000 check for? The voucher seemed a little vague." HOh," he answered, "it had to be! That was the Gas Company's share of a lump sum that I paid fOf it and the Street Railways to the Chairman of the State Board of Equalization. You know the State Board fixes the capital-stock tax assessmenti of all public service corporations; and the only way to avoid being stuck like the devil is to come across with a good fat check for the members of the Board."

All the parties to this transaction have been dead for many years, which, perhaps, is the only comment necessary. None is needed as to the why and where fore of that particular Board. City Halls and Street Railways. Precisely par allel was the course of the street railway experience of the three cities of New York, Boston, and Chicago. When I was a small boy, street transportation in the city of New York was by omnibus at a Io-cent tare. By the time I went to Ha{'vard, the horsecar had developed in and around Boston at, I think, a 7-cent fare. By the time I got to Chicago, the street car fare there had dropped to 5 cents, as in all large cit ies, and remained almost undisturbed until the Great War. All the same, the streetcar companies, while [ 196 ] Useless State and Local Boards not further lowering the· price, developed their· sales and profits by the equivalent device of giving more for the money. First the cable and then the trolley car speeded up transit and lengthened the radius of operation so that at the 5-cent fare the average citizen rode twice as fast and twice as far as he did in earlier years. The cable car as a method of rapid transit was· first used, I think, in Los Angeles, CaliforlJia.

Mr. Holmes, the manager of the street railway system there, noticed that it is human nature to hate to wait for a street car; and that, rather than wait, the possible passenger would walk along to wards destination; frequently going so far that by the time the car overtook him he made up his mind he might as well walk the whole distance and save his carfare. Mr. Holmes theorized that, if the cars came oftener and moved faster, many thousands of fares lost fDr the foregoing reason would be saved; while at the same time, by the use of the now obsolete cable for the motive power, great operating economies would be effected. He succeeded in ob taining the authority of his stockholders to try the experiment and it was an instant success. I haven't the figures at hand, but it was understood at the time that gross receipts doubled and profits, while they did not double, very greatly increased. Mr.

Holmes was invited to come to Chicago and apply the cable to the South Side Street Railway system. Then the North and West Side systems, bought by the Elkins-Widener Philadelphia group, were cabled in their turn. Subsequently electric motive power was developed and proved to be much more economi cal and flexible than the cable system, which it dis placed entirely.' Precisely the same results of enor mously increased patronage on the same lines, in the same cities, and by substantially the· same popular197 ] Too Much Government-Too Much Taxation tion, through increasing the speed and frequency of car service, and extending the radius of transit, justified the great increase of capital required for the new equipment and permitted the issue of many millions of junior, or "watered," shares, on which fair dividends were earned and paid. Looking the whole transaction squarely in the face, it seems to me that no honest man can deny that the capitalists, who gave so much more for the same fare that the public doubled their use of the transit facilities, legitimately deserved the increased profit which they made. N evertheless, the new junior shares could be stigmatized as "watered stock" because no cash was paid for them. They merely represented the increased earning power developed by the im provement of the· property and service. They be came at once a shining mark for the socialist, the agitator, the legislative or governmental blackmailer; and they have been shot to pieces by political bom bardment ever since.

In Chicago, Carter Harrison won four or five mayoralty campaigns upon his proposal to wreck the street railway companies and substitute city owner ship and operation of the street railways. The owners of the North and West Side systems, those who had bought in after the Elkins-Widener opera tions, were fleeced almost of their entire investment by refusal of the city to extend expiring street fran chises, and by legal attacks upon the validity of the stock and bond issues held by investors. There were years of litigation, during which the street railway management never knew when the end might come, or what it might be. Of course it was impossible to finance new development; it was foolish to maintain motive power, tracks and cars in first-class order, which might at any moment be taken away; and - [ 198 ] Useless State and Local Boards there was but one thing to do, namely, to make what was possible in cash returns. to the· investors, letting the property go to rack and ruin meantime. After ten years of such chaos the people of Chicago re belled against an intolerable transportation situation; a new mayor was elected and a reorganization was effected in which, as I have said before, the old own ers lost the greater part of their investment. The so-called water was squeezed out of the street railway securities by the modern process of expert valuation; that is, by taking the supposed cost of replacement, without allowance for the years of time or the mil lions of money spent in development of the existing situation. The owners were allowed to refinance and rehabilitate, under guarantee of rates of fare sufficient to pay 5 per cent. interest upon the official valuation and additions to it; any excess earned above 5 per cent. to be divided 55 per cent. to the city and 45 per cent. to the owners. This guarantee let the latter off with perhaps the hind legs and tail of their own hide, the body, shoulders, and head going to the public and the city.

