Chapter 10. Era of Public Ownership Opens

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Fifty Years of Rapid Transit · James Blaine Walker

Chapter X

Era of Public Ownership Opens and Makes Possible New York's First Subway.

IN the preceding pages the origin and development of Rapid Transit have been traced for the fifteen years between 1865, when the first rapid transit bill was passed by the Legislature, and 1880, when the completion of the elevated railroads to Harlem and the increased business thereby obtained demonstrated the complete success of passenger transportation on overhead structures built above the street surface. This period might well be termed the Era of Private Ownership, for all transportation enterprises then undertaken were based upon the absolute ownership, control and operation of such facilities, even though dependent on public grants for their rights of way, by private capital.

The next fifteen years, namely from 1880 to 1895, may be as properly called the Era of Public Ownership, for during that time the perpetual and gratuitous franchise was abolished and the right of the public to build, pay for, own and if necessary operate street railroads was successfully asserted. It was in 1891 that the present Rapid Transit Act was enacted and soon thereafter amended so as to permit cities to use their own capital in construction, and in 1894 on a referendum vote the people of New York City decided by a substantial majority in favor of public ownership. But before entering upon a description of this momentous change in public policy it may be well to trace briefly the struggle to effect it.

Following the introduction of horse-drawn street cars on metallic rails in 1832 the possibility of profit-making in the transportation of large numbers of passengers for a small per capita fare appealed to the moneyed men of the day and in consequence to the politicians, who found themselves in position to confer the needed rights in the public streets. As the city controlled such thoroughfares for other purposes, it was taken as a matter of course that the Common Council was the authority to confer upon a private corporation the right to lay and operate street railroads. The first street railway franchises were granted in this way, the city granting the charters for the Sixth Avenue, Eighth Avenue, Second Avenue, Third Avenue and Ninth Avenue surface lines. In a report on the subject made by the Committee on Political Reform of the Union League Club in January, 1873, this language was used:

"The immense values thus given away by a simple resolution of the Common Council opened up visions of sudden wealth to members. Rings were formed, candidates nominated and elected simply for their readiness to plunder the city.

"The Broadway franchise for only two miles was valued by the company who thought they had secured it at $1,500,000. Unseemly contests for possession between rival companies occurred in the streets. The defeated and disappointed companies appealed to the courts. It was then found that the City had not the legal right thus to give away to corporations, to use for private gain, the public streets purchased and graded with money obtained from the people by taxation and assessment. In 1854 the Legislature, by an act that appeared to be for a different purpose, yet by a clause skillfully thrust into the third section, confirmed and made valid the grants theretofore obtained from the City.

"The courts having decided that the City officials could not donate to their friends the City streets and squares, the whole business of giving to these corporations the public property of the City was then transferred to Albany. The Legislature at once be came surrounded and besieged annually by an army called the Railroad Lobby. Members were chosen for their subserviency to this interest. Such proceedings were had that street after street was given away, when on the point of donating the Broadway franchise Mr. A. T. Stewart checked the evil by offering to pay the City for this grant two millions of dollars. This was justice, for there was no plunder either for the Lobby or the Legislature in this offer; and the grant was refused. Finally the demand of the citizens for protection against the rapacity of these corporations was recognized, and the Twenty-third street franchise was sold at public auction. The extension of the Dry Dock, East Broadway and Battery road was granted on condition that five per cent. of the proceeds of the cars run thereon should be paid annually to the City. The word 'net' having been inserted before 'proceeds', the company, though doing a lucrative business, paid nothing for five years, till overhauled by a member of this Committee last spring, when they paid up for the five years the sums due the City. The extension of the Second Avenue road was granted last winter on condition that they pay to the City the value of the franchise for the extension.

"After long struggle against the Lobby, the Reformers have at last got the principle of payment to the City for the franchises recognized. It now remains to fix a just rule of value for franchises that may be hereafter granted".

Even after this principle was recognized the idea that only private capital could properly engage in the construction of such facilities prevailed. Municipal ownership was a theory held by some advanced thinkers, doubtless looked upon as visionary radicals in those days. However, its advocates eventually got a hearing. In 1873, the same year in which the Union League committee made the report just quoted from, a bill was introduced in the Legislature by a Mr. Opdyke to authorize a board of City officers to build and turn over to a City department to operate a rapid transit railroad. This measure, which was introduced in January, was endorsed in February at a meeting of the Rapid Transit Association in New York city, at which General Sigel delivered an address. As far as research discloses, this is the first recognition of municipal-ownership in legislation or attempted legislation. The time, however, invited such a move. Samuel J. Tilden, reformer, had been elected Governor in 1872, and the Legislature of 1873, elected with him, had a membership more or less sympathetic to reform ideas. Indeed, it was Tilden's influence which brought about the important legislation resulting in the formation of the Rapid Transit Commission of 1875.

