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Round Table Luncheon Conferences,

CINCINNATI BUSINESS MEN'S CLUB,

TUESDAY, NOVEMBER 16, 1909,

Walter L. FISHER, Esq., CHICAGO, FOURTH VICE-PRESIDENT,

PRESIDING

Vice-President Fisher: As those of you who have been connected with the National Municipal League know the practice of having what we have come to call round table luncheons began, if I understand it, in the city of Chicago some five years ago. Those who were present then thought it would be desirable to get together in a strictly informal way where there could be a general interchange of opinion on some of the more vital and immediate problems in the cities there represented.

That conference confined itself to a discussion of the best manner in which the reform of political conditions in municipalities could be undertaken; and particularly of the different forms of organization,-as to whether an organization like the Municipal Voters' League of Chicago, which did not itself directly make nominations, and which did not directly promote nominations except when that step was absolutely necessary to get men who could properly be supported in the field, was the better form; or whether some such form as existed in New York, exemplified by the Citizens' Union, or as it existed then in Cincinnati as shown by the Citizens' Party, or as was subsequently developed in the city of Philadelphia as shown by the City Party there, was the better plan.

The discussion in general was frank and honest; and I believe the general practice then inaugurated has been followed at each succeeding meeting of the National Municipal League. This time the luncheon seems to have become quite an important feature of the program. At all events, on each day of the present meeting, I believe there has been provision made for a so-called Round Table Luncheon." Three of these have been provided for; and this is the first. This one is differentiated from the others in that no subject was decided upon in advance, and not until last night, in conference with a representative of the Local Committee, did we arrange for a program. It was thought at this time that perhaps the most available subject that could be undertaken to-day would be the broad question of public utilities, and their effect on, or connection with municipal government.

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It is a very broad subject, and I do not expect to do more in introducing it than to touch on it in a very general way. I do not know just what phases of it may be most interesting to the people who are here this afternoon.

Of course, we frequently comment upon the fact that no matter what we have done toward the management of these utilities, we have not reached any satisfactory solution, anything which looks to any of the people who have been most intimately connected with the matter as a really permanent solution. Yet I think that if we reflect for a few minutes upon the essential character of the business carried on by public utilities corporations we will readily understand why that is.

Government is always a matter of the adjustment of methods and of agencies to existing conditions. A method of conducting government,

or the functions of government, at a given time under Government, a particular conditions in a particular community may Matter of not be applicable to other times and other conditions. Adjustment But if we are to look at the underlying principle of

public utility corporations, or public utilities themselves, I think we can throw some light on the question.

I shall not refer to any radical opinions, or to the views of any doctrinaire reformer.

One of the most significant utterances of the chief judicial tribunal of this nation, the Supreme Court at Washington, consists in a declaration in one of the most prominent and well-known cases in this country. That declaration was in these words—“the business of a railroad carrier is of a public nature and in performing it the carrier is also performing to a certain extent a function of government.”

And if you will analyse the decisions of the state courts including the decisions of cases involving governmental or popular aid to railroad corporations, the issuance of bonds or the granting of subsidies in one form or another, you will find that all those decisions in all the state courts that have had occasion to consider them, proceed upon the same basis,-that a public utility, properly so-called, is an essential function of government.

Now if that is true—and I refer to those decisions so that you may understand that the basis of what I have to say is, as I have said, nothing radical, nothing doctrinaire or theoretical, but the fundamental basis upon which our railroad legislation and upon which our gas and electric light legislation depends; in fact, all the legislation that involves either the permanent occupation of a public highway, or the exercise of the power of eminent domain. It all rests upon the hypothesis that the reason we permit these things to occupy a public highway, the reason we permit these corporations to have the arbitrary power of eminent domain so that they may take from the individual his property without his consent, is that they are exercising a function of government, and that that arbi

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trary power is therefore to be justified. If that be true it must then follow that to the extent to which government has turned over to private agencies those things which are properly functions of government, to that extent government has failed to live up to the true standard which we should require of government. (Applause.]

I take it that a government which improperly and ineffectually exercises a function of government is no more failing in its true duty to the people than a government which flatly fails to attempt to exercise a true function of government. Now if that be true; and if the public utility corporation is exercising a function of government which should properly be exercised by the government, and which would be exercised by the government, but for considerations which may be legitimate and persuasive in themselves, to that extent we may expect not to get satisfactory results.

Of course that leaves still to be answered the question, if I was correct in my first statement about government, as to whether in a particular community at any particular time and under any particular conditions, it may be wise to permit a proper agency to exercise a particular function of government. It may be that political conditions in a given community may at a particular time be such that it would be unwise for that particular government immediately, before it had adjusted itself, before it had equipped itself to properly exercise this function, to take it over. It may be that it would be wiser in a given condition of things to permit these functions to be exercised in some non-governmental way; but the point that I wish to make is, that if that is so it must be apparent upon the face of things that it is merely temporary and a makeshift; that we must be in some way failing to make our government such that it can properly exercise all of its true functions.

