Franchises and Fraud: the fight over public utilities in 1893 Kansas City
An index of Kansas City’s booming growth in 1893 was the strain put on public utilities. The old water and gas franchises were expiring as new, sometimes questionable companies offering telephone and electrical services fought for a place in the expanding city. Previous sanitation arrangements, including open creek sewers and the burning or burying of household garbage in people’s backyards, no longer served the needs of a city of 150,000.
1893 was the year many of these
concerns came to a head, beginning with the water works, which were operated by
a private company, the National Water Works Company (NWWC), based in New York. Kansas
City, Missouri, took most of its water from a pumping station located on the
Missouri River at Quindaro, Kansas,
since water lower down was polluted by effluent from packing plants in the West
Bottoms. Parrying over the waterworks issue had begun years earlier with what
B.F. Jones, head of Kansas City's National Water Works Company, called
“agitation [by] an element of disturbers of contract relations,” who were
calling for city ownership of the water works.
In an address to a meeting of the American Water Works Association in 1892, Jones blamed “sensational newspapers [who] vied with each other in abuse of the water company and advocacy of municipal ownership. Water takers were interviewed,” he said, “and made to say the meanest and most contemptible things -- things which had never occurred….”
Kansas City’s twenty year contract with the NWWC was to end in November of 1893. It stipulated that the city had the right to purchase the works at any time, but if it did not do so after twenty years it would be obligated to renew the contract for another twenty years. The city’s growth since 1873 had required big investments on the company’s part in pipes and a new pumping plant on the Missouri River above Kansas City, Kansas. Between 1876 and 1893 the Company laid over 160 miles of pipe and raised its pumping capacity from 5,000,000 gallons daily to 35,000,000. Jones said that the cost of the expansion had taken up most of the company’s net earnings, leaving little for stockholders, “who never dreamed,” he said, “that this splendid enterprise in the interest of Kansas City would soon be denounced as a trick and scheme to prevent the city from exercising its option to purchase the works.” [p. 90]
Jones simultaneously blamed press and public for the anti-monopolistic atmosphere: a “venal and mercenary press,” he said, was picturing the National Waterworks Company as a scheming monopoly out to take advantage of the city. At the same time the “pressure of public sentiment was so great,” he claimed, “that every newspaper either became silent upon the question [of repudiating the 1873 contract], or fell into line advocating city ownership at all hazards, thus illustrating the deplorable fact that the press nowadays follows rather than leads public sentiment.” [pp. 92-93]
As his company faced a sizable loss of investment, Jones concluded that “The tendency of the age is antagonistic to monopolies. The socialistic cry is for a division of the spoils and the spoils are the property of private corporations.”[p 102]. The “Kansas City Case” was likely, he predicted, to become commonplace: a company becomes profitable and then “those who have not incurred a risk, those who denounce the collection of revenues as robbery, those who are so prejudicial that they regard monopolies with fear and hatred, are to be found promptly in the fore front demanding a change of ownership.”[p. 103]
This was where things stood on January 17, 1893, when Fire Chief George C. Hale petitioned the city council for the purchase of four fire engines, citing “the insufficiency of the fire pressure furnished by the National Water Works Company of New York.” The board of public works recommended that the new engines be paid for from the fund set aside for paying hydrant rents to the NWWC, funds that were being withheld because of complaints about water pressure at the hydrants.
George Hale was well respected not only as fire chief but as the developer of fire fighting techniques and new equipment such as the Hale water tower and Hale tin roof cutter, used by fire departments around the country. Later in the year Chief Hale and a crew from his department would represent the United States at the London Exposition. His argument about water pressure at the hydrants seemed proved the next day when the Ninth Street Theater went up in smoke. “Surrounding buildings,” reported the Journal, “were smoking and charred and ready to burst into flames… The firemen fought as best they could, crippled as they were by a poor water pressure.”
B.F. Jones was not buying the chief’s complaints about water pressure. In a letter published in the Kansas City Mail, he noted that until litigation began between the city and the company, Hale had been loud in his praise of the city’s fire protection; only a few months before he had described the city’s water system as “one of the best in the United States” in his official report.
Yet, said Jones, “the chief is now calling for fire engines when it is a singular fact that at some of the recent fires at which it is said there was insufficient pressure, the engines already owned by the city were not called into use, but the fires were handled by the hose from the fire hydrants alone.” While not accusing the Chief himself directly, Jones suggested that the purpose of the pressure claims was to manufacture evidence to be used in pending litigation on the contract’s termination, and also to divert money collected for hydrant rentals to purchase of fire engines: “The pressure now,” he wrote, “is just as good, if not better, than it has been for eighteen years.” The National Waterworks Company, said Jones, “is fully discharging its contract obligations with the city, and no amount of testimony will be of avail in deciding the issues in this litigation.”
In another statement, published in the Times, Jones made a more direct accusation: it is a question, he said, “of whether Mr. Hale is or is not lending himself and his position unfairly to help manufacture sentiment and testimony against the National Waterworks company in a suit recently brought by the city.” Hale, Jones claimed, had always praised the city’s water system; “Whence comes the great spasm of fear at this particular juncture?”
