MUNICIPAL OWNERSHIP. Since 1890, when populist Dr.
The drive to introduce public services arose out of the need for affordable essential services. Mayors Johnson and Baker introduced facilities such as municipal markets and
In the 1899 mayoral election, McKisson, in the midst of a tough battle for political survival, called for public ownership of all utilities, contending that he was defending wage earners against the privileged classes. He earned the praise of the city's radicals but lost the election. Before Tom L. Johnson became mayor in 1901, he declared: "The public utility corporations are a bunch of thieves. I ought to know. I was one of them." As mayor he believed that privately owned utilities were bastions of privilege that would destroy democracy if not controlled. Johnson made his most quoted declaration at one of his famous tent meetings: "I believe in municipal ownership of waterworks, of parks, of schools. I believe in the municipal ownership of these monopolies because if you do not own them they in turn will own you. They will rule your politics, corrupt your institutions and finally destroy your liberties."
Johnson's demand for municipal streetcars and power plants aroused the opposition of the utilities' owners and many other business leaders. The Chamber of Commerce and the Municipal Assn. dismissed the argument that public operation could provide electric power at a lower cost than private enterprise. A special committee of the Chamber of Commerce that studied Johnson's 1903 proposal to start a municipal electric light plant found that low-cost rates would be limited to the small proportion of citizens served by the plant, and concluded that "regulation not ownership is the safe policy for the city." The Municipal Assn. pointed out the danger of inefficient operation as a result of political appointments and warned against socialism. The city's growing
During Johnson's 4 mayoral terms, Cleveland witnessed the most intensive drive to achieve municipal ownership, but the reformer was not rigid on the question. When the Rockefeller-controlled
Johnson's major utility fight was with the privately owned streetcar corporations (see
But the celebration was short-lived. The new company was plagued with a bitter labor dispute, sabotage, and decreased revenues. Disillusioned voters in a referendum election rejected an ordinance that would have placed the city's backing behind the bonds of the municipal traction company. Unable to raise capital funds, the holding company returned the streetcar properties to the former owners. In 1910 a new approach proved acceptable to all parties. An ordinance developed by Federal Judge
The question of municipalization of the
But the increased use of automobiles led to a decline in CTS revenues. Substituting buses for trolleycars and building rapid transit lines did not arrest the fall in ridership. City council members pressured for reduced fares for several categories of riders while insisting that the system operate out of the farebox. Management, with neither local nor federal subsidies, reduced service. Many suburban automobile owners deserted public transit while central city residents, most dependent on public transit, faced frequent breakdown of old equipment and other problems. CTS experienced a further decline in ridership.
By the late 1960s, the public transit system was in a state of crisis. When Mayor Carl B. Stokes and county commissioner Hugh Corrigan applied for federal funds, the federal Urban Mass Transit Administration insisted upon a regional approach. The resulting 5-county Mass Transit Study Committee recommended a regional system to include CTS and all other Cuyahoga County systems, but leaders of the emerging African American majority in Cleveland, as well as many white suburban politicians, feared that their own power would be diluted under regional organization. In 1974 the Ohio state legislature, pushed by the
Compromise was finally achieved out of the glaring need for federal assistance: it was feared that public transit would reduce to peak hour service or collapse entirely. Mayor Perk gave up his demand that the central city have a majority on the proposed 9-person board, while the county commissioners agreed that one of their 3 appointees would be a city resident. The Suburban Mayors & Managers Assn. won the right to appoint 3 board members, reflecting the shift in county population and power to the
With massive federal aid and the local tax revenue available in the next decade, RTA rebuilt the decaying Shaker Hts. system, built repair yards and sheds, bought scores of new rapid-transit trains and buses, and added new services, such as Community Responsive Transit for the elderly and the handicapped. For a few years the system thrived under the impact of heavily subsidized fares and the energy crisis, but by the mid-1980s mismanagement, frequent breakdowns, fare increases, and the widespread use of political patronage resulted in growing dissatisfaction and another decline of ridership.
The municipalization of electric power created the most sustained and divisive controversy over the years. Mayor Johnson's proposal to build a $2 million city-owned power plant, one of his major objectives, languished after his defeat in 1909. Campaigning for mayor 2 years later, Newton D. Baker, who believed that all natural monopolies should be owned by the city, ran on a Johnsonian platform. He carried his campaign to the Chamber of Commerce, where he debated Samuel Scovil, vice-president of CEI, asserting that public ownership of utilities was necessary for the "purification of city politics." As mayor, Baker cleared the legal obstacles; the largest municipal light plant in the nation began operation in 1914.
From the beginning, the effectiveness of the Municipal Electric Light Plant, called Muny Light, was a matter of dispute. Pointing out the dramatic increase in customers from 15,508 in 1915 to over 42,000 by 1927, Baker claimed that it had saved Clevelanders $14 million in its first 8 years of operation. However, its competitor, CEI, also expanded steadily and offered lower costs without Muny's service charge. During the 1920s, the Kohler and Hopkins administrations, not committed to the expansion of Muny, simply provided cost analysis rather than compete in areas already served by CEI.
