Municipal and private operation of public utilities; relative to the labor report of the National civic federation Commission on public ownership and operation

Front matter

PKHSKNTCI) 1$Y munkiN and Private Operation of Public Utilities

RELATIVE TO THE LABOR REPORT OF THE

Commission on Public Ownership and Operation

I

Page 90, speaking of Glasgow: "In the midst of this socialistic tide, two anti-municipal ownership associations were organized — the Citizens' Union and The Eate-Payers' Federation. They started an active agitation, and, along with other influences, the tide of municipalization has been checked or stopped. We were led to believe that from these two associations we could secure information that would correct the universal indorsement of municipal ownership found elsewhere in Glasgow, but were surprised to find that both associations indorsed all that had been done in municipalizing tramways, electricity, gas, and water. They only opposed the municipalization of other undertakings competitive in character. No more conclusive indorsement of the success of municipal ownership in Glasgow could have been brought to our attention," etc.

This tardy "indorsement," sure to come from converted antagonists, has long been an alluring idea with Municipalists and Socialists. Despite itself the opposition is to be won over everywhere by the brilliancy of the communistic successes achieved. Investigator Commons wished to make this point for Glasgow in our joint report, but I asked him to produce his evidence. He spoke of the notes of the stenographer at the meeting between the Glasgow anti-municipal representatives and our Commission, as well as of the minutes of the Twenty-One's secretary, but he never produced his desired testimony. Xext he introduced this "indorsement'' in an instalment of a proposed joint summary, as he termed it, wdiich he sent to me in Xew York from [Madison, I marked out the word "indorsed'^ in the places it occurred and substituted "acquiesced." He dissented. On several such differences we gave up the project of a joint review. Xot one member of the Glasgow Citizens' Union or Rate-Payers' Federation "indorsed" to us the municipalization of the city's gas, electricity or tramways. Secretary Eobert Bird, as the spokesman, and other members of the Citizens' Union and the Federation, met members of our Commission at the Central Hotel in Glasgow, June 4. My own notes are the fullest that exist regarding this meeting. In explaining the purpose of the two organizations, Secretary Bird dwelt on their opposition, in theory and practice, to the municipal telephone, now defunct, to the unnecessary municipal housing scheme that had cost £750,000, while private capital could have done better work at a lower social cost, to misapplications of the Common Good fund, and to the numerous municipal ventures fostered by Socialists and municipal communists. When asked as to gas, tramw^ays and electricity. Secretary Bird said his two organizations were not actually opposing them, but accepting them as they stood, were opposing extensions "on their fringe" that entered upon legitimate competitive fields. The gas undertaking should not deal in gas stoves and gasoliers, the electricity department in fittings and the like. When the tramways department set out in 1903 to make extensions in the surroimding country districts the Eate-Payers' Federation compelled it to give service first to sections of the city "that were crying for it," and the same body of citizens endeavored to prevent the cost of street alterations or repairs made plainly for the benefit of the tramways from Ijeing charged to the city treasury in general. Such statements as these w^ere construed by Investigator Commons as his sought-for conclusive "indorsement" of the municipal operation of the three utilities in question. But if he had pursued the subject further, as did others of the Commission at the time, he Avould have seen clearly that the Citizens' Union w^as fighting the whole municipalization programme.

I interviewed last April on this subject Mr. Arthur Kay, who, as all Glasgow knows, is the leader in both the Citizens' Union and the Rate-Payers' Federation. He said: "Mr. Commons' statement as to this indorsement of ours is totally incorrect. We merely accept these existing municipal undertakings he mentions as ^faits accomplis.' As you put it, we acquiesce in w^hat is not a live issue, just as we live under imperial laws of a century's standing which just at present are beyond correction in practical life. The members of our two organizations believe our tramways would be more justly — as regards other traffic — and better administered by a company holding a license from the Corporation than by the Corporation itself; and if the Electric Light and Power undertaking had

CRUCIAL FACTS. II

been worked with the Electric Tramway undertaking, botli under license from the Corporation [municipality] experts agree that the result would have been more efficiency and less cost. The cleanliness and efficiency of our tramway system in Glasgow do not seem to me in any way to excel those of the privately owned tubes in London."