The irascible Jones even hinted at incompetence on the part of chief and crew in relation to one fire where complaints were made about loss of water pressure at a time when twenty-five lines of hose were in use at one time: “Was the number of lines of hose reduced any to make the rest stronger?” he asked. “Not at all, I am informed. But they hung onto twenty-five lines of hose for a fire in a single house…. it is not possible for any system of waterworks to meet all imaginary requirements where care and judgment are not used.” He grumpily ends his rant by noting that Hale thinks the company made a mistake in installing a main as large as 30 inches in diameter, while others think the mistake was putting in too small pipes: “I think they made a mistake in putting in any pipes at all.”
Hale promptly responded, saying Superintendent Jones “seems to be sweating away in true Quixotic style, trying to bind up the bursts of his water mains by applying water bandages to them instead of a few more needed shutoffs and check valves in the 30-inch main.” What is needed, said Hale, is stronger pipe. He called the fire protection furnished to the city by the company “a menace,” and denied that the pending suit had any influence on him. Hale referred to an 1881 report by a group of civil engineers who found that the system of works would not provide adequate fire protection for a population of 100,000, a level the city had long since exceeded by 1893.
Round two of the waterworks battle began in the spring as litigation resumed. Previously, the company had sued to prevent the city from issuing bonds to construct a city water plant, since the project was contrary to the terms of the 1873 contract and would greatly reduce the worth of the company’s investment. The city had replied with a counter suit contending that the company had not lived up to the terms of the contract and the city was therefore not obliged to purchase the company plant or pay its delinquent hydrant rental.
There were two significant obstacles to the city’s plans to build its own waterworks. One was lack of money. The $2 million bond issue had not gone well; bankers and eastern investors had shunned the bonds, perhaps at the instigation of National Waterworks executives on Wall Street, or perhaps believing the city’s refusal to honor its contract or pay its hydrant bills made it a poor credit risk. This only tended to confirm the dislike of Kansas Citians for the eastern money men whose defense of the gold standard was blamed for the onrushing financial depression. “It is charged,” reported the populist-oriented Kansas City Mail, “that the people have been sold out, that their interests have not been conserved. In short, that there are traitors in the camp of those entrusted with the matter, also that the banks and corporations have combined against the people and are boycotting the bonds with the object of defeating the will of the people….”
Dr. Joseph Feld, founder of the German Savings Bank and a backer of the city plan, blamed unnamed “traitors against the interests of the people” for the situation, and called for citizens to “assert their inalienable rights as free citizens and counteract the schemes of the traitors…. Honest industries and individual rights will become paralyzed and relegated to the rear and anarchy and despotism become the ruling power of the day in the nation if the people do not rise in their patriotism and compel a halt in the greedy, grasping career of the corporations.”
Public officials, said the outspoken doctor, are “simply the facile and servile slaves of monopolies in one form or another and come to the service of the people with a corporation yoke upon their necks,” while the press are just “working for pay and using the people as instrumentalities for plunder.” The bond issue, the doctor argued, should be subscribed to by Kansas City citizens “to show the enemies of Kansas City that there is fidelity and confidence in its people… there is enough patriotism among the people in Kansas City that the bonds would soon be subscribed for….”
The Republican-oriented Journal indirectly, if less pointedly, supported the doctor’s critique of city officials, if not his view of corporations, by saying the city was damaging itself by breaking its contract and not paying the hydrant rental bills, a policy which “is being used in the East to injure the credit of the city…. There has never been advanced a good and valid reason for withholding this money, except the claim that the city wishes to make the water works company become the aggressor in a law suit. Just where any benefit can come from the fact that the water works company has been compelled to force the city to comply with the terms of the contract is not clear.”
City officials, said the Journal, had taken the money intended for paying the hydrant rental and used it to purchase Chief Hale’s fire engines and implement a garbage collection system, with the result that less than a third of the money appropriated to pay the hydrant rental fee remained.
In a later editorial, the Journal editors mocked the city’s claims that the company’s assets were worth only $2 million, given the considerable sums spent to expand the system since its original installation in 1873, when the cost was not much over $1 million. It was “the generally accepted estimate throughout the land that no city had a better system of water works than Kansas City.”
Suit and countersuit were briefly interrupted by the death of the vice president of the National Waterworks Company, George E. Simpson, who was injured while visiting the company’s Quindaro pumping station; according to the Times, his horses took fright during a storm and ran away, overturning the buggy in which he was riding. The Quindaro plant was the second main obstacle to resolving the dispute, since it was the main source of city water, but was located in Kansas. As an article in the Mail pointed out, the company was willing to sell its holdings, but “desires to sell the whole plant, which includes the part in Kansas City, Kan, which the city officials say they do not propose to buy, on account of legal points to be settled, which would then arise.” In any case, as a “prominent citizen” remarks, “What is it going to buy with? If it has insufficient money to clean streets, how is it going to buy a waterworks plan worth $2,500,000?”
The court case dragged on through the summer, with the company seeking to enjoin the city from selling bonds to construct a new plant and compel it instead to buy the company plant and pay the hydrant rental. The company produced evidence that city officials had always been satisfied with its water works; attorneys for the city said the evidence was irrelevant, incompetent and immaterial. Undeterred, the company continued to produce favorable reports, including some by Chief Hale which, said the Journal, “teemed with laudatory remarks of the efficiency of the water works system of this city….”
It was an embarrassing moment for the Chief, who had to admit that the passages referring to the water works company in his annual reports had been written by the company. On cross examination, Hale said that he had been “perhaps a little too childlike in extending to Major Jones the freedom of the columns of the reports.” And in any case, he testified, council members “never read or paid any attention to the reports.”
