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The street car rider does not always bear in mind the fundamental fact that service can be rendered and continued only where that service is paid for. It will not be rendered at less than cost either by private corporations or by government agencies, and the cost will necessarily include the cost of money invested in the instrumentalities of service. It is of prime interest to the rider that unnecessary and unreasonable burdens of cost shall not be placed upon that service because all such additional and unnecessary or unreasonable burdens are in the end a burden upon the street car rider himself.
One of the burdens on private urban railway operation directly affecting the rider, which bulks increasingly large in recent years, is the municipal or state requirements that street railways shall be responsible for paving within the track zone and its maintenance, and in some instances for the paving on the entire street. The situation in New York State is typical of the general situation, and there the percentage of street area which must be paved and maintained by the surface railways runs from 35 per cent. to 56 per cent. of the entire
This burden includes the frequent substitution of more costly types of pavement, together with the burden of perpetual maintenance. The origin of this requirement dates back to the horse car days when the operation of the horse cars resulted in considerable wear and tear on the pavements. At the present time, there may be some slight damage to the pavement in the immediate vicinity of the rails caused by the vibration incident to the passage of heavy equipment, but this wear and damage, if it exists at all, is negligible and in no way commensurate with the requirements placed upon the street railways to maintain paving within the track zone and often without the area of the track zone. From a tabulation prepared by the American Electric Railway Association, it appears for the year 1921 electric railways paid taxes amounting to $71,158,000 and paving and other imposts amounted in round figures to $29,000,000. Of this latter amount, the paving charges consisted of $15,100,000 for new construction and $6,700,000 for maintenance of paving, or a total paving charge of $21,778,000. Other imposts referred to, making up the balance of the $29,000,000, included cost of free transportation, street cleaning, sprinkling, snow and ice removals, bridge tolls, etc.
One hundred companies located in twenty-six states of the Union report paving requirements ranging from a minimum of five feet in width to a maximum of eleven feet on single track and twenty-five feet on double track. Seventy-one companies located in thirty-four states report that they are compelled to pay for repaving even when the streets have been torn up for other than street railway purposes. While individual companies throughout the Union have succeeded in being relieved in part, at least, of some of these paving burdens, in general they still remain. In some states the burdens are imposed by municipal ordinance, and in other states the burdens are imposed by state statute.
Nor is it to be overlooked that in all instances the railways through general taxes are required to pay a substantial portion of all other pavement costs.
The requirement that electric railways pay for paving construction represents in the last analysis an unfair discrimination against the car rider in favor of the abutting property owner. The car rider ultimately pays for the cost of this new paving, although the abutting property owners profit greatly from the very fact that the street railway lines are on those streets. This fact was brought out in the proceedings of the Federal Electric Railway Commission. There the testimony showed that in Boston, property benefited $133,000,000 from an electric street railway line which cost about $30,000,000, and that real estate values had improved over $130,000,000 in West Philadelphia alone because of the construction of the subway and elevated in Philadelphia, which it was estimated would cost about $30,000,000. Similar statistics have been obtained for the City of New York showing the immense benefits from the transportation systems to the owners of real estate. We have had a concrete case recently in my own state, in the City of Milwaukee. In the Fall of 1921, the Milwaukee Electric Railway and Light Company laid a double track on Oneida Street from Jackson Street to East Water Street, costing with special work probably $100,000. This investment permitted the operation of certain cars on Wells Street not previously carrying the cars of this company. The landlords owning the business property abutting on this section of Wells Street promptly raised the rents materially — in some cases to almost double the previous figure, but of all the tenants affected by the increase in rent, only two intended to move. The result clearly indicated that the profit to the abutting property owners was expected to be permanent. Land values on this section of Wells Street have been greatly enhanced by the laying of tracks of the street railway company without any cost whatsoever to the abutting property owners.
It should be brought home to every street car rider in the country that every dollar from earnings which the street railway company is required to pay for paving means that there is just so much less which the regulatory commissions can order expended for service or improvements, or so much increased cost per ride for every ride taken.
The street car company is now treated as though it owned a private right of way in the streets. As a matter of fact vehicular traffic is in many of the cities heaviest in the street railway zone, and in this respect there has been a greatly increased use of the street railway zone for general vehicular traffic in the last few years, owing to the great increase in the number of motor vehicles parking on the sides of the streets. Studies made in New York State show that the vehicular traffic in the railroad area amounts to from 40 per cent, to over 90 per cent. of the total vehicular traffic in the street. As a matter of fact, the operation of the street railroad cars does not wear out the surface of the street, but the pavement is actually worn out by the operation of vehicular traffic thereon. The street car company is not only paying for the pavement worn out by vehicular traffic, but is often paying a larger proportion of the damage done by vehicles in the remainder of the street than is borne by the municipalities with respect thereto. Furthermore, the passengers who ride on street cars are merely using the streets as passengers, as are riders in other vehicles using the streets, and there is no more reason for penalizing the street car rider than there would be for penalizing the rider in any other vehicle. As to the benefits to the property owner, there is no question what
If we say that the street cars are responsible for an advance in real estate values to property on or contiguous to street car lines amounting on the average to 200 per cent., we are in many cases putting a conservative estimate on that increased value due to street car lines. Real estate values can be made or unmade by routing or rerouting of car lines. There is, therefore, every obligation upon the owners of real estate not only not to cast unjust and unreasonable burdens on street car riders, but in my opinion to go further and in case of extensions give positive recognition of the benefits accruing to them. The demand for extensions into thinly populated or into unpopulated territory is insistent. The demand often comes from those interested in real estate development, the owners of the real estate anticipating for themselves the profit which will come from increased values through the extension of the street railway system into their territory. Extensions of this nature will not in themselves pay perhaps for years to come. They offer an additional facility but cast upon the general rider an additional burden of cost. They increase the average length of haul which in itself, of course, increases the cost to the average rider. The additional cost of the increased length of haul has often been overlooked by those furnishing street car service and in general is given little consideration by municipal authorities in their orders for extensions. The problems of extensions is a difficult one. It must be considered in connection with the general benefit of all. There are already many instances where the owners of real estate or industries to be specially benefited by extensions have furnished in whole or in part the money necessary to build them, thus relieving the general rider, so far as fixed charges are concerned, of this additional burden. There appears to be a strong element of equity in the principle that extensions of this nature which cannot pay and must be a burden upon the general rider and which will be beneficial to specially situated real estate owners or industries should be financed by those benefited. Assessments for this purpose would be in line with municipal policy in many states, where, for instance, water mains are extended at the cost of the property owner to be served. The Federal Electric Railway Commission recommended the levying of assessments for extensions resulting in special benefits to such property in proportion to the benefits received.