At a meeting of tramway committeemen of the Glasgow City Council and the tramway manager with our Commission, June 5^ Bailie Alexander, chairman of the committee, said: ''The Town Council is now agreed that the electricity for both departments should have been operated under one authority. There ought to have been one central control."

The municipalization movement was not "universally indorsed" in Glasgow even by the radical parties. John Paul, representing the League for the Taxation of Land Values, a strong and active organization, said to me in an interview, the notes of which I gave to Investigator Commons: "All done, what's done? There's as much poverty in Glasgow as ever. The Social Democratic Federation, at a meeting here ten years ago, upheld our municipalization. But now it calls the movement municipal capitalism." A member of the League, for a decade a city councillor, told me he withdrew his support of municipalization, as its results were not socially good. Among other points he made was that the 15,000 city employees of Glasgow, working for their own ends, constituted a menace to good government on broad lines.

In this instance Investigator Commons, contradicting me, published to American readers as truth the very reverse of the truth.

It seemed to myself and several other members of the Commission that the rise in Great Britain of the Municipal Employees' Association, as well as other unions made up of municipal employees. was significant as a growing public danger in connection with the development of municipal operation. As I have said, on his arrival I had ready for Investigator Commons the data relative to this "spurious union," much of which he used in our joint report. He paid full attention to this aspect of municipalism, and was anxiously interested in the action of the Trade Union Congress of 1906, which passed a resolution threatening to exclude organizations made up of municipal employees in mingled occupations from the support of the trade unions. In his review (pages 98-99), he sketches the progress of the association, and after mentioning this action of the union congress, says: "Without the support of the regular unions the strength of the Municipal Employees' Association has disappeared. It was a temporary phase of the rapid increase of municipal ownership."

In April, 1908, I showed this paragraph to Eichard Davies, tlie present general secretary of the Association, in its new central offices in London. He said, as to the disappearance of his organization's strength : "This is far from an accurate statement. We have never lost a single mi ember by this action in the trade union congress. We have now 15,000 members against 13,000 two years ago. Here are our reports for 1907, in comparison with those for 1906, whicji show an improvement in our finances. As all the organized working-men of this country know, we have had serious internal troubles, resulting in ousting the former General Secretary, who has since started another organization among municipal employees. Nevertheless, our present reports, which are revised by chartered accountants and are therefore correct, show that our income for 1907 \\as more than £850 in excess of expenditures, which is better than the year before. We do not interfere with the unions of skilled tradesmen, but urge workmen of the trades employed by municipalities to go into the unions of their trades. Hence, really a considerable membership of such unions, and in places almost whole organizations, w^hile not connected with the Municipal Employees* Associations, are municipal employees organized to promote our principle of benefiting themselves through their votes. For example, Mr. Commons, in mentioning (pages 41 and 49) other unions made up mainly of municipal employees, says that six-sevenths of the members of the Tramway and Vehicle Workers' Union in the Kingdom are in municipal employment.

Thus the municipal employees in all other forms of organization are numerically stronger than is the Municipal Employees' Association itself. We are getting men in the tramways departments not reached by the Tramway and Vehicle Workers. Here is the financial statement for March, 1908, of one of our tramway branches in Manchester, which has 430 members, and w^e have four branches in Salford-Manchester. Of the laborers in municipal employment, nine out of ten belong to no trade — sewermen, scavengers, street sweepers. The unskilled trade unions have never got these men, and we are getting them. The joint board of unions and the Labor Party have given members of the Municipal Employees' Association until May 1, 1910, to assimilate in national unions represented in the Trade Union Cono^ress. Changes which we have made in our rules for organization may set aside the present apparent differences between us and the unions, which meantime have not attacked us. The fact is, the unskilled municipal employees will not organize in the outside unskilled unions, such as the gasworkers and dockers, who, with several other national unskilled workers, have added to their titles "and General Laborers' Union," and are open to all non-tradesmen. I look for a federation of government workmen and municipal employees. Commissioner Commons failed to understand the situation as it is regarding our organization and made an unfounded statement as to the disappearance of our strength. We have as much influence now on the election of Councilmen as we ever had, and it is growing. We contribute money to the election of Councillors favorable to us."