In another story in the Times, it was reported that the chief’s encomiums to the company appeared not only in puff pieces supplied by Mr. Jones for annual reports, but in a speech delivered in 1888 on the occasion of the completion of the Quindaro works, in which he’d said that the “water service given the people of Kansas City was the best in the United States.”
Both sides then brought out-of-town engineers into the trial, beginning with three employed by the city to investigate the existing facility and estimate the cost of a new one. Not surprisingly, they testified that the NWWC plant was insufficient for the city’s needs, “for the reason that the pipes are much too small” and “the settling basins extremely faulty in their construction….”
The company produced its own experts, notably Professor Charles B. Brush of New York, best known as an electrical engineer but promoted by the company as “among the best of the civil engineers of the country.” Professor Brush presented a thirty page study concluding that the city’s water system was ample: “of all the direct pressure systems he had seen, he considered Kansas City’s the best,” and the pressure at the hydrants “sufficient to meet the demands at any fire.” The Company’s test of system pressures in October, as reported in the Times, seemed to confirm Brush’s conclusion.
Bush predicted that the system advocated by the three city-employed experts would cost $1,000,000 more than their estimate and the tunnel under the Missouri River they advocated, necessitated by having to abandon the Quindaro plant, would leave the city without water whenever mud clogged the pipes. Under cross-examination, however, Bush admitted that an estimate of the cost of the plant would take months of caculation, not the few days he had spent in the city.
In mid-November the company’s franchise with the city ended. Legally, Kansas City had either to renew the franchise or buy the plant, in addition to paying an alleged $145,000 in delinquent hydrant fees, equivalent to $4,000,000 or more in current dollars. The city said it was willing to buy the plants in the city and Quindaro, but balked at paying the hydrant fees until the court case was resolved.
Meanwhile, the National Water Works Company was busily creating additional legal complications for the city. It quietly transferred title of the Quindaro supply plant to a nominally different, newly-created company, under identical management but with which the city had no contract, making acquisition more difficult. It refused to go to court to compel the city to purchase the waterworks claiming prices would necessarily be depressed “while the existing financial depression prevails.” Instead, the company proposed renewal of the franchise for another twenty years and immediate payment of the hydrant rental.
MORE IT’S OPEN WAR” headlined the Times
when the head of the NWW Company, Giles Taintor, announced that unless hydrant fees were paid
within a week he would cut off water to fire hydrants, though not private
By this time the 1873 contract had lapsed. Cowherd told Taintor that the city “desires and expects” the company to continue supplying water pending the outcome of litigation, prompting a scorching letter from Taintor reminding the mayor that the city owed hydrant rentals amounting to $145,000, yet the company had observed the contract by continuing to supply water “despite the city’s wrongful refusal to keep its agreement to pay for the same, and in the face of an avowed purpose to embarrass the company financially, and thereby to coerce it to accept such terms as the city might choose to dictate. As a result, the company has been operating at a loss and has been compelled to incur large indebtedness to cover the deficiency.” He concluded that if the debt, or most of it, were not paid within a week, the company will “cease to supply Kansas City with water” for hydrant use.
The company was bluffing, responded Cowherd, and doing everything it could to make it impossible for the city either to build its own water works or purchase the company plant by transferring title to a dummy corporation and loading it down with debt: “The scheme is exceedingly simply and the motive is not easy to be misunderstood,” the mayor told the Journal. He was confident the courts would issue an injunction to prevent the company from turning off city water supplies, and denied the city owed anything on hydrant rentals since it had overpaid by at least 18% and perhaps as much as 50% over the life of the contract, according to court testimony. If anything, said the mayor, the company owed the city for the overpayment.
But Kansas City was not up against amateurs. By transferring ownership of the pumping plant, NWWC had insulated itself against a court injunction, since it could claim that it could only get water if it paid for it, and couldn’t pay for it until the city paid its bills. “We have no money,” the Times imagined the company pleading. “There is no power which can compell [sic] us to buy goods from an owner who is unwilling to sell, or to pay for them when we are without the necessary funds. We are absolutely helpless in the matter.”
Cowherd’s next move was to call a meeting of the city’s business leaders to devise, as the Star put it, “ways and means to free the municipality from the clutches of the water company.” There was agreement to “sever all relations with the National Water Works Company of New York and to begin work upon the theory that Kansas City is big enough, rich enough and able to build, buy and operate water works of its own,” built by “home men and paid for by home capital…” on the north side of the Missouri river, in Clay County, Missouri. Water would be delivered to the city through a pipe running under the river.
“We can have our own works,” said one of those at the meeting, General H.F. Devol, the local collector of internal revenue. “This is too humiliating, and the people of Kansas City won’t stand it much longer. Public sentiment favors our doing something ourselves. We can build the supply plant and it don’t matter much whether we build or buy the distributing plant, though it would be better for all parties if we could use the plant already laid.”
When conversation turned to the problem of finance, one person suggested trying again to sell the old $2 million bond issue. That idea was quickly scotched: the company had given the bonds a bad reputation in financial quarters. The president of the board of public works, J.S. Cannon, offered a new idea: small denomination bonds issued to local investors. Because of the financial crash and bank panics earlier in the year, people were shying away from banks and looking for a profitable investment: “People are sick of savings banks and are hoarding their earnings,” a Times story quotes Cannon as saying. “There are $3 million locked up in Kansas City today by people who want to invest it in a safe way. These people will invest in bonds, ranging from $50 to $500, and we can sell all these bonds right here at home.” Cannon’s plan met with favor.
