authorizing the purchase of the East Boston Ferry Company's franchise and property by the city was obtained.1 The East Boston Ferry Company petitioned for an increase in tolls, which were then the same as originally established in 1852. The Board of Aldermen refused, and the company brought a petition for a writ of mandamus, which was granted by the Court, and thereupon the Aldermen acquiesced and passed an order raising the tolls.

2

The city then negotiated a purchase of the property and franchise of the East Boston Ferry Company for $275,000, and on the first of April, 1870, took possession.

Up to this time the city had expended, including this sum of $275,000, nearly $700,000, net, for property, franchise, and subsidies.

Under the Act of 1869 the city, upon purchasing the ferry, could either make it a toll ferry; or a free ferry, and assess betterments on real estate in East Boston; or a free ferry for ten years and then a toll ferry, and assess half the betterments on East Boston property. The City Council elected to adopt the first plan, and on March 24, 1870, established a toll ferry, and fixed the rates, including a two-cent fare for foot passengers.

In 1871 a proposition to abolish tolls was defeated in the City Council, and an order to establish one-cent fares for foot passengers passed the Board of Aldermen, but was defeated in the Council.

The agitation for free ferries, begun in 1871, culminated in 1877 in an order which passed both branches of the City Council and was approved by the Mayor, abolishing the tolls from and after January 1, 1878. This order was declared illegal by the Supreme Judicial Court in the case of Attorney-General v. Boston, 123 Massachusetts, 460, on the ground that the city had exhausted its option by the terms of the order of 1870, establishing a toll ferry.

By 1878 the revenues of the ferries under the schedule

2 See East Boston Ferry Company v. Mayor and Aldermen of the City of Boston, 101 Mass. 488.

MUNICIPAL INVESTMENTS.

157

of tolls which had remained unchanged since 1870 were approximately equal to the current expenditures; and although the ferries had cost the city up to that time over a million dollars net, and the average annual receipts were not equal to the average annual expenditures for all purposes, a series of reductions in tolls commenced. On January 1, 1879, a reduced schedule went into effect, by which 16 tickets were sold for 25 cents and 60 tickets for 75 cents, and reductions amounting to from 20 to 25 per cent. were also made in the tolls for teams. Later in the year the schedule was again lowered, so as to permit the purchase of 50 tickets for foot passengers for 50 cents. An application was also made in that year to the Legislature by the Mayor and Aldermen for an act permitting the establishment of free ferries. The petition met with vigorous opposition from the taxpayers, and was defeated.

In 1880 further reductions in tolls were made, principally In in respect to the price for team tickets by the package. 1881 a still further reduction was made in the cost of team tickets by the package. In 1887 the tolls were reduced to the lowest point practically possible for foot passengers, namely, one cent; and the rest of the schedule was practically cut in half. This was the last reduction, and since 1887 the ferries have been maintained upon the schedule which went into effect July 1 of that year. The fight for free ferries was renewed before the Legislature of that year, with the aid of the City Council, but again proved unsuccessful.

In the meantime, the ferry directors went out of their way to misrepresent the financial results of the ferry undertaking. The annual report for 1881-2 is the first to contain a table purporting to show the "actual standing" of the ferries, which has been repeated in succeeding reports, with figures brought down to date. In the report for 1886 a "trial balance,” apparently supporting the table of "actual standing," appears for the first time. If it was proper to characterize the reports prior to 1876, as was done by a committee of that year, as based upon inflated values, it

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VALEDICTORY ADDRESS.

would be equally proper to characterize this table of "actual standing" as a deliberate and intentional misrepresentation. In this table, as it appears in the report for 1881-2 and subsequent years, the ferry department is debited with the amount spent from 1859 to date, except that no account is taken of interest on the moneys borrowed, and the department is credited not only with the amounts received from toll-, with the estimated value of the boats, real estate, "franchises," supplies on hand, etc., but also with $250,000, alleged to be an amount" charged to ferry department for avenues that were laid out as streets in August, 1880, and properly should be credited to this department and charged to streets," and by a further sum of $11,530.30 for "paving avenues." The credit of $250,000 is the sum paid the two ferry companies in 1859 as a subsidy or "measure of relief," and, as distinctly appears from innumerable reports and documents of the period, was in no sense an expenditure for streets.