In the same month, February 1873, a mass meeting was held in Cooper Institute, New York, at which Abram S. Hewitt, afterwards Mayor, made an address in favor of City-owned rapid transit lines. Resolutions were adopted favoring a City-built and City-operated line, and a Committee of One Hundred was appointed to go to Albany to support the Opdyke bill. This bill authorized the Governor and Senate to appoint six commissioners, who, with the Mayor and two heads of City departments, was to constitute a commission with power to survey and build a rapid transit railroad. The fare was to be seven cents, and the interest on the bonds issued by the City for construction was to be paid out of earnings and the fare reduced if the earnings would permit. The Chairman of the Committee of One Hundred was Rudolph A. Witthaus. It did valiant work, and mass meetings were held in various parts of the city to aid the cause, but the time was not yet ripe, and the Opdyke bill failed to pass. It undoubtedly had a marked effect on the public mind and unquestionably led the Legislature of 1875 to the consideration and passage of the bill authorizing the Mayor to appoint the first Rapid Transit Commission, which confirmed and amplified the rights of the new elevated roads.

The Legislature of 1874 considered the subject, but took no remedial action. In March the Assembly Committee on Railroads reported against the creation of a rapid transit commission, on the ground that no commission could build a road unless the City would pay for it, and this was not desired.

Public sentiment as voiced by the press, also, was still hostile to public ownership. The Times in an editorial published on April 1, 1874, said:

"Much as we have found to condemn in the action of the Assembly Railroad Committee, we thoroughly approve of their determination to sanction no scheme which provides for the expenditure of City money in the construction of local railroads."

In March 1875 the Committee on Rapid Transit of the Board of Aldermen reported a recommendation that private capital be given the first chance to build a rapid transit line, and if that failed the City should undertake the work. A minority report favored City ownership, but the Board adopted the majority report.

Early in the year 1875 the Chamber of Commerce held a meeting at which subscriptions were taken to start a rapid transit fund. A Committee of Fifty was named to solicit further subscriptions, and the subscribers organized the New York Rapid Transit Association to further the construction of a road. Gouverneur Morris was chairman and C. H. Roosevelt secretary of this meeting. During the early part of the same year a committee of the American Society of Civil Engineers made a report recommending the construction of elevated roads to supply the rapid transit needs of the city.

Mayor Wickham in his annual message in January 1875 mentioned the subject and stated that the need of rapid transit had been partially supplied by the New York Central improvement from 42d street to the Harlem River. This was the tunnel and viaduct carrying four tracks which was paid for half by the City and half by the company. The City's share was $3,200,000. It is difficult now to appraise a state of public sentiment which frowned upon using public money to build a road to be owned by the public, but condoned the outright gift of $3,200,000 to a corporation for improving its own property. Of course, in this case the City gained something in the elimination of many grade crossings, and the principle of contributing toward the cost of such work is still recognized as sound, but such a disposition of public funds in those days seems a contradiction of the evidently prevalent opposition to public ownership.

In the same message Mayor Wickham congratulated the city on the rapid transit assured by the Central improvement. He said:

"As provided by the law authorizing the improvement, two of the tracks are to be devoted exclusively to rapid transit within the city."

A later enactment relieved the company of this obligation.

The first elevated railroad was built in the absence of any law to compensate owners of property along the line. In 1872 a constitutional amendment was adopted requiring the consents of property owners as a prerequisite to railroad construction, to the extent of at least one half in value of the abutting property. This requirement was embodied in the Rapid Transit act of 1875, which provided that in lieu of such consents the railroad must get a favorable decision from three commissioners to be appointed by General Term of the Supreme Court, such decision to be reported to and confirmed by that court. This bill was known as the Husted bill, it having been introduced in the Senate by General Husted, who worked indefatigably for the cause of rapid transit both in and out of the Legislature. Governor Tilden also supported the measure, which was also known as "the Governor's bill". The appointment of commissioners under this bill by Mayor Wickham and the important work they did have been noted in a previous chapter.