The city’s next move was to try to defang the water company’s threat to cut off the city’s water on November 25 by having a circuit court judge issue a temporary restraining order. Three city representatives traveled to Little Rock on the 24th to appear before a judge. G.E. Taintor and L.C. Krauthoff, the company’s attorney, were simultaneously en route to Little Rock “with a mass of documents and testimony to resist the motion.”
Back in Kansas City, the conflict almost came to blows when company employees were arrested for working on the streets without permits, “an act plainly in defiance of municipal authority,” claimed the Star: “the city is not going to lie down,” the editors wrote, “and permit itself to be ridden over by a corporation which has no interest in Kansas City save what it can get out of it. The people are not ready to submit to the insolent dictation of President TAINTOR.”
Police guards were placed on all the hydrants, though they became unnecessary when the Little Rock judge granted a restraining order to prevent water from being turned off: “Victory for the municipality” went the Journal headline. Taintor had a different view of the outcome, reported the Times: in his opinion “the court is inclined to look with favor upon the company’s claims and allegations in regard to the city’s indebtedness,” and the restraining order would not be made permanent.
The restraining order provided a breathing space of a couple of weeks for city leaders and opinion-makers to decide what to do about the two key issues: paying the hydrant debt and building a city plant. The Journal took its customary pro-business view, maintaining that the company had for many years stood by its contract and the managing officers of the company had been “faithful officials” and “have not been offensive or harsh in their dealings with the city or the people. And the columns of the Journal bear witness to the fact that it has always favored the payment of what was due to the company.”
The paper did, however, take the company to task for discrediting the $2,000,000 bond issue in the financial markets, for threatening to shut off the water supply – “if carried out equivalent in possibilities of disaster to an act of war” – and for transferring ownership of the Kansas works to a dummy corporation. The editors predicted that the status quo ante could never be restored: “The city will have built and will own its own water supply, and the present water company will be paid in cash the value of all its property within the city, as determined by the court…. And the company will be paid for all the services it has given the city….”
The atmosphere around the water works controversy was so heated and suspicious that before the Journal could offer its prescription for solving the problem (“prudence, good temper… a disposition to keep bad blood, demagogues and self-seekers in the background”) it had to reassure readers that it had no financial relations with the company. For the same reason, discussion in the upper house of the two chamber city council about how to proceed promptly became bogged down in mutual suspicions about the motives of other council members: “it is evident,” reported the Journal, “that some of them think that there is a scheme behind everything….”
For example, Alderman Johnston questioned the budgets for the trip of the delegation that went to Little Rock and for payments of $100 a day to the city’s expert witnesses in the court case. “We are only piling up debts which we have no money to pay for,” he said. “There is now a deficiency in the fire department and the same thing will occur in the police department… It is time we should call a halt to these reckless expenditures.”
To establish his bona fides, Johnston said he had lost his job with the Burlington Railroad because he would not vote in favor of the Water works company. “I have no more use for the National Waterworks Company than I do for that cuspidor,” he said, spitting dramatically in the cuspidor. But Peter Tiernan, president of the upper council, suggested that this squabbling over bills made necessary by litigation was a ruse: “They only want to cripple the city in its fight.”
Another alderman, William Huttig, vehemently disagreed: “We have had enough fellows putting their fists down into the city’s pockets. This thing has continued for a long time, and I for one am getting tired of it.” He fretted that he had been kept in ignorance while the attorneys did their work without consulting the council. Huttig too had to claim distance from the NWWC: “Certain men around this town,” he told the council, “the ‘push,’ I have been told, although I do not know what the ‘push’ is and may be a member myself, have stated that I am a National water works man. It’s a lie….”
The alderman’s reference to the “push” – the cabal running city hall – was a reminder of the belief many Kansas City residents had that city affairs were being run to enrich a few, who could not be trusted to act in the city’s interests. It was not only to the “push” that Huttig referred, however, but to local businessmen proposing to finance the waterworks project: “I do not want to see the city tie itself up by putting itself under the control of a couple of local capitalists whom I might name, and binding itself to pay them 8 percent.” This position too was probably seen by some as another ruse to benefit the company.
Councilman Lowe offered the most vehement denial that he had been compromised by the company: “As far as being a friend of the water works company is concerned,” he said, “I will say that I am willing to concede that the National Water Works Company of New York was conceived in iniquity and spewed from the cankerous womb of sin into the revolting lap of a young and prosperous community, if this will appease the feelings of anyone, and if this does not suit them let them fix up something stronger for me and I will indorse it.” Doubtless some saw Lowe as protesting too much.
The temporary injunction running out in mid-December, the circuit court judge ordered the city to pay 75% of the disputed back hydrant rental and 80% of the contract price for water from the expiration of the contract on November 15, pending final hearings early in 1894, although the judge held that if the city didn’t have enough money in its treasury to pay its hydrant bills, it should pay what it could for the present. The conclusion of the battle still lay ahead: commissioners were appointed to appraise the value of the waterworks plant the city was required to buy .
The Times put the court’s decision in a nutshell: “The National Water-works company must sell its plant and Kansas City must buy it. The city must pay a portion of accrued hydrant rentals and the company must continue to supply the city with water.”
