The Price of Public Water
Everett’s labor leaders take on the Stone-Webster utility monopoly in a high-stakes battle over rigged rates and watered stock.
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The first fruits of the complaint filed by the Trades Council are at hand; the McChesney-Improvement Company-Stone Webster monopoly of light, water, and street car service in Everett received its first jolt when the state utilities commission went through the books of the corporations for the first time. The facts reported by Engineer Gray are striking: the Improvement company turned a $2,500 land purchase into $90,000 in bonds for the water company, and $500,000 in bonds were sold to Stone-Webster for only $400,000. These items represent hundreds of thousands of dollars of 'watered stock' on which the company insists on earning 10 percent profit. During the hearing, the corporation packed City Hall with witnesses brought from across the country to defend these high rates. Against this battery of experts, the people were represented by Assistant Attorney General Steven V. Carey, who fought to expose these financial manipulations. The commission found that the light, power, and railway departments had been reaping massive net returns of 11 to 13 percent, far exceeding reasonable earnings.
“These three items alone represent about $243,000 of watered stock, on which the company claims the right to earn 10 per cent.”
Everett’s early-20th-century battle against Stone-Webster’s utility monopoly echoes current debates about the ownership of essential public infrastructure. The 'watered stock' and corporate self-dealing tactics used to justify high service rates remain a central theme in modern arguments for municipalization of utilities.
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