What does it mean to have ‘municipal’ services in cities governed entirely in the interests of capital? ‘W.A.’ looks at rapid transit in New York City.

‘The Problem of Rapid Transit in Cities’ by W.A. from International Socialist Review. Vol. 4 No. 1. July, 1903.

NEW YORK CITY has increased in population 37 per cent in ten years. The causes that make it to the interest of large numbers of people to remove to the cities are in the nature of the business system which offers to them a living in the manufacturing cities which they do not make on the mortgaged farms. There is no doubt that this inconvenient and unnatural congestion of the population in cities is increased by the admitted practice of all transportation companies to “tax the traffic for all it will bear.” And this further aggravates the problem of street car service. Apparently our surface cars could not be run very much faster through crowded streets without great danger. This does not apply, however, to the elevated trains. Perhaps, on the existing lines hardly enough cars could be added to comfortably accommodate the people at all times. That there are engineering problems will be admitted. But these engineering problems are created by the present business system. That the people can be comfortably accommodated and pay for such accommodation there is no doubt. The fact is that they are not.

Investors in the stocks of the street railway companies will admit that their investments are governed by their purpose to get the largest possible profits; dividends on their capital. Their profit is the difference between the income and the expenses of the business. They are, consequently, interested in having this difference as large as possible; and the management that is most acceptable to them will be that which can make the expenses as low as possible and the income as large as possible. That is to say, that the men managing the street car service are selected for their ability to supply the public with the cheapest possible service and charge them for it the largest possible price. The cost of running crowded cars is probably very little greater than the cost of running empty cars, or cars only comfortably filled. The motive for building new lines can only be the hope of more profits. Whatever tends to reduce the crowding on cars tends to reduce the profits per car and the rate of interest on stock. It does not seem that incompetence in management could make for the public as bad a state of things as this deliberate intention to give them the poorest service at the largest possible price.

It will be urged that the income does not permit the necesary changes. The low rate of interest on stock will be cited to prove this. It is perfectly well known that the rate of interest on face value of any stock has no meaning whatever to show the rate of profit on investment, unless the capital actually involved in the business is known. Not even the market price of the stock is any guide in determining this, for this market price is in proportion to the anticipated dividends on it, and bears no relation to either previous investment or the capital actually involved in the business. The practice of watering stock is a perfectly commonplace method of concealing large profits and diverting attention from the extortion by which they are accumulated. If the profit for every $100 actually involved in the business is $25, the actual rate of interest is 25 per cent. If on this stock of a face value of $500 is sold, there would be $5 profit for every hundred of it, and the rate of interest declared would be 5 per cent. Where no dividend on stock is declared at all, it will be found that profits are devoted to payment of interest on bonds, which differ not from the stocks, except in that interest is guaranteed at fixed rate.

There are people in every community who hover between the hope of profit by the present business system and the fear of being crushed by it into the great mass of the working class. The foundation of this business system is the control of the land, machinery and organization necessary for production and trade by the few that they may enjoy the products of the labor of the many. Labor power is purchased at the lowest possible price in the market, the price of his subsistence, and consumed as quickly and thoroughly as possible in making profits, a surplus over and above its wages. This consumption of human life in unwilling, unpaid service for the profit of a few, is the only essential condition of slavery. These people, while as a class the most intelligent in the community, have always been too dull to see this, however clearly shown. There is nothing in their exalted religious beliefs that is offended by it. They have no moral sense that revolts against it. But, when hopes of profits are overbalanced by immediate losses and inconvenience by this business system, when the large combinations of capital, the trusts, practice successfully on them that which they do not succeed in practicing on others, they are marvelously enlightened; whereas, no power of logic or eloquence could before convince them of the iniquity of this business system. Planks appear in the platforms of that political party which is most devoted to the interest of this class calling for the national ownership of coal mines and railroads, and for the municipal ownership of public utilities. The business of purchasing labor power at the lowest market price and consuming it to pay interest on bonds rather than stocks, is to be transferred to the state. This is a state capitalism, commonly called state socialism or public ownership.

This change must extend the opportunities for political corruption as it extends the power of public officers to control of industries, and without affecting the causes of political corruption. We do not want municipal ownership of anything until we first secure public ownership of the municipality. Corruption of public officers is common in all states of society in which the wealth produced by the people is accumulated through various processes, always legal, of course, by others controlling the industries of the people. There is no substantial difference in their appropriation of profit interest and rent as the holders of bonds rather than of stocks. Such a wealth owning class always has profits to make out of the people and are certain to use all means in their power to control public affairs in their own interest against the interest of the people. How can purity in public affairs be sustained on a business system that is founded on stealing? The moral and material effects are not changed by the fact that it is not commonly called by that name. How can a political republic be sustained in industrial despotism?

The costs of running a successful business are always a part of the income, the profit being the other part. If this profit is abolished and the price to the public is made the cost of the service, or product, the price must be less. If not, the incompetence or dishonesty of the management is proven, conditions being the same. It is only fair to admit that the dishonesty of capitalist politicians is no worse than their incompetency in such affairs. However, the Fourteenth Annual Report of the United States Commissioner of Labor on Water, Gas and Electric Light Plants shows that municipally controlled plants do supply the public at lower rates. If it did not, nothing would be established against the contentions of Socialists, as these plants are, with very few exceptions, burdened with bonded indebtedness, and the interest on these city bonds is charged to the cost of production. But if it is pointed out, for instance, that the cost of running the Government Bureau of Engraving and Printing is so great that private capitalists can contract to do the work for less and yet make a profit, this only illustrates that the private capitalist, impelled by his selfish interest, is far more successful in wringing out unpaid labor from employees than is the capitalist politician, impelled by his zeal for the public economy. This fact is not questioned. As a system for getting labor unpaid, this present one can hardly be improved by transferring its management to tire state.

If the public do not like to be herded like cattle into the cars, why do they persist in offering honor and great rewards to men who do this most successfully? But what solution is proposed to the problem of rapid transit in cities? It seems safe to say that the service will not be run for the benefit of the public until it comes completely into the control of the public. Are we going to leave the negotiation of this transfer for us to agents and friends of the present owners of the street railways? And is it to be expected that the representatives of the people will be generally true to their trust left to shift for themselves against the capitalist interests they antagonize, and while the means of corruption is in the hands of these capitalists, having great incentives to use it? As for the work people, whatever the changes in fares or wages or prices, they may expect no more than the bare price of a living while their insufficient opportunities of employment are limited by the chances of profit for those who command the means of employment.

The International Socialist Review (ISR) was published monthly in Chicago from 1900 until 1918 by Charles H. Kerr and critically loyal to the Socialist Party of America. It is one of the essential publications in U.S. left history. During the editorship of A.M. Simons it was largely theoretical and moderate. In 1908, Charles H. Kerr took over as editor with strong influence from Mary E Marcy. The magazine became the foremost proponent of the SP’s left wing growing to tens of thousands of subscribers. It remained revolutionary in outlook and anti-militarist during World War One. It liberally used photographs and images, with news, theory, arts and organizing in its pages. It articles, reports and essays are an invaluable record of the U.S. class struggle and the development of Marxism in the decades before the Soviet experience. It was closed down in government repression in 1918.

PDF of full issue: https://www.marxists.org/history/usa/pubs/isr/v04n01-jul-1903-ISR-gog-Princ.pdf