Franchise Wealth and Municipal Ownership
BY JOHN H. GIRDNER, M.D.
THERE is much writing and talk about municipal ownership in these days. When you talk about a municipality or an individual owning something, it implies that there is something to own. It is about this “something” that I want to write. I want to make it clear to the reader what I mean by franchise wealth or franchise property, and exactly how it differs from private wealth or private property.
When you buy a house and lot in a town or city, your property is of two kinds, private property and franchise property. Your private property begins at the building line in front and extends backward the full width of your lot to the fence or line which divides your back yard from the back yard of your neighbor who fronts on the next street. Your franchise property extends from the building or stoop line, outward, the full width of your lot, across the sidewalk and on to the middle of the street where it meets the franchise property of your neighbor on the opposite side of your street.
The money to grade, drain and pave the street in front of your lot was raised by assessments levied on that lot. These assessments were added, by previous owners, perhaps, to the cost of the lot, and were a part of the price you paid for the lot. In other words, you bought and paid for the franchise property in front of your stoop line as directly as you did for the private property behind the stoop line, and you are therefore entitled to the usufruct of the one as much as the other.
The aggregate of the franchise wealth of all the individual owners in any given street is the sum total of the franchise wealth of that street. And the aggregate of the franchise wealth of all the streets of a given town or city is the sum total of the franchise wealth of that city. And it is absolutely owned by all the inhabitants of that city, for everyone contributes in some manner to the creation and maintenance of this franchise wealth.
There is another thing about this kind of property which the people ought to keep in mind. Like their private property, their rights in this franchise property extend from the surface right down into the earth, as far as it is practical to dig; and, from the surface, right up into the sky, as high as it is practical to build. It is well, I say, to keep these facts in mind; they may come in handy when a corrupt mayor and board of aldermen, or an eminently respectable board of rapid transit commissioners, are about to hand over to a private corporation a city subway or elevated road.
The tremendous importance of the franchise wealth on all social and economic questions in a city like New York may be more fully appreciated if we call to mind this fact, viz.:
That the value of any piece of city real estate is determined almost entirely by the character of the franchise property in front of and nearby it.
Why does a lot one hundred feet deep, with twenty-five feet front on Fifth avenue, sell for so much more than a similar lot fronting on Second avenue? They are the same size. They are composed alike of earth and rock. You can dig as deep a foundation and build as high in the air on the one as the other. But why the great difference in price? You say because Fifth avenue is a better street than Second avenue. But this answer does not explain much. What you mean to say is, that there are certain characteristics, which I have not time to discuss here in detail, connected with the franchise property in front of and contiguous to the Fifth avenue lot which make it more valuable than similar characteristics connected with the franchise property in front of and contiguous to the Second avenue lot. And this is my point, that it is at last the character of the franchise property of a street or a city which determines the value of the private property or real estate of that street or city.