In this way, by taking no account of interest, by crediting two hundred and sixty-odd thousand dollars improperly, and by putting an inflated value on the real estate and franchise, a net loss on the whole undertaking was figured out of only $46,034.07. A glance at Table 29, in the Appendix, will show that on this date the real cost of the East Boston Ferries amounted to about one and a quarter million dollars, and the tangible assets, real estate, boats, etc., were valued by the Directors themselves at $618,591.86 only.1

1

On April 17, 1891, the Board of Ferry Directors was abolished, and a superintendent was appointed in their place. Since then the ferries have been conducted substantially in the same manner as before, as no increase in the tolls as established in 1887 could be hoped for from the City Council ; and the ferries are run at an annual loss of about $60.000, without counting the average expenditure for boats and permanent improvements, which amounts to some $30,000

more.

Since the abolition of the Board of Ferry Directors the

Report for 1881-2. p. 10. Undoubtedly a speculative valuation.

MUNICIPAL INVESTMENTS.

159

annual loss has been relatively less than under the management of that Board, the percentage of deficit in the current expenses to receipts from tolls having been 44.9 per cent. between 1888 and 1891, and only 37.7 per cent. between 1891 and 1894; a result which testifies to the advantage of confiding executive work of this character to a single person, rather than to a board of five.

At the close of the last fiscal year, January 31, 1894, the East Boston Ferries had cost the city $2,359,348.38 more than the receipts from all sources; and this deficit appears to be increasing at the rate of nearly $100,000 per annum.

The financial history of the East Boston Ferries is the record of a succession of failures. Single corporations having a monopoly for the time being were unsuccessful; public regulation failed; competition was disastrous to the private interests involved and unsatisfactory to the public; subsidies proved not even of temporary value: and, finally, municipal ownership has turned out to be the most disastrous experiment of all. The investors lost their money; the city has sunk nearly two and a half millions of dollars; and to-day the people of East Boston are no better satisfied with the accommodations furnished by the ferries than they were in

1852.1

It is easy to see, however, that if the tolls had been maintained at the figures originally established by the City Council of 1870, the ferries would before 1880 have been on a self-supporting basis, that is, the total income would have equalled the total annual expenditures,— and by 1895 the greater part of the original expenditure, if not the whole of it, would have been cancelled. Instead of following, as in the case of the Mystic Water-Works, the prudent, business-like course of maintaining tolls at a point sufficient to pay a net profit above expenditures, which would reduce

1 An instructive contrast in ferry management is presented by the experience of New York city, which secures a large yearly revenue from the lease of ferry franchises and docks.

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VALEDICTORY ADDRESS.

and gradually extinguish the original cost, the City Council has managed this department as though the only interest concerned was that of the passengers on the ferries; has reduced the tolls to the lowest possible figure, and far below the point of profit; and has only been prevented by the courts and the good sense of the Legislature from abolishing them altogether.

As the sole cause of the disastrous results of this undertaking has been the yielding of the City Council to the desire of a section of the people to be transported between East Boston and the city for nothing, that is, at the expense of other people, so it is easy to point out the remedy. Stop all loans for boats, buildings, wharves, and slips; increase the tolls to a point that will pay a considerable profit above all annual expenditures; and provide that a small number of taxpayers may procure from the courts an injunction against reducing the tolls until the extinguishment of the cost. The remedy is easy to suggest, but impossible of accomplishment, as it is wholly improbable that a single vote could be obtained in the City Council for an increase in the tolls.

SECT. 6. Summary. The five municipal investments undertaken by the city of Boston have now been described. One of them, the improvement of the public lands, may be considered as having been fairly successful, having regard to both the financial and sanitary results. One of them, the Quincy Market, paid for itself in twenty years, and has been a source of large annual profit ever since. Another, the Mystic Water-Works, has paid for itself in thirty years, and from this time on, freed from debt, should be a source of annually increasing profit. The East Boston Ferry, on the other hand, has proved a most disastrous failure, and continues to be a great and annually increasing burden to the city. The fifth undertaking, the Cochituate WaterWorks, was the largest and most difficult of them all, and has been so administered as to stand midway, in point of financial results, between the Mystic Water-Works and the