At the time I was innocent enough to suppose and prophesy· in the Outlook magazine that that settle ment would hold good forever; as the city became a partner to the extent of 55 per cent. of the net profits over bond interest; but such has not proved to be the case. City demagogy found the issue too useful, and has of late years merely shifted the attack upon another flank. As everywhere throughout the land, the more than doubled cost of wages and material made the 5-cent fare in Chicago a losing proposition. Meanwhile, a Public Utilities Commission had been established to which the corporation turned for relief and authority to charge a higher fare. Just where the matter now stands, I do not know, but when I [ 199] Too Much Government-Too Much Taxation was in Chicago a few weeks ago the corporation was between the devil of employees' demands for increased wages and the deep sea of refusal of the Public Utility Commission to allow an increased fare. For nearly two years the corporation has been trembling on the verge of default of interest on some of its junior bonds; while the stocks issued many years ago at the time of the first forced reorganiza tion have never paid a cent in dividends. The City has received, meantime, under that former settlement, many millions of dollars, which it is supposed to have on hand as a fund for building subways; but no one knows where the cash is. Dur ing the ten years of the former fight not a dollar in capital could be raised, service ran down, rails and cars would hardly hold together, operating expenses ran up, and the people cursed and swore because they were so poorly served. As yet history has not re peated itself, but may easily do so before long, unless the city government stands out of the way.

One would suppose that Chicago's politicians and blackmailers would have no valid excuse for further agitation against its street railways. Nevertheless, when the Great War doubled the cost of everything and sent the cost of street railway service up from say 3! cents per passenger to 7 cents, and the owners naturally wished to raise the 5-cent fare to 8 cents I think they did not ask for more-political war once more broke loose upon them and the present mayor fought his campaign largely on the issue of retaining the 5-cent fare for the People. Very similar has been the situation in N ew York, with which I am comparatively unfamiliar; but everybody who goes to that city and travels on the street cars has noticed during the last four or five years the tontinued appeals to the public printed . (zoo] Useless State and Local Boards for instance, as the Subway Sun and posted in the cars where he who rides may read---asking for simple justice in the way of an increased railway fare and for popular support of the Public Utilities Com mission in granting it. Everybody knows also that Mayor Hylan was reelected not long ago largely upon the issue of a continued s-cent fare and that he proposes to realize that proposition by starving out the street railway companies and the purchase of their properties at slaughter price by the City.

Of course, we all know that purchase and operation by the City (that is by Tammany Hall) will not lessen, but on the contrary will greatly increase, the cost of service and the staggering deficit against which the street railway companies have been strug gling for several years. The 5-cent fare paid to the City will be far more inadequate to cover cost than it already is,when paid to the street railway com panies. The deficit, which will certainly come to many million dollars a year, will first be paid through the public treasury by the taxpayers; and will surely in the long run come out of the pockets of the public in the shape of increased rents and cost of living. The average laboring man may never know it, and , may continue to think that he is paying a 5-cent fare instead of the, 10 cents really taken out of his pocket. Mayor Rylan and Tammany will meantime get an excellent rakeoff, plus enlargement of quasi-political patronage by virtue of controlling the many thou sands of employees of the railway systems. ,New York will be -that much deeper in the political mire.