The extension of the two elevated railroads under the plan adopted by the Rapid Transit Commission of 1875 allayed for a time the agitation for rapid transit. Many thought the problem solved, and the next ten years were barren of any important movements looking to new construction aside from that of the elevated roads. By the end of the 1880's, however, the elevated lines had become congested and it became apparent that additional rapid transit roads must be provided.

In 1888 Mayor Abram S. Hewitt, whom many regard as the, father of modern rapid transit and who had urged public ownership as early as 1873, sent to the Common Council a message, in which he advocated the use of the credit of the City for the construction of a road to be owned by the City but which could be leased to a private company for operation. His plan, which was practically that later incorporated in the Rapid Transit act of 1894, provided for construction by a contracting company, which should lease the road for operation for a term of years, give a sufficient bond, pay for the equipment of the line but give the City a lien on such equipment and guarantee to pay the City annual interest and one per cent. for a sinking fund on the bonds issued for construction.

The Common Council did not approve the plan, but Mr. Hewitt and the Chamber of Commerce had drafted a bill embodying it, and this bill was introduced in the Legislature of 1888. It failed for reasons which Mr. Hewitt himself thus described:

"The prejudice against the scheme was so great, however, that it was difficult to find any member of the Legislature who would be responsible for the introduction of a bill, which was opposed not only by the Common Council of the City, but by the political organization which controlled the politics of the City. The Mayor appeared, however, before the Committee of the Legislature and made a very elaborate argument as to the necessity for increased rapid transit facilities and of the mode under which he proposed to secure them at an early date. The Committee, however, declined to report the bill back to the Senate, and so far as that session was concerned the proposition entirely failed."

Hugh J. Grant, a Tammany man, was inaugurated Mayor in January, 1889, and with his inaugural message took up the question. Sentiment for public ownership, however, apparently had not crystallized in the preceding decade, for Mayor Grant, while urging the construction of new lines, declared that they must be built, equipped and operated by private capital. Here is an extract from his message:

"It may be proper, however, to state that, in the construction of a rapid transit road, it will be necessary to rely upon private enterprise. We might indeed prefer that the road be constructed at the public expense and when completed leased for a term of years to the highest bidder, upon conditions which would carefully provide for the comfort of the citizens and for a suitable return to the public treasury, but in view of the limit to which the borrowing capacity of the City is now restricted, this scheme would be impracticable. Private capital must, therefore, furnish the means for the construction of the road, but the public authorities must be vigilant to guard the right of the citizens to the enjoyment of a fair proportion of the benefits that will flow from its operation."

The tone of this message shows what a change had taken place in public sentiment in the preceding decade. While preference for construction by private capital is shown, the advantage of limited term franchises is recognized and the duty of public officers to see that the public shall share in the profits of the undertaking is affirmed. The day of perpetual franchises granted without compensation to the municipality was gone forever.

Mayor Grant in March 1889 had drafted a bill to amend the Rapid Transit law, which he sent to Albany. This bill gave the Mayor power to appoint a rapid transit commission without waiting for a petition from taxpayers, as required by the original act. Owing to political opposition, however, this bill failed of passage. The Mayor, with considerable acumen, appealed to the Legislature to give to the City of New York the right to name the men to act as Commissioners. This invocation of the home rule principle eventually proved successful. In 1890 a hostile Senate again killed his bill, but in 1891 the bill was reintroduced and passed both houses. Meanwhile, in December 1890, in order to get action Mayor Grant, on the petition of taxpayers, appointed a commission under the Act of 1875. The men he named were William Steinway, John H. Starin, Samuel Spencer, Eugene L. Bushe and John C. Inman. How this action was brought about was told by the late John D. Crimmins. In a statement published in the Evening Post on October 24, 1913, Mr. Crimmins said:

"In 1889 on the assumption of office by Mayor Grant I made known to him the importance of taking up the rapid transit situation. I personally circulated the petition and knew every signer, had the signatures acknowledged and brought the petition to Presiding Justice Van Brunt of the Appellate Division of the Supreme Court who prepared and administered the required oath. I may mention here that Mr. George S. Lespinasse was enlisted with me in this movement, securing and witnessing signatures. I brought the completed petition to Mayor Grant, who instructed me to find the men who would serve. I received more refusals than consents. I made the offer to James McCreary, Charles Stewart Smith and others. Mr. Smith was later a member of the Board of Rapid Transit Commissioners. The Commissioners appointed by Mayor Grant, were required first to adopt the routes and general plan of construction of a rapid transit railroad, and then to obtain the necessary consents for its construction from the local authorities and the property holders affected. That was the beginning of the work of the Rapid Transit Commission, the results of which we see today."