I asked in 1906 many observers of public movements in Great Britain about the Municipal Employees' Association. The usual rej^ly was that its possibilities had not yet been demonstrated ; no man had yet come to the front in the organization who had sho\vn the capacity necessary for a national leader. Secretary Davies, who has had experience as a Leicester Town Councillor, now gives promise of being the man for the occasion.

On this question again Investigator Commons wrote as a fact what he wanted to be a fact but was demonstrably contrary to the fact. That municipal employees, whether teachers or tramway men, policemen or public building janitors, clerks or laborers, will enter

THE MUNICIPAL EMPLOYEES. 13

into alliances for their own purposes, so far from being a "temporary phase" of increasing municipalization, may be reckoned on as a fact as well settled as office seeking. The only move made by tlie Trades Union Congress against the Municipal Employees' Association was passing an indefinite resolution, never acted on, except in the way of negotiations, which are pending until May 1, 1910.

III

In his review (page 102) Investigator Commons alleges that in Newcastle, one of the places visited by our Commission, where private companies operate some of the public utilities, the Municipal Council is "decidedly inferior in quality and ability to others." His judgment of the Council of Sheffield, where the gas is supplied by a company, is equally characterized by antipathy. The recklessness of such opinions may be inferred from the fact that Investigator Commons spent, all told, less than one week in these two cities together. Of Newcastle he says : "An equivocal class of labor agitators takes advantage of the situation to get elected to the Council." Of Sheffield he has this: "In that town there is a peculiar inducement for the eminent business men in charge of the gas company to look with approval on the election of inferior Councillors, because the Council elects three of its members as directors of th.e company. The strength of the company is seen in the incompetency of these municipal directors, who are kept in ignorance of essential details of its affairs. With Councillors of this inferior type, and with the indifference of business men to the management of municipal affairs, the result is seen in the absence of any protest against practices which are undermining the municipal undertakings."

I showed the foregoing passage to two members of the Parliamentary Committee of the Trades Union Congress (corresponding to the Executive Council, American Federation of Labor). One of them, a member of the Newcastle Council, could hardly be expected to give a reply, though he is one of the most popular and highly respected Labor members of Parliament. The other, C. W. Bowerman, M. P., whose duties on the Parliamentary Committee, in Parliament and the London County Council, and for many years as Secretary of the Typographical Union, have brought him in constant contact with the office-holding and other union officials of Great Britain, said: "I have never heard one word against the Labor members of the Newcastle and Sheffield Councils." He mentioned several of his acquaintances among them. "Such inferior Councillors as are referred to by Commissioner Commons would be knoAvn to all of us," he continued. "They are not known, because there are not any. I consider that an unfair report." I mentioned Alderman Uttley, the only Sheffield Labor Councillor a gas director. Mr. Bowerman said: "He is one of the responsible men in the Hearts of Oak, a great popular national insurance association, and as a citizen has an unimpeachable standing."

Hanbury Thomas, Managing Director of the Sheffield Company, said :

"That portion of Professor Commons' article which referred to this company was not submitted to myself or an official of the company for correction, and I may say that I have read with sur-

14 THE Cn^IC FEDEKATIOX LABOR REPORT.

prise and amusement the rather remarkable deductions he has arrived at from information given bv this company to the Commissioners.

^•'The idea that the Gas Company, who are the largest rate-payers in Sheffield, should look with favor on the election of inferior Councillors is absolutely ridiculous. If the Professor were a business man he would know that business men of high capacity are far more easy to get on with on a Board than men of small experience.