Many street railway systems operate under franchises requiring street sprinkling of the entire street and the removal of snow and ice either from a zone or the entire street. Both of these requirements are burdens properly to be borne by the municipality as such. They have no more relation to a street car system than they have to any other vehicular traffic on the street, yet these additional burdens are in the end cast upon the street car rider. Undue tax burdens directly affect the cost of service and are reflected in the fares paid by the car riders. Another burden cast on the street car rider comes from the sprinkling requirements and the same principles apply there.
Most of the taxes levied against public utilities have been based in the past on the idea that the utility selling service at rates fixed in its franchise could in no way pass the burden of taxation to the consumer. Legislatures are still making laws which appear to overlook the fact that with rates based on the cost of service, taxation of a public utility is merely an indirect taxation of the users of its service. All laws placing special tax burdens not in line with the fair and equitable distribution of taxes upon utilities are in fact penalizing the users of the service. An unjust tax burden is no different from an unjust paving burden in this respect, and insofar as payments are thus required from a public utility they to that extent increase the difficulty of rendering good public service. Studies made in New York State developed the fact that for a ten year period the taxes levied against mercantile and manufacturing corporations was equal to 4.3 per cent. of their net income, while the state and local taxes not including paving averaged for street railroads 56.5 per cent. of their net income.
In few states is there any coordination between the regulating and taxing bodies. The old statutes relating to taxation are retained and new ones casting additional burdens of taxation are enacted, while the power to regulate service and rates is placed in the hands of a body having no authority over the burdens imposed under such statutes or ordinances. On the one hand we have the regulating body with the duty of prescribing and enforcing service, and on the other hand we often have a taxing body treating utilities as tax collectors. Efforts on the part of the regulating body to bring about a stable financial condition of the utilities and the fair return necessary for that stability has in some instances immediately met with increased taxes from a body in no way coordinated with the regulating body. The duty of a regulating body to bring about a fair return cannot and should not be shirked, but it is fair to say that increased tax burdens can only add to the difficulty of the regulating agency, in performing its proper functions. Of course, in some states the fixed franchise rates of fare still exist. If it be claimed that in such instances the additional tax burden cannot be passed on to the car rider, it is also equally clear that the increased tax burdens are making it more difficult to render proper service for that car rider. The experience of the last few years, however, has demonstrated to everybody the impossibility of a fixed and inelastic franchise rate of fare, regardless of cost, and it can be only a question of time when franchises of that nature will be superseded in all parts of the country as they already are in most parts of the country. In some states we still have service regulation with no regulation over fares or the financial means of giving service. Such situations are illogical and anomalous and so clearly contrary to public interest that they cannot continue to prevail.
Some franchises contain very burdensome amortization provisions. Provisions of this sort merely mean that the rider, besides paying what is the reasonable charge for the service rendered including a fair return for the capital furnished in rendering that service, shall pay an additional amount with the idea in view that at the end of a definite term of years or at some indefinite future period the entire investment will be wiped out by this excess payment and the property become governmentally owned, of course, at the expense of the car riders. Generally such provisions became effective at a period when the 5-cent fare was almost universal regardless of the question of the cost of service, and at a time also when it was thought that in some instances the flat 5-cent fare might without being a burden upon the car rider provide such an amortization fund. With increased fares the rider has naturally insisted upon fares which shall not exceed the reasonable cost for the service rendered. Excess charges for this purpose would appear to be justified neither economically nor socially. Riders of this generation should not be penalized for the benefit of the riders of the coming generation.
The advent of the jitneys and busses was at first hailed by the average car rider with considerable enthusiasm. It took time and experience to show that the car rider could not have both jitneys and street cars and it was soon very evident that jitneys and busses could not render the service rendered by the street car systems. They neither offered the magnitude of service, the certainty of service, nor the reasonableness of service offered by the street car systems. In general they confined their efforts to taking the cream of the traffic, the short haul passenger, with the result that the most paying part of the street railway business was taken from the street railways and the average cost per street car passenger was greatly increased. Motor busses and jitneys have been demonstrated to be impossible as substitutes for the street railways, and insofar as they acted as competitors paralleling routes, their service was uneconomical and represented an inefficient duplication of facilities. The remedy for peak hour traffic problems would appear to be effective cooperation by all parties interested in improving the condition of that service and by effective regulation to insure the best street car service possible without resorting to competition of independent jitney and motor bus operation, which in the long run simply serve to increase the general costs of transportation to the riding public.