The Commission named by Mayor Grant met and organized on January 6, 1891, electing William Steinway chairman. On January 9 following the Commission met again and decided to proceed under the existing law, although a bill for a new act was pending. The Commissioners, however, seemed to have felt assured that the bill if passed would not upset what they might do. Accordingly they issued a public call for plans and suggestions.

Before the end of the month of January the Legislature passed the Stewart rapid transit bill and on the last day of the month it was signed by Governor David B. Hill. William F. Sheehan, later prominent as a traction lawyer in Mew York City, was Speaker of the Assembly and by his rulings assisted the final passage of the bill in that house.

This was the Rapid Transit Act of 1891, which with numerous amendments still stands on the statute books. It created the Board of Rapid Transit Commissioners and named as the first Commissioners the five men appointed in December 1890 by Mayor Grant. The act authorized the board to lay out routes and adopt plans for a rapid transit railroad, either supra- or subterranean, and to put up the franchise to build and operate at public auction. It also required the consents of the local authorities and of the abutting property owners to the extent of one half in value of the property affected.

The Commission on February 9, 1891, reorganized under the new law, electing William Steinway, President, John H. Starin Vice President and Eugene L. Bushe Secretary. Its work went right along unaffected by the reorganization, and it proceeded to consider plans, hear arguments and receive suggestions.

The law itself, as shown by the provision for the auction of the right to build and operate, contemplated private ownership, but the advocates of public ownership soon made themselves heard. One of the first if not the first was Jacob H. Schiff, the banker, who appeared before the new Commission on March 13 and made an argument for the use of City funds to defray the cost of construction. Mr. Schiff's theory was that an underground railroad would be a very expensive undertaking and it was doubtful whether its operation would pay a sufficient return on the money invested to make it an attractive investment for private capital. The City, however, could borrow money at three per cent., a much lower rate than private capital could command, and therefore could better afford such an investment.

Another phase of the problem to which the Commission devoted considerable attention was the question of motive power. It was the desire of all interested that an underground road should be built if practicable, and the kind of motive power to be used was a most important consideration. The experience of the London underground with steam, in spite of smoke-consuming devices, had not been satisfactory, and the best engineering thought of the day in the United States was averse to employing it for an underground road in New York, where from the nature of things there must be long stretches of tunnels without open spaces such as relieve the London tube. Electricity had been recently applied to street car propulsion, and it was favored for the new underground road if built. At the same meeting at which Mr. Schiff urged public construction, Mr. Frank J. Sprague, afterwards famous as an electrical engineer, appeared and advocated the use of electricity.

The Commission appointed William E. Worthen as its Chief Engineer, and later William Barclay Parsons Deputy Chief Engineer. During the summer it came to a decision to build an underground road and announced its preference for a route running up Broadway and the extension of Broadway then known as the Boulevard. Worthen and Parsons reported plans for an underground road, and in October, 1891, the Commission adopted and submitted them to the Common Council for approval. On October 28 that body approved the routes and plans and gave its consent as the local authority to the construction of the underground road. The Mayor's approval was added on October 31.

In the Commission's report to the Common Council there is evidence of much valuable work done in a short time. Its engineers had made borings to determine the depth and character of the rock along the proposed route, had investigated the trend and extent of traffic and studied the problem of treating the sewer and water pipes, the several possible methods of construction and other matters necessary to the intelligent undertaking of a work of such importance. The Commission decided to build the road as close to the surface of the streets as possible, so as to make access to the stations easy for passengers, but was in doubt whether to construct the four tracks contemplated on one level or to make a double deck subway with local tracks on the upper and express tracks on the lower level. Its engineers, therefore, were instructed to make alternative plans showing both methods, but the Commission in its report plainly showed a preference for the one level construction.

On the subject of motive power the report said:

"While the Board is convinced that electricity as a motive power is available for the purposes of the railway recommended by this report, it is not deemed wise at the present time to exclude other forms of power answering the essential conditions of speed and non-combustion in the tunnel, or to attempt to direct the exact method of application of such power as shall finally be adopted."