You have seen how this has operated in many things. The most illuminating discussion, the most important investigation, whatever you may think of it, that has ever been had with regard to public utilities was that

undertaken by the National Civic Federation a few National Civic years ago when it appointed its Commission upon Federation Public Utilities for investigating that question in this Investigation country and abroad. The Chairman of that commis

sion was your own fellow-citizen here in Cincinnati, Melville E. Ingalls. It made a most exhaustive investigation of the question, including reports of engineers and accountants, in which were set forth the conditions of the physical property of various public utilities, together with an investigation of the financial accounts. That investigation led to a most remarkable unanimity.

I think the most significant and encouraging experience that I have ever had in a matter of that sort was in connection with that investigation. I was a member of the Committee of Twenty-one that had the investigation immediately in charge. Now while on the fundamental question as

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to whether municipalities should as a general priniciple take over and operate their public utilities, there remained an absolute conflict of opinion between the extreme radicals on the one hand, who were on the Committee, and the extreme conservatives on the other, it was possible to agree upon a unanimous recommendation with the exception of a single man on the Committee, that all public utilities should be handled and managed under terms which would permit the existing municipalities to take them over upon fair terms and fair notice at any time (Applause), under provisions for the effective regulation of the rates and of the service rendered by those utilities, and under provisions for the publicity of the accounts, books and records, and under provisions for a definite term grant which should require at the expiration thereof some readjustment of the relations between the corporation and the municipality.1

It was possible in that report to get absolute agreement upon the proposition that one of the reasons why our public utilities had not been any more satisfactory than they were was due to the direct interference

of the corporate management in the political affairs of Corporate a particular community (Applause); in other words, Influence it was possible to insert in that report the statement

that it is charged that the managers of the public utility corporations have directly interfered with the politics of the community, to the detriment of the community, and that we had found from our investigation that that charge is substantiated.

We got concurrence in a proposition of that sort of men whom I might mention, whose direct personal interest and employment and investments were connected with private ownership of public utilities. On the other hand we were able to get the concurrence of the extreme radicals to the proposition that they are mistaken who believe that the inauguration of a policy of municipal ownership and operation of public utilities will provide a political panacea. While the fact that the municipality is given the responsibility and the opportunity to work out these problems may tend to dignify local municipal government and thereby to elevate it; while it may remove the artificial obstruction from government which the self-interest of the corporation interposes, nevertheless, you cannot get rid of the human factor in the equation in any such way, and that good government depends upon that factor first, last and all the time; that municipal ownership of public utilities will not remove it, and might

1 In connection with Mr. Fisher's remark in regard to the National Civic Federation's investigation, it is interesting to note that the conclusion which the Federation's committee reached was substantially identical with that reached by the National Municipal League's committee on Municipal Program ten years previously. The fact that two committees approaching the subject from different viewpoints reached substantially the same conclusion is strongly persuasive of its soundness.

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in fact under existing conditions in a particular community increase the danger; So that on these two extreme propositions, we were able, as I say, to get absolute unanimity of opinion with the exception of one man, who maintained the attitude throughout of agreeing to absolutely nothing, that would even tend remotely to encourage the believers in municipal operation and ownership of public utilities.

This question is a very broad one. It includes the street railroads on the one hand, employing a large number of employees, and involving such difficult questions as are involved in the matter of political interference by these employees,-a question, which you know has been handled very differently in different communities, in some cases employees not being allowed to vote; in other cases being given representation depending directly on their number, as in some of the New Zealand and Australian colonies where they are permitted to elect themselves the number of members of the local council or legislature that their numerical strength entitles them to; but they cannot by having five hundred votes in one ward and two hundred in another thereby have the balance of power to elect a much larger number then their numerical strength entitles them to, and thereby obtain dangerous control or influence for their own self interest so as to have an immediate influence on increasing their wages or lessening their hours of labor.

So we have on the one hand the street railway question involving such matters as I have described, and on the other hand such questions as the municipal management of water works, which as you know were at one time almost entirely in private hands and now are almost entirely in public hands. Of course, perhaps we can go even deeper than that to the original highway itself, to the turnpike road which has so largely disappeared throughout the country, and which was a direct example of turning over one of the primary functions of government into private hands. I doubt if there is any more primary function of government than the maintenance of public streets and roads, unless it be maintenance of public order; yet the time was when the mere creation, management and maintenance of our highways was turned over to private individuals or corporations, because government was not exercising all of its true functions.

I do not know which phase of this matter is the most interesting or most important in the view of you gentlemen. The whole matter is open for general discussion, and if any one has a particular phase of it in which he is interested, or which he wishes to speak about, we will be glad to hear from him. I think first I will ask Mr. Chase to speak of the situation in Boston. I think there have been some recent developments in and around that municipality that will perhaps be interesting, and will serve to start the ball rolling.

MR. HARVEY S. CHASE, Boston, Mass., Member of Executive Committee:

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