Both sides declared victory. The city claimed that the reduced rental payment showed it had been right all along about getting inferior service, and that the judgment had upheld its right to buy the works at a reasonable price. The company said that the judgment was what it had always contended for under its contract with the city: “It shows,” the Journal reported company lawyer L.C. Krauthoff as saying, that the case will be tried on its merits, without regard to popular and official prejudice. It shows that the company has been furnishing the service claimed…: the court gave us 75 per cent and $108,000 is quite a nice little Christmas present, when the city has been contending that it wouldn’t have to pay us anything.”
Star editors maintained that the judge’s order “fully conserves the equities in the case and protects the rights of both parties to the controversy.” They also point out that, depending on the final court reckoning in January, the city might find itself having to pay the full amount of $108,000, money it didn’t have. The city was broke, having on hand only $42,000, of which half was already committed to financially strapped city departments, including police and fire.
Money appropriated for the rental fund had been siphoned off for other purposes “more urgent in the judgment of the political machine than the payment of an obligation incurred by the city,” such as Chief Hale’s fire engines. Had it been left untouched and the necessary funds set aside for the current year there would have been no difficulty in paying the amount specified by the judge. Fulminated the editors, or editor, since the voice is surely that of William Rockhill Nelson:
But it is not the policy of the ‘gang’ which is running Kansas City to save taxes or to husband the public treasure. It is its policy to increase taxes and to absorb and devour in the payment of salaries and perquisites the money which ought to be devoted to meeting the legitimate expenses of the city government. It is because such a combination is in power that the city finds itself in its present humiliating predicament, and such disgraceful emergencies are likely to arise until the people decide to place the administration of city affairs in the hands of men who recognize in the municipal government some higher purpose than to feed and foster a corrupt machine.
Thus the great waterworks conflict became enmeshed with Kansas City history, politics, eastern monopolies in the west, the financial crash of 1893, and the role of newspapers in the gilded age.
The same factors were involved to a lesser extent when the Kansas City Gaslight and Coke Company sought an extension of its franchise with the city. The Company had been established soon after the Civil War by a combination of out of town and local businessmen – commonly referred to in the papers, without prejudice, as “capitalists” – including M.J. Payne and R.T. Van Horn. In the early years, the Times recalled in a history of the company, a mere five miles of mains, conforming to the extent of graded streets at the time, served the city’s needs; gas works to process coal into gas for lighting had a daily storage capacity of 50,000 cubic feet of gas.
As the city grew, gas lines were extended, gas works enlarged and houses piped for gas. But the gas mains couldn’t keep up with therapid expansion into new suburbs, fed by street railways. Where mains didn’t reach, streets were lighted by unreliable gasoline lamps that had to be tended by lamplighters. The Journal reported, for example, that when a cable car broke down in the middle of February passengers had to tramp home through streets that were cold, muddy, and unlighted because the lamps were all out. There were, said the paper, “a great man harsh words said about the lamplighters.”
Gasoline lamps were also expensive: the contractor responsible for the maintenance of the 1100 gasoline lamps charged $21 a year for each lamp; the Times noted that the contractor had agreed to reduce the price to $19, saving the financially strapped city about $400 a month.The Mail commented on complaints that the gasoline lamps were more generously placed along streets of the well off, and were spare in poorer districts: "I would like to see a laboring man's property get the same amount of light that is afforded a rich man," one citizen tells the paper.
The savings could perhaps have been used to cover the amount the city was paying for the gas lighting of city hall: $293, considered an excessive sum until it was found that there was a leak in the plumbing: “As remorseless as death and taxes,” reported the Journal, “the supply of gas still continued, and the city kept on paying for 744 feet of gas which was not used.”
It was economy rather than leaking pipes that made electricity a more attractive option for city leaders. In January the board of public works considered an offer from the Fort Wayne Electric Company, a pioneer in the development of arc lighting, to put an electric arc light plant in the basement of city hall, erect a 21.7 mile circuit, and set up arc street lights at $8 a month per light. The company representative, said the Times, “seems to be a very glutton in his willingness to relieve the board and the city of all the trouble and care of heating and lighting the city hall and lighting the streets.” The salesman also argued that the new electrical system would cost less than the current system using coal gas. “Mr. Buckley’s plans,” said the Times, “presuppose the fact that the city will want to buy its own plant as soon as it sees how cheaply it can manufacture its own light…” The plan was blocked by another electrical company, Kansas City Electric Light, whose general manager told the board that under patent law it alone had the "sole right to sell or furnish incandescent light globes" in Jackson County, having bought electric light patents from the Edison company.
If city leaders had long dealt with the waterworks company, they were novices in the electrical field. City Hall Engineer McNally had to explain to them that the electrical capacity the city planned to use for lighting and heating city hall and market house as well as powering 154 arc lights was insufficient and another electrical engine was needed: “I think it would be foolish,” he is quoted as saying in the Journal, to have only engines enough to supply the power when all the power capable of being used is exerted. What is to be done if an accident occurs? The city would be in darkness.”
It was perhaps the threat of the newcomer, electricity, taking over the market that prompted the Gaslight and Coke Company, two years before its franchise was to expire, to approach the city about extending its franchise for another thirty years. Under the old franchise, obtained from the state of Missouri, Kansas City received no money from the company. The company was prohibited from seeking a renewal of their franchise directly from the state.
The Gaslight and Coke Company president, Colonel, M.J. Payne, baited the hook with a profit-sharing agreement and a reduction in the cost of street lighting: “a plain business proposition,” said the Colonel, but one that might forestall the city making a deal with the Fort Wayne Electric Company.