"I am pleased to say that the City Council has always paid this company the compliment of sending good men to represent them on our Board. For many j^ears Alderman Gainsford — a Colliery proprietor, and Chairman of the Derwent Valley "Water Board, which is a huge scheme for supplying water to Sheffield, Leicester, Derby and one or two other towns — was a Nominee Director, and only recently resigned because his multifarious duties prevented his having the time to give that amount of attention to the Gas Company's business that he desired to. Alderman Batty Langley is a timber merchant in a large way of business, and is a Member of Parliament for the Attercliffe Division of Sheffield. Alderman Stuart Uttley is a Trade Secretary, and I may say one of the most respected men of his class, a man of sound common sense, and certainly not a Socialist. He was for some years Chairman of the Highway Committee. It is certainly news to me that he has had more to do than any other Director in fixing the hours of labor and the rates of wages paid to the employees of the company. It has always been our custom to pay good wages, recognizing that thereby we insured good service, which has all helped to bring the company into its present prosperous condition.

"With regard to the City Council generally, I am sure it will compare favorably with that of any other city in the United Kingdom. We have men in it of very high capacity, who are leading members in their various businesses and professions, and Sheffield is generally regarded throughout the country as a go-ahead town.

"With respect to the Gas Company, I am pleased to say that its management stands high in the opinion of the City Council, and also of the whole of the inhabitants, who recognize that the company as been carried on as much for the benefit of the consumers as for the shareholders. The exceptionally low price at which gas is now sold, viz.. Is. 4d. down to Is. per 1,000 cubic feet, is ample proof of this. Our Chairman, Sir Frederick Mappin, has for many years been looked upon as the foremost of Sheffield's citizens. He has been Mayor, Master Cutler, Member of Parliament for one of the Divisions, and Chairman of the Technical Department of the University (in fact, he was the making of this Department), and has occupied every position of honor it was possible for the town to place him in. Sheffield is his native place, and it has never possessed a son who has been more disinterestedly devoted to its ^velfare.

"I think these facts are sufficient in themselves to refute the statement that there have been any practices on the part of the companv calculated to undermine municipal undertakings.

^ "The Professor's other comments are equally unfortunate, and were I to go through them in detail I should find myself obliged to contradict most of the conclusions he has drawn."

DEFICIENCIES. 15

IV

Investigator Commons' statements against the Newcastle-upon-Tyne Gas Company brought out these comments from W. Doig Gibb, its Chief Engineer:

''The sentence (page 102), — 'The presence of private gas, electricity and water companies, with their representatives in the Council, prevents the leading business men from interesting themselves in the success of the municipal government, while an equivocal class of labor agitators takes advantage of the situation to get elected on the Council' — is absolute nonsense. I have never heard such an opinion expressed by any one in Newcastle.

"It is next to impossible to have Councillors of any standing without a few of them being interested in the local semi-public enterprises, such as the gas company here is. But when any business connected with their company is being discussed in the Council Chamber the interested members very seldom take any part, and then only by way of explanation. Indeed, the Secretary and myself think that the gas company is probably handicapped by having two of their directors on the Council, inasmuch as they are both sensible men, and if not interested would vote for common sense proposals. As it is, they neither influence the Council nor vote.

"The gas company at Newcastle does not pay its organized common labor the same minimum as the municipality (page 107). One or two isolated cases may have been taken to prove this, but the general practice is undoubtedly that the gas company pa3^s from two to four shillings per man per week more.

" 'The presence of a strong labor organization' (page 110) has nothing whatever to do with stokers working five hours for eight hours' pay. As a matter of fact, the stokers work as follows : Each eight-hour shift is divided into four periods ('charges'), each consisting of three-quarters of an hour work and one hour and a quarter rest. Thus in eight hours three hours is actually working time, and at the end of the fourth period of two hours the men are not kept to take their rest of an hour and a quarter, but can go home. The eight hours nominal shift, therefore, consists of three hours* work and six and three-quarters hours in all at the works. The men are paid by 'charges' and not by hours. No stoker could work continually for eight hours, and the Newcastle custom is the ordinary one throughout all gas works, whether union shops or othc]-- wise.

"After inquiries I am unable to find that Professor Commons submitted any manuscript or proof to any official of this company for correction. It is difficult to check his figures, but I am not in agreement with many of them."

