CHAPTER XI

OPERATION OF GAS AND ELECTRICITY IN THE UNITED KINGDOM

1. Gas Industry Founded by Private Individuals.-Municipalities Have Profited by the Experience of Individuals.-Two-Thirds of the Gas Furnished by Private Companies. Comparative Table.

2. Electric Enterprises.-Municipalities Opposed to the Introduction of Electricity.-Minority Lighted at Expense of Majority.-Financial Results of Gas and Electrical Undertakings. Variations.-Local Authorities

Which Are Operating at a Loss.

1. In Major Leonard Darwin's remarkable study, entitled Municipal Trade, I find the following figures, indicating the number of British municipalities which have undertaken to supply gas. During the period 1820-1839 only three municipal plants appear. During the period 1870-1879 thirty-eight municipalities adopted the system, and from 1890 to 1892-fifteen. Not until the gas industry had been firmly established by private companies did municipalities take a hand in the game, having then at their disposal the labor, buildings, equipment, mains, and consumers already provided for them by their competitors. Nor was this change of proprietorship always attended by immediately disastrous results. In such cases, however, a disaster would have been a miracle.

An incident relating to Manchester, which has supplied gas since 1824, betrays the sang-froid with which municipal authorities are capable of treating certain financial questions. On the occasion of a royal visit to that city, in 1905, the gas reserve fund was called upon to provide £8,897 ($43,300) to defray the expense of the king's entertainment.

A Birmingham municipal gas plant was the grand municipal ideal of Joseph Chamberlain. In 1874 he bought out the two existing companies for £2,000,000 ($9,740,000). The measure was regarded at the time as a purely fiscal one. In 1905 Birmingham was charging 2s 6d per 1,000 cubic feet of gas, when a private company at Sheffield was charging Is 5d.

Vince estimates that the favors granted to employees represent an expense to British taxpayers equivalent to an increase in taxation of 4 shillings on the pound, or 20 per cent.1

Sixty-three per cent., or almost two-thirds of the public gas lighting service of the United Kingdom, is furnished by private companies; the proportion is the same for private gas consumption. In England and in Wales the proportion of gas furnished by private companies is 69 per cent. In the United Kingdom the consumers supplied by private companies represent 59 per cent.; in England and Wales 65 per

cent.

The capital of the companies has increased £2,017,000 ($9,822,790), while that of local authorities has

1

1 Vince, History of the Corporation of Birmingham, 1902.

decreased slightly. The gross receipts of the companies are a little higher than those of the local authorities, but the net returns are less. It is easy to grasp the reason for this. In the furnishing of gas local authorities have certain privileges not accorded private companies. The price of gas furnished by private companies is 2s 9d, by local authorities 2s 6d. Yet the local authorities acknowledge a net revenue of 934 per cent., while the companies show only 55% per cent.

According to a parliamentary report of January, 1912, the capital invested in gas works in the United Kingdom amounts to £134,000,000 ($653,000,000). The following table summarizes the accounts and operations of these gas undertakings:

We have no detailed report permitting us to follow up the comparison between the results of operation by private companies and by local authorities. But, in any event, although municipalities have been furnishing gas in Manchester since 1824, and in Beverly and Carlisle since 1850, their example has not been followed generally, since private companies are still supplying gas to two-thirds of the population.

2. The first electric installations were established at Eastbourne and Hastings in 1882, and in London in 1885. Bradford created the first municipal plant in 1889.

An act of 1882 authorized local authorities to buy up companies at the end of twenty-one years, and afterward, at the end of successive seven-year periods.

In determining the purchase price only the market value of land, equipment, material, etc., was to be taken into account. No other compensation was to be paid. The object of the act was to prevent the construction of any more private plants.

The local governments were naturally anxious to protect their gas plants against any possible competition. The testimony of Mr. S. Chisholm, provost of Glasgow, before the committee of 1900, offers a typical example of this policy. Municipalities wanted authority to construct electric plants only in order to prevent private companies from doing so.

The City of York obtained a provisional order in 1892, but it did not supply electricity until 1900. Birkenhead waited from 1886 until 1900; Bristol, from 1883 to 1893; Greenwich, from 1883 to 1889. Four years appeared to be the average delay, according to the table submitted by Campbell Swinton, which includes a list of fifty-four municipal electric lighting orders. The local authorities were evidently more anxious to prevent action by others than to enter into the business themselves.

In order to protect the interests of its gas plant Birmingham required, as the condition of its approval of the Birmingham electric supply company in 1890, that the latter should supply only the principal streets of the city. In 1898, however, the company being prosperous, the city decided to purchase. At the time the negotiation was completed the market price of each share was £10 IOS od, a figure which would naturally 'Raymond Boverat, Le Socialisme Municipal en Angleterre et Ses Résultats, p. 190.