The decision on the fate of the gas company was two years away, but the Kansas City Mail made its position on the franchise extension known immediately: “Down with the Gas Monopoly!” it declared: “The city should own its own gas works and cease paying tribute and compelling its citizens to pay tribute to monopoly.” The populist-leaning Mail regularly ran such anti-monopoly editorials and letters from readers. In one letter, “Harry H. Hinde” denounced the “massing of the country’s wealth in the hands of a few men.” Water works, lighting plants and street transportation “should be owned and controlled by the municipal and the railroads by the national powers. Being so controlled would render an equalization of hours for labor, an increase of salary… and reducing the cost acquired by the use of water and lighting to a small ratio when compared with the prices set by monopoly, which as a rule governs such necessities.”
When the company did eventually negotiate an extension with the city after its franchise expired in 1895, the Missouri attorney general, perhaps influenced by similar anti-monopolist sentiments, stopped it, saying its charter had expired and the company with it.
A utility that no eastern monopoly aspired to control was city sanitation, which did not lend itself to highly capitalized investment. Kansas City had to struggle with the problem on its own and was not doing a good job of it before1893. The Assistant Sanitary Inspector reported that the sanitary departments of comparable neighboring cities – Denver, Omaha, Minneapolis and others – were “far in advance of the remarkably countrified and impoverished department which Kansas City maintains.” Denver, with a population comparable to Kansas City’s, had sixteen sanitary officers and an appropriation for garbage removal while Kansas City had four sanitary policemen and no garbage disposal system, nor did it own a civic garbage dump. People burned their garbage, buried it in backyards or vacant lots, or paid someone to haul it to a private dump. The sewer system was not much better than it had been in the city’s frontier days: O.K. creek, running through much of the residential core of the city, was an open sewer over much of its length. The Bellefontaine drain “went by the name of a sewer,” it was reported in the Journal, but “was a constant source of danger.”
Another source of danger was the collapsing walls of the main sewer line, as described by a Times reporter who walked the line from the Junction, the central business district, to the point where it emptied, untreated, directly into the Missouri River.
In the course of 1893, driven by fear of a cholera epidemic, strenuous efforts were made to improve the city’s sanitation. With many fits and starts, a garbage disposal system was established. Work was underway to enclose O.K. Creek and West Kansas slough sewer, but money was short. The contractor for the OK sewer section from 18th and Harrison to 20th and Cherry was reported in the Times to be out of funds. This section of the “creek” was adjacent to McClure place, described in a Star story as “one of the plague spots of the city. And perhaps no greater menace to health of the community, in the event of a cholera epidemic, exists than this same McClure place” where garbage piled up in alleys and apartments were poorly ventilated.
This, at least, was the image the Star wanted to create in the mind of readers worried about the arrival of “King Cholera,” but the paper may have had political reasons for singling the place out, since it was populated mainly by Russian Jews and was in the Star’s view “a nursery of the ‘push.’ It is here that the hundreds of illegal voters were registered last spring.” The political machine was William Rockhill Nelson’s favorite target, although the pro-Republican Journal liked to point out that the “Baron of Westport” was assiduous in feathering his own nest. In a later editorial, the Star put its critique of the “push” more directly in relation to public utilities and civic improvement, arguing that a city “approaches nearest perfection” when its citizens demand “that there shall be no robbery, nor perversion nor waste; that there shall be no gangs, nor “pushes,” nor “pulls,” nor conspiracies, nor conspirators, nor combinations of any name or nature hostile to the public welfare.” In this condition, the question becomes what the city should do with “those immensely valuable natural monopolies, which may be a source of revenue to the body corporate, but which are now given away to individuals that they may acquire wealth at the expense of the city. What shall be done with the franchise of gas and water soon to expire? Shall the city pay longer for the use of its own? Shall it buy where it might sell?”
Electricity was one of those “natural monopolies,” though still at an early stage of development in 1893. A Journal article suggested that the U.S. was still at an experimental stage with electricity while “Londoners are now in a position to make practical use of the new element in economical living.” At the World’s fair in Chicago, the electricity building was giving visitors a view of the future. The day is near, enthused the Journal, “when electricity and its mechanical appliances will almost, if not quite, supersede all other forces in general commercial use for all the manifold duties no performed by coal and gas.” Soon, said the paper, electricity would “entirely take the place of fuel and light for all household purposes.” In Kansas City, according to a Journal story, electric power was displacing horse power on the horse-drawn Prospect Avenue car line. Another Journal story imagined farms rigged with trolley wires for the electrification of wagons, plows, reapers and mowers, bringing “a wonderful revolution in the management of the farms of the West.”
The lectures on electricity of Professor Lucien Blake of the University of Kansas were highly popular. Blake was an acolyte of Nikola Tesla and inventor of a number of devices. He introduced his Kansas City audiences to the theory of electricity, and entertained them with demonstrations of its powers.
By means of what the Journal called, vaguely, “an electrical arrangement,” Blake enabled his audience to hear a concert played in St. Joseph, Missouri, fifty miles away, “as clear and distinct as if given in the hall itself.” In another lecture reported by the Journal, he introduced his audience to the then-popular theory of ether, and in another demonstrated the process of cooking with electricity. Reported the Star, the professor “performed a somewhat unusual feat in culinary art. He roasted beef and baked pie in the same oven,” perhaps one of the new electric stoves presented at the 1893 exposition. The Journal commented that a window in the oven “permitted the cook to look at the roast without burning her fingers, and a young lady could practice her exercises while preparing the dinner.”