Investigator Commons' bold travesty of scientific observation in these instances brings him to print rash, foolish and evidently forejudged conclusions as facts he had ascertained and presumably verified.

MAKING OUT A CASE AGAINST A COMPANY, NO MAT- TER WHAT THE FACTS.

Investigator Commons was the sole writer of the sub-chapter, "Profit Sharing or Copartnership (pages 82-88, "Eeports of Experts — United Kingdom"), and he is the authority for references

IC THE CIVIC FEDERATION LABOR REPORT.

elsewhere in the joint report to the South Metropolitan Gas Company, London. ]\Iy permission to him to proceed without me in this and several other cases of private undertakings came about chiefly through his baseless assumption, largely by insinuation, that somehow I was expected to defend the acts, questionable or otherwise, of the companies under investigation. To this point I shall refer hereafter, but enough to say here that when Investigator Commons on one occasion in London alluded to this idea I told liim to go ahead and give all the evidence he had found of oppressions of labor by the British companies and I would accept whatever he wrote. I added that of course he would set down such facts on honor and when published they would have to stand the criticism of interested readers. I was busy at the time with the management of the Commission's work, so I allowed him free rein in gathering material against the British companies. He was an adept in presenting such matter with a judicial pose; besides, as in social standing he was a university professor and therefore presumptively an American gentleman, why not trust him? In reflecting on my turning over this work to Investigator Commons I have at times questioned myself as to whether there ought not to have been with us a third labor investigator — a representative of the employers, to guard over their rights and interests at each step in the inquiry. To this my reply at this stage is, first, that I hoped for a fair degree of foresight from Investigator Commons in his unrestricted procedures, that he might not be tripped up afterwards, and, secondly, that I knew if he proved notably unfaithful I must give publicity to his shortcomings. That is what I am obliged to do now.

Before Investigator Commons reached London I had interviewed Will Thorne, Secretary of the Gas Makers' Xational L^nion, and Pete Curran, their organizer, getting from them their version of the South Metropolitan strike of 1889 and the development since of that company's labor copartnership. I had also had communication with the company's officials and given them our book of labor questions — Schedule 11. x\t our Commission's London office, engaged in occasional employment in transcribing and condensing legal and other reports, was a Mr. S. D. Shallard, a Fabian editor and lecturer, and from him I heard the Socialist history of the labor developments at the South Metropolitan Works. In turn afterward Investigator Commons saw all these same men, of both sides. He let me know, from time to time, that he was heaping up facts, important ones, in the South Metropolitan case, greatly to the company's discredit. When, in October following, at Madison,, he gave me his instalment of the report on this subject it seemed to me easily possible to get up what he had Avritten, aside from the points given us in the company's replies and publications, by simply quoting the union Socialists Thorne and Curran and the visionary Shallard. He had managed to get from outsiders somewhere allegations of facts or interpretations of passages in the company's reports, to show that its benefit and profit-sharing schemes were methods b}^ which the employees were oven\'orked and in important respects tricked out of the benefits and compensations due them by law. This latter point, insisted on by him as demonstrable by his statistics, modified greatly my own favorable estimate of the

THE SOUTH METROPOLITAN COMPANY. 17

company's co-operative features. Bat he had not shown his matter to the company for its version of possibly inaccurate or controvertible statements. This I myself have done recently — April, 1908. The officials of the company had already "checked up" Investigator Commons' errors on capital points. Following are examples :

