Wealth against commonwealth

by Henry Demarest Lloyd

The people are often assured that these false figures of capitalization are merely romantic and do them no harm, because charges must be governed by the "laws of trade." One of the "laws of trade" that regulates the "market price" of such commodities as transportation, light, water, gas, furnished by the help of the public franchises, is the power of the public to regulate. This public power depends upon the public knowledge and the public disposition. To make the public believe that the profit of serving it has been only 3 per cent. a year, when it has been nearer 50 per cent., is to manipulate public opinion, the most potent of all the "laws of trade," for a competing supply cannot be got easily, often not at all.

A committee of citizens were invited by the representatives of the gas companies to meet them to verify the statements of the companies as to the unprofitableness of the business, and the inexpediency of municipal self-supply. But when the committee wanted to know what had been the real cost of the private pipe lines, on the $6,000,000 nominal capital of which the people were expected to pay dividends, they could not get any satisfaction. The companies would only give an estimate. To the request for more definite information, the reply of both companies was, "We have not got the books of the contractors; we have never had them. We have no means of knowing the actual cost of the Toledo plant, or any books to show it.[550] We have no papers or documents in regard to the construction of this line." It came to light later that one of the companies in the oil trust had constructed the pipe line for the gas company, and at a price approximating the large figures claimed. The company that built this pipe line is a ring within the oil and gas ring, always on hand for such contracts and at like margins of profit, and it is owned almost wholly by the principals of the combination.[551] The people—mostly Ohioans—who took the minority 40 per cent. of stock of the gas company were really the "simple greens." All that was paid for this construction by those who were members both of the inside ring and the gas company came back to them; their associates in the minority paid, but got nothing back. It was from the latter came the profits of this contract to the insiders.

The people of Dayton had a similar experience. Their natural-gas company demanded an advance to 25 cents a thousand, and met a committee of the people to prove that the demand was proper. But it would not let the people know what the actual investment was to make which good it sought to tax the people. The books containing the construction account were "not accessible." "The actual cost to construct the plant is what we most desired to know," the committee reported. As at Toledo, so at Dayton; all private enterprise would let its customer-subjects know was what it wanted them to pay; information to show what they ought to pay "was not accessible." What the profits were elsewhere can be guessed at from the fact that in Pennsylvania $36 a year was charged in most of the towns for cooking-stoves. In Toledo the charge was $19.50 a year.

Almost every day after the pipe line had been decided on the people saw something done, showing how well founded their apprehensions had been. The power to discriminate in rates the people saw used by the private companies for selfish and anti-public purposes, precisely as they had foreseen it would be. When the fight for and against the city pipe line was on, one of the gas companies sought to enlist the strong men in their support by making them special rates, pursuing the tactics of divide and conquer. Manufacturers with influence useful in controlling public sentiment were conceded special rates. Others were given to understand that any lack of "loyalty" would be followed by punishment. So effective were these alternating methods of boodling and bulldozing that the council committee on gas, in a subsequent investigation, found it almost impossible to obtain any information from manufacturers as to their use of natural gas for fuel. What little they did secure was under injunctions of secrecy. The committee found that some were made to pay twice, some three, and some even four times as much as was paid by neighbors for like service. The only rule for charging seemed to be to favor those who had "influence." This was using municipal franchise just as the franchise of the highways had been used in their behalf by the railways. An assembly of divines could not be trusted with such power over their fellows.

After the Fostoria incident the people of Toledo had another illustration given them of how wisely they had builded. The gas supply of the people of Columbus, Ohio, was shut off arbitrarily and suddenly in midwinter—January, 1891—and they were informed that the company would supply them with no more gas unless the City Council would raise the price to 25 cents a thousand feet from 10 cents. The gas had not failed. The caverns that discharge gas at 25 cents a thousand will let it come just as freely at 10 cents. The council had fixed the price at 10 cents, and the company had accepted it. The demand for a higher price was close upon an increase in the capital stock of the Columbus company from $1,000,000 to $1,750,000. More stock called for more dividends, and this was one way to get it—to strike this sudden blow, and then to say, after the manner of Silas Wegg, "Undone for double the money!" It was for the power to do this at Toledo, to preserve the power of doing it everywhere else, that hell and earth were being moved in Toledo to prevent the people from serving themselves and setting an example to the rest of America. In the same way the gas was turned off at Sidney, Ohio, and not turned on again until, upon the application of the mayor, the company was ordered to do it by the courts. "There is a great deal of suffering here," the press reported, "and it is feared that several deaths will result from exposure."

