Wealth against commonwealth

by Henry Demarest Lloyd

The completion of the line to the city was not the completion of the enterprise. Mains had still to be laid in the streets, and house connections made. At every step, now as before, unrelenting opposition did all that could be conceived of—in the courts, the Legislature, the city government, the money-market—to block municipal self-help. Great numbers of the citizens desired to change from the private companies to the city. Over 7500 consumers were at one time, in 1891, calling upon the city to supply them.[542] The litigation which was kept up, and the defeat of the attempt of the city to sell its natural-gas bonds in the open market, had exhausted the funds at the disposal of the city trustees. But they showed a readiness of resource equal, with the help of the people, to all these emergencies, and proving that public enterprise can more than hold its own in the competition with private enterprise. Contractors were got to pipe the streets by sections, and take for pay the pledge of the income earned by the pipes so laid. In other cases people wanting the gas were willing to advance a part of the cost. The same contractor who had faith enough in the city to build the main line from the gas-fields and take the bonds while they were under fire volunteered in the same way to build the submerged lines across the Maumee River, and ten miles of mains within the city. This was done at a moment when otherwise the enterprise must have come to a stop, and the name of this patriotic contractor is given to the public by the trustees in their annual report with words of gratitude.

The amount of bonds originally authorized was $750,000. The trustees, in consequence of the delays and enhanced cost caused by lawsuits and other tactics of opposition, had to incur a floating debt of $300,000. The council by ordinance directed the issue of bonds by the city to the amount of $120,000 to pay off part of this floating debt. The State Circuit Court refused to sustain this action of the council, but pointed out that all the city lacked was the authorization of the Legislature. This was the only decision against the city in all the litigations, and in this the State Court was afterwards overruled by the United States Circuit Court. A bill was accordingly introduced, giving the city the right to issue $300,000 in bonds for the floating debt, and $100,000 for the extension of the gas plant: wells, pipes, pumps—whatever was needed. A strong lobby immediately appeared in the State Capitol to defeat the bill. As part of its ammunition a pamphlet was circulated among the legislators, giving "Facts and Reasons" why the Legislature should not authorize the new issue of bonds. This pamphlet illustrates the easy virtue with which some lawyers dispose of themselves to those who have the money to pay them. Two of its strongest points were that the contracts for which the floating debt had been incurred were let without proper competition, and that the trustees had no power to make the contracts. This pamphlet was signed by two lawyers, one of whom, before these contracts were let, had given the trustees his written opinion supporting such contracts unqualifiedly. The representatives of the people were able to exhibit to the Legislature his written opinion stating that the trustees had the power to make the contracts, and had let them in compliance with the requirements of the statute as to bids. The pamphlet declared that the court, in granting the injunction against the issue of the $120,000 of bonds by the Common Council, had declared the claims which were to be paid by the proceeds of the bonds to be "illegal and invalid." This was untrue. The court had held only that the city had not the power to issue the bonds, and pointed out that the remedy was in new legislation by the State to remedy the want of power.

Pursuing the tactics of defamation of the city and its authorities which had been used throughout this contest, the pamphlet said: "We are prepared to prove ... that the contractors put in their bids substantially as gambling transactions, at such excessive price that they thought they could take the risk of the illegality of the natural-gas proceedings, trusting that these illegal transactions would be permitted to pass without question, or that subsequent legislation would ratify these illegal acts; all, or nearly all, of the contracts were taken at prices more than double the fair cash value for all the work and material provided for; and all the work and materials, the claims for which now aggregate about $350,000, could have been obtained in the open market, under valid laws, upon proper terms of payment, for less than $250,000. We have the evidence within our control to establish that the work under some of these contracts was actually done for less than 40 per cent. of the amount named in the contract. In addition to these facts, we can establish, if permitted to offer evidence, that the certificates issued by the natural-gas trustees were, immediately after the conclusion of the contracts and before any litigation was had upon them, hawked about the streets of Toledo at from 60 to 75 cents on the dollar; and that the great majority of these certificates are now in the hands of speculators, who bought them at not to exceed 65 per cent. of their face value."

