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- Bonds and a Public Industry How a.Property Worth More Than Eight Millions Has Been Built Without a Cent of Taxation The electric pumping plant through which the city of Spokane is:supplied with water from a series of wells. The structures to the right are the well houses. BY OLIVER S. MORRIS N 1883 the city of Spokane, % Wash.,, got its water by bucket out of the Spokane river. A few well-to-do peo- ple had private wells. Today the city of Spokane owns and operates a big, modern water plant worth from $8,000,000 to $10,000,000. This muni- cipal property has never cost the peo- ple of Spokane a cent in taxes. It was built and has been operated out of its own revenue. It stands today as a fine example of those publicly owned utili- ties which have been financed out of bonds guaranteed by the government, but which have themselves taken care of their own bonds and interest with- out a cent of taxation ever having been levied for them. PEOPLE LOANED CREDIT; EARNINGS PAID THE DEBT The people of Spokane at first loaned their credit for the construction of their water plant, but the water plant itself, not the people, retired the bonds as they became due and paid the in- terest. Later, when extensions and en- largements were needed, the people did not even have to guarantee the addi- tional bonds issued—the plant had be- come so valuable and its revenue so sure that bond dealers were. willing to buy water plant bonds that were not guaranteed by the people but that were simply secured by the water plant alone. If farmers of the Northwest, now seeking free markets through public ownership- and operation of terminal marketing facilities, need anything to convince them that bond issues guar- anteed by the people and secured by the proposed public utilities are the correct financial plan for getting what they want, they ought to study the financial plan of the Spokane water department. Those who want to make publicly owned utilities distasteful to the people by building them by a tax levy will get little comfort from this story of the Spokane water plant. FOES OF‘ PUBLIC OWNERSHIP TRIED TO MAKE IT FAIL B Spokane has not been altogether wise in' its handling of the water plant. The plant too often has been the football of politicians. At times it has been gross-_ 1y mishandled. It has been hampered also by those who oppose municipal or public ownership “on principle.” Often during the 34 years it has been operat- ing it has fallen under the manage- ment of politicians who opposed muni- cipal ownership and who have done their best to discredit municipal ownership by running the affairs of the plant badly..But with all this the plant today is successful and profitable. “Qur water plant is our biggest and best single asset,” City Com- missioner of Public Utilities C. M. Fassett told me while | was in Spokane. “It has been under good, bad and indifferent management at © installments on the bonds out of earnings. _ Dakota opposes because it would “saddle a debt on the state”. They pr ers pay by direct taxation for every unit of public industry they m People of the cities approve the “Socialism” .of a water-supply system publicly owned be- cause they have found that it doesn’t pay to take chances with the public health and safety by permitting private ownership. Did you ever hear of a fire insurance man advo- cating the sales of a city water system to a private company? various times. Its affairs have often become tangled. But at no time would the people ever have parted with it and there never has been a serious agitation to turn it over to a private corporation for operation. “The people realize the value of this publicly owned utility because it has always served them well and cheaply, even under bad management. We have had to pump every gallon of water we use. Half of the city is built on hills and high plateaus, the highest of which, 7% miles in area, necessitates a vertical lift of the water of 550 feet. Yet the plant has been and is furnish- ing water at 10 cents per 1000 gallons. This is one of the cheapest rates in the United States where pumping condi- tions are similar. It is away under the rate any private water plant in any city charge where pumping conditions are the same.” SERVICE OF ABLE MEN CAN BE HAD BY PUBLIC Since commission form of govern- ment came in Spokane seven years ago the water plant has been ably and effi- ciently handled. Commissioner Fassett is one of the best-known.experts on city management in the United States. He has the distinction of being one of the very few men in public positions whose writings on public ownership and municipal affairs are in demand among technical publications and pub- lications dealing with city affairs. He is not a politician. He has been in charge of the water department since Spokane adopted commission govern- ment. Under him, in immediate and active charge of all the detail of oper- ation, is Water Superintendent Alex- ander Lindsay, who has been ten Yyears with the municipal plant, the last eight as superintendent. He is a highly trained and experienced expert. . The cases of Mr. Fassett and Mr. Lindsay prove that publicly owned projects can command the services of experts and retain them over long periods of time, Jjust as private corporations can hire and retain efficient managers.- NO TAXATION REQUIRED TO BUILD BIG PLANT The city of Spokane in 1884, issued $50,000 in bonds, a debt against all the people of the city, to buy a private water plant just built in the city, and in 1888 issued $75,000 more of the same kind of bonds for improvements and extensions. The rapid growth of the city necessitated frequent enlarge- ments and bond issues of the same kind, guaranteed by the credit of all the people, were issued as follows: In 1891, $500,000; in 1905, $450,000; in 1910, $400,000. The interest on these bonds as due has always been met by the water revenues, and when the bonds have had to be renewed or retired the plant itself has always been able to take care of it. Taxation has never had to stand any of it, although the - city at large guaranteed the bonds in This is City Commissioner C. M. Fassett of Spokane, who, after long experience in public affairs is a strong advocate of public ownership and believes that the bonding system is the correct principle owned plants. striking for building public He has made a success of the big Spokane city water plant. Here is a property worth eigh’E or ten millions acquired by bonding and paying the interest and This is the method whieh the Old Gang in North ay build. _Can you guess why? order that they would meet a ready sale. Since 1910 the Spokane water plant has been big enough and prosperous enough to issue its own bonds for needed extensions or to take up previ- ous bond issues without having the city guarantee the issues. In 1897 the first issue of bonds for the plant not guaran- teed by the people at large was floated. It was for $350,000. In 1911 an issue of $1,250,000 in purely revenue bonds, in no way guaranteed by the people, was issued and met a ready sale at low interest. This issue was largely to take up previous indebtedness draw- ing a higher rate of interest. CITY NOW HAS PROPERTY WORTH EIGHT MILLIONS Today the Spokane water plant is valued at from $8,000,000 to $10,000,000, It would be worth even more than that to a private corporation with a monop- oly on the water business of the city. Its indebtedness is about $5,000,000, a little under half of which is a debt purely against the plant itself, the balance being guaranteed by the city at large. But the plant, out of its revenues, from $400,000 to $500,000 per year, is able to pay all bond interest and operating expenses’'and lay aside sufficient to make needed improve- ments and extensions. A recent im- provement out of the earnings of the plant was the complete fire-proofing of the upriver pumping plant and the in- stallation of a high-pressure fire hydrant service downtown, which cut insurance rates for the city in two. Spokane gets the purest water from a system of wells east of the city. The pumping plant, run partly by water power from the river and partly by electricity purchased from a private power plant, has a capacity of 85,000,- 000 gallons daily. There are 350 miles of water mains owned by the city plant, and the plant owns and operates one 17,000,000 and one 24,000,000 gal- lon reservoir and six 850,000 gallon standpipes. The entire city is supplied with absolutely pure water in abun- dance, water that is almost like ice water as it comes out of the taps, even in summer. The plant has purchased large tracts of lands in all directions from its wells, to conserve the water supply and keep it pure. The wells tap an underground stream of cold, crystal water., FOR THE “SKY LIMIT” Almont, N. D., April 18, Editor Nonpartisan Leader: ‘We are glad to know you are con- tinually on the job. Don’t let the Old Party bosses put anything over you. I only wish that President Townley’s speech could be printed in pamphlet form and was in the hands of every voter in the U. S. A. > ‘Wait until next election. Then you will hear something drop. We will elect a few more like our boys that stood so nobly by us, Messers. Cahill and Koller. Yours for the Sky Limit. ‘W. F. MARTIN. efer to make the farm-