Page 84, "Reports of Experts — United Kingdom"; "In 1889- the company, in accepting the eight-hour system, had to meet agreatly increased cost of labor. The change from twelve hours toeight, at the same rates of pay per day, meant an increase of 50^ per cent, in the cost of labor in the retort house. In order to overcome this handicap the management endeavored in many ways ta increase the amount of work, such as making the scoops larger, detailing men to keep them in repair and to see that they were kept full, and shortening the periods of rest/' etc. To this the reply of the company is that "it was quite the other way. The men, instead of having more work put upon them, were constantly refusing to do work that they had theretofore done." Scoops were not madelarger; men had always been detailed to dress scoops even before profit-sharing was started. Machinery was introduced which lessened the manual labor. Conditions as to periods of rest, etc., are the same now as in the non-profit-sharing companies. But no other company gives, as does the South Metropolitan, the many benefits of profit-sharing, plus those of its various forms of benevolent associations, plus aftei ten months' services a week's holiday" with pay to every man and boy, and after three years' services the same holiday with two weeks' pay. Instead of a growing oppression of the company's laborers there has been constant amelioration in their condition. The holidays were in vogue before the strike, also the superannuation and sick benefits. The benefits of the sick fund are now 12 shillings per week for thirteen weeks, & shillings for another thirteen weeks, contribution of workmen 3d. per week; superannuation 3d. per week — 10 shillings per week at the age of 65 years and 25 years' service. Additions to pay since the strike have been, first, hours per week reduced from 60 to 54 with an increase of ^d. per hour; secondly, a few years ago an additional quarter of an hour for breakfast, with no decrease of pay; the men are paid for 54 hours and only work 52% hours ; and thirdly, last year an additional %d. per hour, given to a large portion of the men. There is no need for any man to lose any time duringthe year unless he chooses. Christmas Day and Good Friday are paid for to the whole force. The employees pay but Is. 8d. for their gas to the public's 2s. 3d. per 1,000 feet. They get their coal and coke at cost, delivered by the company's vans. They have companygarden allotments, free to all, at Old Kent Road, Greenwich, and East Greenwich. The average holding of company stock and savings per man is now £60.

The company makes all promotions from within its force. In the offices are thirty-six sons of workmen. When slot meters were introduced the 140 new collectors necessary were selected from the working force. The contributions of the company in 1907 were : To copartnership, workmen only, £38,663 (including officials^ £45,590); workmen's accident fund, £1,264; workmen's superannuation fund, £4,428; workmen's sick and burial fund, £1,615; cost of holidays given workmen (about), £16,000; to benevolent societies, hospitals, etc., £1,008. Through the company's building society its workmen have built or bought 230 houses.

Page 86, Investigator Commons: "The stock [of profit-sharing employee] can be withdrawn of sold only when the employee leaves the service of the company." Correction: "The members can withdraw their stock to buy a house, as many have done, or in any case of imforeseen unusual necessary expenditure not to be met by the weekly wage. The men who have dra\\Ti out to go to America have each landed there with a round sum in his possession."

Page 87, Investigator Commons : "The Copartnership Committee is simply a means of registering the will of the company through its chairman, and the claim that it is a joint committee with equal representation is a fiction as well understood by the workmen as by its authors." (Investigator Commons originally ended this sentence with the words "is false" after "representation"; on my suggestion he adopted the roundabout phrase instead). Eeply by the company's speakers: "*^^The only foremen w^ho are elected as company representatives are the head foremen af each station, who are in the position of officers, and as such would not be eligible for election b}' the workmen. There never has been any attempt at interference with the freedom of the men in selecting and electing their representatives. Only very rarely have they elected a sub-foreman. All wage-earners, which includes many of the foremen, are eligible to serve if they possess the qualification. The sentence as to the 'fiction' is very unfair and quite incorrect." The three workmen directors of the company united in saying: "The paragraph is a libel on the comm.ittee. We contradict every word of it."

Page 89, Investigator Commons: "The South Metropolitan scheme [of sick and death benefits] is the oldest, having been established for officers as early as 1842, and being extended to different classes of workmen at different times," etc. It was the workmen's sick and burial fund that was established in 1842 ; and their superannuation fund in 1855, while the latter for the officers was started in 1890.

Same page — As to the mutual benefit schemes: "Membership is nominally voluntary but actually compulsory." Eeply : "Practically all the workmen contribute to the accident fund because the benefits considerably exceed in the aggregate those obtainable under the Workmen's Compensation Act, and they always get the compensation without difficulty or uncertainty, while the subscription by the workmen is nominal ; it used to be a half-penny a week, but it now ranges from Id. a month to Id. a quarter. The subscribers to the sick fund are fevv^er than to the accident fund, and still less to the superannuation fund. Thus it is seen that membership is really voluntary."