In a spring lecture, Blake spoke on the “electro-magnetic theory of light,” speculating that in time people might communicate with each other from any places on earth and through all barriers without visible means of communication. “Sounds rather incredible” went the Times headline for the story.
In a later lecture Blake theorized that it would someday be possible to transmit electrical power to any distance without the use of wires, a possibility known as the Tesla theory after Nikola Tesla, who first conceived the idea. The Journal story on the lecture reported that Blake had set “electrical waves in motion in the basement of the university building, passed them through the air to the wall, through the three foot thick stone wall, through outside air several feet, through his own body and then collected and recovered them, showing the energy in the form of light and heat outside of the building.”
Tesla and Blake’s vision of wireless electricity transmission remains a subject of experimentation today, but Blake was more successful as an inventor of a system for wireless communication between land-based telephone and incoming ships at sea. The U.S. government accepted his experiments, the Times reported, and “recognized in Prof. Blake, an equal, if not a greater, inventor than Edison, the great American wizard, who failed in his efforts to perfect an invention now successfully completed by a Kansas professor.”
In practice, electrification was still a haphazard, unregulated, even amateurish process conducted by an assortment of highly competitive, not particularly ethical companies. In January, the Journal described a case being conducted in county court in utter darkness because an electrical plant long since installed in the courthouse, “due to some slight lack of wiring and putting in of fixtures…is resting idly down in the court house basement, while officials and employes [sic] in all departments have to cut short their work each day for want of light.” Kansas City’s grand new city hall had to delay its grand opening because of a lack of electric lights: “it may be for weeks and it may be for months that the hall will be without electric lights,” reported the Journal, “and the officials of the building would scorn to make a spread with the dim, uncertain light of common gas.”
As with water and gas, the question of monopoly, competition and municipal ownership of the electric utility was discussed. “The people,” said the Journal, “are unanimously in favor of competition in the supply of electric light, the parties interested in the twenty-year monopoly accepted. High prices for poor light, and prices so high that many people cannot enjoy electric light at all, is a condition of affairs that cannot always exist.” Kansas City was now a significant market, the paper argued in a later editorial and the city no longer had to induce enterprises to provide services by giving away the store: “To repeat the practices of the past is to continue to use the streets and alleys as a nursery for the schemes of sharpers and promoters, and then see the corporations into whose hands the privileges drift fatten and grow arrogant on the money which they yield.”
particular target of the Journal’s complaints was what the paper called the “Friedberg
combination,” owned by a Kansas City pioneer, Benjamin Friedberg, who built and
owned the Consolidated Electric Light and Power Company. It furnished light for
Kansas City, Kansas, including the West Bottoms, as well as Rosedale and
Argentine, but at what the Journal considered an unreasonably high price. Friedberg’s company, vowed
the Journal, “will never be permitted to dictate terms to the city. That
combine must give better service or stand aside. Their pretensions must be
repudiated and their illegal twenty year contract disregarded. That contract is
monstrous in law and reason, and the claims founded upon it are baseless.” In another editorial, the Journal
demanded that the city's contract with Friedberg be broken: "Free the
hands of the city from the shackles now upon them; open the field of
lighting to competition!."
the waterworks company, the Friedberg company had a twenty year contract lasting until 1910 – the Journal
called it the “tax-eating
Friedberg contract” – which it desired to retain. Like the waterworks company
it had gone to court to prevent the city from constructing its own electrical
works. The matter was still before the courts three years later when a group of
local business men sought a state charter to establish a new electric light
plant. The city, reported the Journal,
“is now paying $26,500 a year for lighting the streets, about 89 per cent of
which is paid for electric lights. With all of this expenditure the streets are
The new company would, its backers promised, reduce the cost by half and give better satisfaction, but the manager of the United Electric Light Company, Harry Friedberg, insisted that the company’s contract with the city was valid. Echoing the irascible B.F. Jones’ attack on his enemies, Friedberg accused a “set of men in this city who, under the guise of patriotic citizens, have been continually trying to stab our company and break our contract.”
The Journal editors claimed to favor municipal ownership of the electric utility, but it’s possible that the paper’s attack on Friedberg’s company was motivated by connections with one of the four other electric companies competing so furiously for customers and poles that it was not uncommon for companies to remove each other’s poles. In 1896, for example, there was a confrontation between two Friedberg-owned companies, Consolidated Electric Light and Power Company and the United Electric Light Company in the West Bottoms, each company uprooting the other’s poles at night .
So significant were the costs of street lighting that Kansas City, Kansas, its budget buckling under the effects of the financial depression, told Friedberg’s “combination” that it couldn’t afford its street lights and had to turn them off “until the coffers of the city contain good and sufficient funds to meet the bills as they come due," although this meant breaking the city’s contract. Since the city also had to shut down gas and gasoline lamps, “the magnificent Kansas metropolis was shrouded in darkness last night,” the Journal reported: “From the city limits out at Quindaro, along down the Missouri and Kaw rivers, around to the Southern bridge at Argentine, not an electric light burned at the city’s expense. The streets were dark and the citizens in general got their first idea of the retrenchment begun by the mayor and city council in compliance with the demand of the public…. Lights out will be the order for six months unless new arrangements are made.”