In 1927 some council members, concerned about the future of Muny, asked city utility director Howell Wright to study the plant's ability to increase its share of the streetlight system, to lower its rates, and to evaluate its need for new capital. Wright reported favorably on the plant's financial condition and its future, but asserted inaccurately that the state's constitution prohibited the issuance of bonds to extend or improve municipal enterprises. To match CEI's lower rate, he proposed a new rate ordinance that reduced the city's profit by $30,000 a year. Three years later, Wright, ousted as director, asserted in an article (in a magazine underwritten by the private utility companies) that Muny was "an isolated and obsolete operation" and claimed that CEI, not Muny, had led the way in rate reductions. (Ten years later, as a board member of the
The Depression focused the city's attention on survival. Not only did the profits from Muny go into the General Fund for relief programs, but the occupant of the mayor's office changed 6 times between 1930-36. Muny failed to expand and was the dumping ground for the political friends of various chief executives. Conscientious employees approached activist Republican lawyer
In 1942 a coalition of reform-minded Republicans and Democrats failed to pass a proposal to place public utilities--waterworks, sewer system, Muny, and CTS--under an independent commission. Later that year, when the Securities & Exchange Commission ordered the North American Co. to sever its relationship with several power companies, including CEI, the coalition proposed legislation authorizing the city to purchase CEI. Financier
As Cleveland came out of the Depression the fortunes of Muny improved, but CEI blocked any expansion. After World War II, with tremendous increase in electrical usage, Muny served only about 20% of the electricity provided within the city boundaries.
In 1965 Carl B. Stokes advocated the sale of Muny in his campaign for mayor, but when elected the council refused to pass the necessary legislation. His commissioner of power secured a temporary interconnection with CEI, but when the utility refused a permanent link, the
In January 1977, however, the Atomic Safety & Licensing Board ruled that CEI had "deliberately rigged the interconnection policies to cause Muny Light's power failures" and ordered CEI to "wheel" cheaper power from the Power Authority of the State of New York (PASNY). When city council refused to approve the sale agreement, CEI turned to the courts to collect its debts. The city offered to repay the money over a 14-year period, but CEI president Karl H. Rudolph refused. In April 1977 Clevelanders overwhelmingly voted down a property tax increase proposed by the council to pay off the debt, and pressure mounted. The council voted to sell the plant, but Dennis J. Kucinich, clerk of courts, organized a Save Muny Light Committee, which secured sufficient signatures to put the question on the ballot. The election did not occur because of a dispute over the legality of the petitions, but Kucinich was elected mayor in November 1977.
With the sale of the Municipal Electric Light Plant blocked, Kucinich was determined to take advantage of the earlier NCR ruling. CEI was equally determined to collect the city's $18 million debt in federal court, which issued judgment liens against city property and ordered Cleveland to pay its bill by April 1978 or face a $5,000 daily fine. Efforts to pay the debt eventually resulted in financial chaos for the city (see
The city council agreed to put an income tax issue on the ballot to pay off the debt, if the mayor would sell Muny. He refused but suggested a compromise, placing Muny under an independent board for an 18-month trial period to determine if it could survive financially. If it failed, he would agree to sell. The council turned this offer down. On 15 Dec. 1978 Cleveland went into
The council called for a special election to authorize the sale of Muny Light and a 50% increase in the city income tax. Kucinich organized a powerful door-to-door campaign that persuaded voters not to sell Muny but to raise their taxes. He saved the light plant but not his office (see
After the 1985 council election, CPP supporters, a major force in city council, pressed for a $50 million investment to make CPP more competitive and supported aggressive marketing to challenge CEI's hold on governmental and commercial accounts. A reluctant council president Forbes held council hearings on a $50 million improvement program, part of a $100 million System Improvement Plan. The issue at first bogged down in racial politics. Although Muny had serviced predominantly white ethnic neighborhoods, the 1979 referendum on the plant demonstrated support in both African American and white wards. Recent demographic changes brought an increasing number of blacks into CPP service areas.
In the fall of 1986 the council held extensive hearings on the latest expansion proposals. CEI threatened to pull its headquarters out of the city--with the implication of disastrous financial consequences. But Forbes finally realized that he faced defeat if he continued to oppose the measure. In Jan. 1987 the council voted 21-0 to expand CPP.
Cleveland voters have continued to reflect a suspicion of the public-service monopolies that Tom L. Johnson attacked 90 years ago. Even when the light plant was badly managed as a result of political spoilsmanship, citizens remained true to the Johnsonian dream of cheaper power. Mayor Kucinich effectively articulated both the hostile feelings and the dream, and rallied citizens in the decisive referendum of 1979. But the success of the dream depends not only on the opportunity for expansion, but also on businesslike administration unburdened by political appointments and supported by both the mayor and the city council. On the other hand, CEI spokespeople and their supporters in the business community have viewed municipal power not only as a kind of socialistic intrusion on private enterprise, but also as an unfair competitor. They point out that the municipal utility has never paid taxes or promoted industry, whereas CEI has paid millions of dollars to Cleveland and its school system and has fought aggressively for expansion of area industry. Many business leaders have concluded that customers of public power who benefit from a 20% reduction in rates are being subsidized unfairly by other taxpayers. In 1984 Cleveland Public Power, one of 2,200 members of the American Public Power Assn., received the association's highest award for "outstanding improvements in service to customer/owners." In spite of strong opposition from a private competitor, Tom Johnson's dream of public power survives in Cleveland.
Thomas F. Campbell
Cleveland State Univ.