The people did not fail to comprehend the significance of criticisms in the Toledo organ on the municipal water supply. Monopoly must go on conquering and to conquer, or be overborne by the ever-recuperating resentment which rises against it, freshened with each new day. Nature hates monopoly, says Emerson. The studied attack on the city water works was believed to be meant to prepare the people to intrust that as well as the gas supply to the trust's "sound business men" and "private enterprise."

Finding that the council would not bend to the demands as to rates, and that the people were too resolute to be in any way diverted from their pipe line, Toledo was given some such doses as could be ventured upon of the Fostoria and Columbus medicine. The company shut gas off from those who would not pay the increased rate. It deprived public institutions of their fuel. It refused to supply gas to a new public school whose building was planned for natural gas. As the city's pipe line was not completed, the children had to go cold. The winter of 1891-2 was the first winter the city's pipe line was in operation. With the first cold snap, at the end of November, great distress and danger were brought upon the people by a lawless act, done secretly by some unknown person to the city's pipe line. One of the main pipes in the gas-field, through which flowed the product of two of the largest gas wells, was disconnected, so that its gas could no longer reach Toledo. Who did this was never discovered.[552]

Defeat, final and irrevocable, crowned the unvarying series of defeat which the private companies had suffered everywhere and in everything—in public meetings, in the Legislature, in the gas-fields, at the polls, in the courts, in the sale of the bonds, and in the competition with the city. The City Council of Toledo, advised by its lawyers that it could recover damages from those responsible for the losses brought upon the city by the opposition to its pipe line, has had suit brought for that purpose. April 14, 1893, City Solicitor Read began proceedings to recover $1,000,000 damages from members of the oil combination and the various individuals who had been used as stalking-horses in the campaign. At the next meeting of the Common Council several citizens of the "influential" persuasion assisted the mayor in trying to coax and bully the council to abandon the suit, but without success. The council were threatened with a financial boycott to prevent the sale in future of any of the bonds of the city, but it refused to be terrorized.

April 8, 1893, the natural-gas trustees of Toledo had the happiness of being able to give formal notice to the city auditor that no taxes need be levied to pay the interest on the gas bonds, as it "can easily be met from the revenues derived from the sale of natural gas." The city pipe line was on a paying basis at last. Toledo had vindicated its claim to be a free city. The completion of the enterprise had been delayed three years. A loss of not less than two million dollars had been laid on the city, but its victory was worth many times that. Toledo's victory showed the country, in full and successful detail, a plan of campaign of which Columbus had merely given a hint. It was not a local affair, but one of even more than national importance, for the oil combination has invaded four continents. This struggle and its results of good omen will pass into duly recorded history as a warning and an encouragement to people everywhere who wish to lead the life of the commonwealth.

Note.—For the year ending December 31, 1893, the city trustees report that they sold gas to the amount of $139,066. The city owns 5433 acres of gas territory, and has 85 wells, 73 miles of pipe outside the city, and 91 miles in the city. Since the gas began to flow the sales have amounted to $388,540. Out of the receipts the debt has been reduced $60,000, besides refunding $67,000 to those who advanced the money for piping the streets. While doing this the plant has been considerably enlarged. The city accomplished this while charging the people but 15 cents a thousand, while the gas companies of the trust charged 25 cents a thousand. Had the city been permitted to act without obstruction, the cost of the gas plant would have been long since fully paid, and the price of gas made still lower.[553]