The report was accompanied by reports from four consulting engineers to whom the plans prepared by Worthen and Parsons were submitted. These engineers were Octave Chanute, of Chicago; Joseph M. Wilson, of Philadelphia; Theodore Cooper, of New York and John Bogart, State Engineer of New York.

In the plans submitted by Mr. Worthen and Mr. Parsons there was a notable difference. Worthen proposed four tracks on a level built near the surface, but below the level of gas and water and sewer pipes, so that the latter might be left undisturbed. Parsons suggested a double-deck subway on each side of the street, the space between to be made into a pipe gallery under the center of the street in which all pipes removed in construction should be placed, such gallery to contain all pipes laid in the future. Some years later, when Parsons became Chief Engineer of the Board which built the first subway, it is interesting to note that the Worthen plan for four tracks on one level was adopted.

Following the approval of the project by the municipal authorities the Commission had the detail plans made and advertised for bids for the franchise. Bids were solicited in the fall of the year 1892. Only one bid was received, that of Col. W. N. Amory, who offered $1,000 for the rights. His bid was rejected. It was openly hinted that the opposition of the elevated railroads, then in the control of Jay Gould, was responsible for the failure to sell the franchise. Gould, of course, did not want a competitive transit line in the city, and certainly was powerful enough, financially and politically, to interpose obstacles. Later the Steinway Commission tried to get the elevated roads to build extensions, but this effort also proved abortive.

William Barclay Parsons, in a conversation in 1913, declared that the Steinway Commission was a Tammany board and that the elevated railroads, which did not want the competition of an underground road, were all powerful in shaping its work.

After the failure to sell the franchise, Mr. Parsons said, a strange thing happened in the Steinway Commission. "All the employees of the Board, myself included," said Mr. Parsons, "were dismissed, and in thirty days all were reappointed except me. The Board then offered the elevated railroads rights for important extensions. Having failed to enlist capital for an underground road, the Board did what was expected of it and made elaborate plans for extending the elevated railroads. Then another strange event happened. The elevated railroad interests, then dominated by Jay Gould, and Russell Sage, refused to build the extensions offered. They felt so secure in their monopoly that they actually scorned the gift the Board would make them. That ended the Board of 1891. Having failed to build either subway or elevated lines there was nothing more for it to do. The Legislature of 1894 abolished the body and created a new Rapid Transit Commission, of which Alexander E. Orr was made chairman. This was the board which built the first subway, and I became its chief engineer."

There could be no more fitting close to this chapter than the following extract from an address delivered by Abram S. Hewitt on October 3, 1901, upon receiving from the New York Chamber of Commerce a gold medal bestowed in recognition of his long and effective work for rapid transit:

"In the meantime (after the failure of the plan to obtain construction by private capital by the 1891 board) the difficulties of the situation became more and more manifest, until at length a proposition was made to the Chamber of Commerce of the State of New York by a well known and responsible banking house in this city to undertake the construction of the underground system, provided the City of New York would loan its credit to the corporation undertaking the work to an amount not exceeding thirty millions of dollars. This proposition was referred to a committee of the Chamber, who, despairing of any other solution of the question, reported at a meeting of the Chamber in favor of the proposition. It was my privilege to point out in the discussion which followed that such a loan of credit would be contrary to the Constitution of the State of New York, and that it was not expedient to submit to the people any proposition under which the public credit could be utilized for private enterprises. The importance of vesting ownership in the City was insisted upon, and after full discussion my contention was unanimously approved by the Chamber of Commerce, and a new committee, of which I was a member, was constituted to formulate a bill to be presented to the Legislature under which the suggestions made by the Mayor in 1888 were to be incorporated in the proposed legislation.

"Taking the original bill as a basis, and with the aid of the late Henry R. Beekman, who as Corporation Counsel had drawn the original bill, a new bill was prepared and reported to the Chamber of Commerce for its approval. Having received a unanimous vote in its favor, the committee caused it to be submitted to the Legislature, where, after full discussion and some amendments, one of which required a referendum to the people, the bill was enacted into a law on the 22nd of May, 1894. Under its provisions the work is to be done as proposed by the Mayor in 1888 by the issue of bonds under contract open to public competition, providing for an adequate bond i for the completion of the work and for the investment of a large amount of capital, estimated between seven and ten millions of dollars, for rolling stock, real estate and appliances, all of which are held by the City as security for the fulfillment of the lease by the lessee."

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