In Boston, the situation is not quite so bad. The street railways went through precisely the same cycle of evolution from slow to rapid transit; except that I think the cables did not intervene, the change being direct from horsecars to trolley. As in New [201 ] Too Much Government-Too Much Taxation York, the cost, as well as the advantage, of subways was superimposed upon that of surface operation (in Chicago there are as yet no subways), and with the World War that cost of operation doubled and increase of fares became imperative; bankruptcy threatened the street railways, and the Public Utilities Commission was in a quandary. Even tually the street railway properties were turned over to public trustees, I think, under special legislation, authorizing them to give service at cost, including therein a reasonable return upon capital.* Further more, because, just as elsewhere, the agitation against an increased fare had delayed the same so long as to *The Supreme Court of the United States has just decided a case which is an illuminating commentary on the coolly confiscatory atti tude of the City of Boston toward· the Boston Street Railways.

As noted above the rise in cost of labor and coal, in all operating ex pense, to double old figures, made the old 5-cent fare a rapid bankruptcy proposition. For several years all advance of fare was forbidden by the action of the city authorities; and the street railways faced ruin. The service and equipment ran down till, as above stated, the state passed a law taking over the Boston Elevated, to be operated by Trustees for the public benefit; any deficit resulting to be apportioned among and paid by the various municipalities served by the system. This took effect in 1918, and by 1919 a loss of nearly $4-,000,000 was rolled up by the Trustees. Of course they promptly raIsed fares with consent of the Public Utilities Commission to a paying point, ten cents; and the property is rapidly getting back into condition again. But meantime, the city of Boston refused to pay its share of the 1919 deficit, some $2,900,000, and carried its contest to the court of last resort. It is now most jllstly compelled to pay.

But the dishonest politicians who control the city of Boston have all along told the voters, and still tell them, that they will make the rich men who own the street railways to carry the people for a 5-cent fare, no matter what it costs them to do so. They promise to procure authority from the state to force a sale of the railways to the city; and then to continue the 5-cent fare, paying the losses out of the public taxes, contributed by the same rich men who own the railways. But for the Massachusetts and U. S. Supreme Courts, they would openly rob them now, without the shadow of justification, after their roads have shown under the handling of trustees named by the state the absolute inadequacy of the 5-cent fare. It isa pretty ob ject lesson in demagogy. [ 202} Useless State and Local Boards put the street railways in a serious financial hole, the trustees were empowered to collect a lo-cent fare until sufficient net earnings should accumulate to re habilitate the properties and restore decent service, as well as pay interest on securities. That is still the situation; though it is evident that a reduction in fares can be made before very long and is now under consideration.

To sum up the history of transportation in the three great cities named, which has been repeated more or less in the case of every city and suburban street railway in the United States, the net result of government control of street railways has been' sim ply disastrous, as it has meant elastic expenses and an inelastic fare. The investors in those properties, who had for forty or fifty years furnished a profitable, legitimate, cheap, and inestimably valuable service to the mass of the population; who were by every law of honesty and common sense entitled to as great reward for their investment, their patience, and their risk as if they had put their money into furnishing any other neces sary of life; have been treated as criminals, and robbed of their property, usually without process of law. In the meantime, political blackmailers have swarmed about them like gadflies upon an unlucky mule mired in a swamp. As I know by personal experience, neither the corporations, their managers, nor their owners have had the smallest show ofjustice, the remotest chance of a fair hearing from politicians, legislators, councils, the press, or even the reformers.

Here and there the courts of last resort, whose jus tices are generally appointed for life and are above and free from political pressure, have intervened to save the unfortunate investors, in some part, from the consequences of putting their money into the r 203 ] Too Much Government-Too Much Taxation service of the public. Such relief as the courts have given was, however, necessarily limited by the nature of the case, and after all was based merely upon the personal conviction of this or that judge as to what constitutes a reasonable return upon investment. There arose the whole question of what the invest ment actually was, usually answered with disregard of all the history of the corporation, of its necessities from time to time, the cost of its abandonment of old methods and adoption of the new, the changes in values and conditions brought about by time and growth; also, of course, utterly ignoring the values fixed by the law of supply and demand, and the sound old commercial maxim that a thing (service, for instance) is worth what the public will pay for it.