Private customers also paid a high price for electrical service. A contract with the Kansas City Electrical Company for lights in the southern portion of the expanding city charged “at least $3 per light per month,” according to the Journal. City council was always trying to find ways to increase city revenue from utilities franchises. In the case of a company like the Kansas City Electrical Company, it was proposed to levy a tax of $5 on each utility pole in the city. Though there was consideration of running wires through conduits, city streets remained a vast tangle of poles and wires for telephone, electricity, electric light, telegraph, and street railways: 5,555 of them, according to the Journal – at $5 a pole, a generous addition to the city’s coffers if the ordinance passed.
most recent utility to arrive on the scene and fight for franchise rights was
the telephone. Long distance telephone calls remained unprofitable
because of the small number of inter-city lines; it remained a subject
for amusement rather than business, as when Professor Lucien Blake used telephone lines to transmit a concert in St. Joseph to an audience in Kansas City.
Together with the Professor's explanation of sound waves and electric
current, it made for "the most novel and interesting experiment ever
witnessed in this part of the country..."
In Kansas City, Missouri, the Missouri and Kansas Telephone
Company wooed the city council with promises: “Should the council grant us the
franchise asked for,” promised the superintendent of the Missouri and Kansas
Telephone Company “we will spend fully $300,000 making improvements in our
plant." He promised to remove some of the 6,000 miles
of wires on poles and put them in conduits.
An unnamed “citizen” of Kansas City, quoted in the Star, raised an objection to the proposed franchise that was increasingly being heard: there should, he said, be a provision for the purchase of the plant by the city and the city should have the power to regulate prices: “If the business of supplying telephone service becomes very profitable,” he said, “then the city should be enabled to buy the other assets of the company and go into the business itself that it may reap the benefit of a monopoly which by right belongs to it…. It would be folly to bind the subscribers to pay a rate which seems reasonable now, but which in a few short years may, by the expiration of various patents, be enormously profitable to the company.”
For the Missouri and Kansas Telephone Company the immediate issue was not municipal ownership but competition from new companies: by 1906, there were 6,000 independent companies nationally, each making great promises. Will the new telephone companies materially affect the business of your company, the superintendent was asked. “That is a matter I cannot determine,” he replied. “I notice that new telephone companies are springing up in all parts of the country. One of them claims to have $80,000,000 capital, although I can’t see where it got it. We have the advantage of being an old established company and of having complete plants in Kansas City and elsewhere.”
The “$80,000,000 capital” telephone company was the new Harrison Telephone Company, referred to admiringly in the Times as “that colossal company.” Its directors met in Kansas City in February, among them respected local figures and out-of-towners, notably E.L. Ingalls of Chicago, Edward M. Harrison, and D.J. Young of Fort Smith, Arkansas. They discussed introducing a new telephone system and building a manufacturing plant in Chicago for the company’s patented equipment. The company was said to control sixty patents for inventions by J.D. Harrison of Arkansas, a cousin of ex-President Benjamin Harrison, and had on its board of directors such luminaries asGeorge R. Peck, general solicitor of the Milwaukee Railroad, and Major William Warner of Kansas City, later a U.S. senator.
The company’s president, C.M. Ferree, described plans for an “automatic exchange or switch, doing away with the ‘hello’ girl” and thus reducing expenses. the $80,000,000 capital, he said, was all paid up, half owned by Ferree and two others, the other by local stockholders or to be sold. If they wished, he said, the owners “could easily sell all we have.”
The Harrison Company, operating under the name of the Interstate Telephone Company, applied for a franchise to construct and maintain a “complete telephone system” in Kansas City, Kansas, before extending its operations to the Missouri side. The Harrison Company, reported the Star, “owns numerous telephone patents, and the local managers of the interstate company say that they will very likely use the Harrison system and that their enterprise will be backed by that company.”
A twenty year franchise was granted to the Harrison company by Kansas City, Kansas, “the first move taken in that city toward securing cheaper telephone service after the expiration of the Bell telephone patents in next March, reported the Star. The company promised residence telephones for $4 a year, $2 less than current rates, and was busily pursuing franchises on the Missouri side, in competition with the Missouri and Kansas Telephone Company. It had, said one of its attorneys reassuringly, “ample capital to do the proposed work.”
Harrison Company was a fraud, a “tremendous swindle,” in one judge’s words, as
would be discovered a year later, when the company virtually vanished: there was no $80,000,000 and the company’s patented
equipment was worthless: “you couldn’t hear a cannon through the Harrison
telephone,” confessed one of the company’s own promoters.
To give prestige to the company, stock had been given to prominent
people, including U.S. Senator Stephen B. Elkins, ex-Secretary of the Treasury
Charles Foster, and Missouri’s William Warner, but the bulk was sold to
innocent buyers: “widows, small trust companies and others who had been led
into the company because of the eminence and respectability of the board of
A bill of complaint issued by two stockholders in 1896, alleged that
Warner and the other directors had been fully aware of the company’s fraudulent
transactions. “The affair,” remarked
counsel for the complainants in court, “was conceived in sin and fraud.” The complaint led to a court injunction forbidding the company from disposing
of any of its assets, valued by then at no more than $100,000.
The Missouri and Kansas Telephone Company, later Southwestern Bell, triumphantly loaded up the remnants of its putative rival’s equipment and sold them for scrap.
November 14, 2013