The authors of these statements were at once challenged by the city's gas trustees to prove them. "We assert," the gas trustees said, in a formal challenge, "that you cannot establish the truth of those statements. We deny that the facts are as you state them to be, either in substance or in detail." This was signed by John E. Parsons, W.W. Jones, Reynold Voit, J.W. Greene, gas trustees, and Clarence Brown and Thomas H. Tracy, ex-gas-trustees. The city's trustees proposed that they and their accusers deposit $1000 on each side as a forfeit to abide the result of an inquiry by the three judges of the Court of Common Pleas, or any other disinterested arbitrators. They placed at the service of the accusers and the arbiters all the books, records, and employés of the city's gas department.

The challenge was not accepted, and the authors of these attacks made no attempt to prove them. The Legislature disregarded them, and granted the city and the gas trustees all the additional power to issue bonds asked for. In a subsequent proceeding in the Federal courts—the issue involving the validity of these certificates—it was admitted, contrary to these allegations, that the prices were fair, and that the contracts were entered into in good faith, and the court held the certificates valid.

The most serious crisis in the contest was still to come. In 1892 the gas wells of the city began to do what the people of the city will never do—surrender to the enemy. When the oil trust found, after years of opposition in the Legislature, the courts, and the gas-fields, that it had been helpless to prevent Toledo from getting ample tracts of excellent gas territory, with some of the largest gas wells in the field, and equal to the supply of the entire consumption, domestic and manufacturing, it turned to other tactics.

All about this territory secured by Toledo and found so productive the private companies of the trust proceeded to buy or lease and to sink wells. The trust shut off all its own wells, except those adjacent to the city territory, and for two years drew exclusively from the wells nearest those of the city. When the city's line was completed to the wells the volume of gas was found to be largely reduced. It had been drawn off into the wells of the opposition. In the spring of 1892 the private companies resolved to put in pumps to strengthen the diminished natural pressure, but to prevent the city from doing the same thing. Then, with their pumps alone at work, the pressure could be so much further reduced as to render the Toledo pipe line valueless. To this end all efforts were directed. The newspapers were kept full of matter showing how impossible it was to pump gas, that all the money expended in pumps would be just so much wasted, and that the companies had canvassed the matter fully, but abandoned the idea. Column after column of inspired interviews filled the papers, all admonishing the city of Toledo not to commit such an act of folly as to put in gas pumps. Then application was made to enjoin the sale of the bonds authorized by the council and the Legislature for pumps. So month after month dragged along. The bonds remained unsold, and the pumps unobtainable.

The injunction was refused both by the Court of Common Pleas and by the Circuit Court. But there was a right of appeal to the Ohio Supreme Court until the beginning of 1892. Boston bankers had subscribed for a large block of the bonds, but withdrew upon learning these facts. "It is possible for the contestants," the lawyers advised them, "to carry the matter to the Supreme Court. This, we understand, they propose to do." The simple assertion of a purpose to continue the litigation was enough to defeat the sale of the bonds. The payment of costs and lawyers' fees would be a very moderate price to pay for compelling the city's gas plant to go past midwinter without the pumps indispensable for its operation. One of the employés of the private pipe line, according to an account in one of the Toledo papers, declared to a reporter that "if we could not prevent the city from putting in a [pumping] plant any other way, we would blow it up with dynamite."[543]

Any faithful employé familiar with the blowing up of derricks in the shut-down of 1887,[544] the explosion in the independent refinery at Buffalo,[545] and the "chemical war" waged by the whiskey trust against the "outsiders" in Chicago[546] might almost be pardoned for thinking this was "only good, reasonable talk." The oil monopoly is evangelical at one end and explosive at the other, and it has made both ends meet.