Nevertheless, that very standard of value-the willingness or refusal of the public to pay-is, and must always be, the great governing criterion which determines the charge for service fixed. by the suc cessful corporation manager. It cannot be too high without killing his trade; it cannot be too low with out making it worthless. It must automatically rise and fall with the natural ebb and flow of general value, with or in spite of the slow and vacillating ob struction which must inevitably characterize public utility commissions. The latter are political ap pointees, job holders, usually anxious to retain their jobs and to placate the public. Their whole position is necessarily a false one; they are almost bound to do injustice; and as a matter of history their interference has worked mischief to that public service, which is the only excuse either for their existence or for that of the corporations themselves. It may be true that they operate as a sort of safety valve, to relieve pos sible explosion of popular wrath at supposed extor tions; but, if so, it is merely that the public are [ 2°4] Useless State and Local Boards easily fooled. The public utility commissions are but one more of the political fakes with which dema gogues humbug American voters. It can be said of them, however, that they are far better than Mayors, City Councils, and State Legislatures, to deal with in a pinch, because there are comparatively few of them; and because the theory, at least, of their appointment is to do justice.

New York, like Chicago, is confronted by a condi tion very difficult to work out. Only one thing is certain, which· is that for the last fifty years in and about both colossally growing towns there have been literally hundreds of great private business organizaItions, which, free from the blight of government in terference, have grown and prospered commensur ately with the growth and prosperity of the city, have served their clientele always better and cheaper, and thus have made constantly greater profit in pro portion to the service. For the same period of time their street railways have grown and served always more and more, yet "have gone broke," solely be cause of government regulation. They must now serve less and less. It is true that the occupancy of the public streets by a street railway company must necessarily be a monopoly, and that the cost of service cannot be regulated by competition. It. is further true that solid monopoly "tends to inspire its management with arrogance and irresponsibility toward the public." On the other hand, the law of big business tends in precisely the opposite direction to create, for the sake of its greater profitableness and smaller friction, the best service and the friendliest relations possible between the public service corpora tion and its great master, the public. My personal conviction is that far better results would be ob tained entirely without state or city regulation in the [ 205 1 ' Too Much Government-Too Much Taxation matter of public utilities. In the present state of public prejudice against such uncontrolled oppor ..

tunity for profit as the corporations would then possess, their freedom from regulation is probably impossible; but let us hope that it may come some happy day. I 206] CHAPTER VII TOO MANY OVERLAPPING LOCAL GOVERNMENTS AND TAXING BODIES I HAVE heretofore considered my sixth category, "Too many lines of government activity" (especially government interference with business) because that category is most in the public mind at present. Let me now consider in briefest detail the unnecessary complexity of government itself, and of our politics my First Category. Whether the Pilgrim Fathers, in devising the New England town meeting, ever dreamed of its applica tion to our modern cities and their great populations, I do not know. They were plain men of little ex perience with large affairs, and probably were not in the habit of crossing bridges before they came to them. Their rather crude organization still survives, more or less modified, throughout our entire North ern, Central-western and Western states. Here it is, for instance, as it now exists in Massachusetts. The state is divided into 14 counties and they again into 37 cities and 317 towns. Towns frequently comprise more than one village, but they are one for political purposes. The state elects a governor, lieutenant governor, 8 councillors, a secretary, a treasurer, an attorney general, an auditor, 40 senators, and 240 representatives; also presidential electors in a presi dential year. The county elects a district attorney, a clerk, or clerks of court, or courts, a registrar of probate, a registrar of deeds, a sheriff, a county [ 2°7 ] Too Much Government-Too Much Taxation treasurer, one county commissioner and two assist ants. The cities elect differing numbers of officers, according to their charters, the difference corning mainly in the number of aldermen. They usually elect a mayor, a clerk, a treasurer, and a board of aldermen, the total probably averaging 20 elective officers per city. A town elects 3 or more tax as sessors, 3 or more poor overseers, a treasurer, a col lector, an auditor, I or more highway surveyors, I or more sewer commissioners, I or more constables, a field driver, 2 fence viewers, a tree warden, 3 or more school commissioners, 3 or more health com missioners, 3, 5, 7, or 9 selectmen. The above totals 294 elective officers for the state, 9 for the county, an average of 20 for the city, and not less than 25 for the towns.