Documentary History of American Water-works

Introduction Historical Background Chronology Geography Biography Technology Ownership and Financing General Bibliography

Ownership and Financing of American Water-Works

Water Rents, Rates, and Charges
List of water rents and rates for various systems
Frontage Taxes Hydrant Contracts

Ownership
Apart from a small number of systems owned by the federal and state governments, water works ownership can be divided into two basic categories. 

Unincorporated entities include sole proprietorships, partnerships, and various types of companies and associations.  These were widely used for smaller systems.

Incorporated entities have a charter authorized by the state, either by a specific law granting a charter, or under general authority granted by the legislature.  Municipal corporations are one type of incorporated entity and include counties, cities, towns, villages, and other subdivisions of the state, which later included special water districts.  Non-public corporations include stock companies and associations where individual water consumers own the system. 

List of water works owned by a public entity (through 1865)

Massachusetts in 1799 was the first state to pass a law allowing aqueduct companies to incorporate without a legislative charter.  Maine passed a nearly identical law after it became a state in 1820.  Applications for incorporation were made to a local justice of the peace and companies organized under these laws could only hold a maximum of $30,000 of real estate.  Permission from Selectmen was required prior to installation of pipes in public streets.  Vermont passed a similar law in 1835 requiring that a copy of the agreement be filed with the local town clerk. Other states passed various general incorporation laws during the ensuing decades.

Water works companies were usually, but not always, required to secure permission from the local selectboard or other governing body before installing pipes in public streets.

The right to own property was not universal in America until the second half of the 19th Century.  Charters for water works would often include language such as this language from an 1844 charter: "And in case any owner or owners of land, real estate or property taken by said trustees and company, shall be married women, infants, idiots, insane, or shall reside out of this state, then, and in such case, the said trustees and company shall cause the damages sustained by said owner or owners to be determined in the manner above prescribed, and shall pay the amount of the said last mentioned damages info the court of chancery, for the benefit of the person or persons entitled to the same, which damages shall be paid before the said trustees and company shall take possession of the property."

New York State passed laws in 1848 and 1849 granted substantial property rights to married women, and in 1851 gave them the right to vote their stock in corporations.  At least two water works companies are known to have been wholly owned by women:  The Aqueduct Association in the Village of Little-Falls was wholly owned by Nancy M. Boyer from 1883 to 1888; and the Virginia City (Montana) Water Company was owned by a black woman, Sarah Gammon Bickford, from 1900 to 1931. Anice A. Barlett owned the Plainfield, Vermont water works in 1940.  Mary Elizabeth Cooper Scott owned the Dayton, Nevada water works after her husband died in 1896. 

Ann Giffin was an incorporator of the Gettysburg Water Company in 1823.

1892 "Water Works Franchises," from Michigan Law Journal, 1(9):310-313  (October, 1892)

1905 "Municipal Ownership," The New York Times, August 29, 1905, Page 6.
Alleged to be a Failure in Nine Cases Out of Ten.

1907 "Notes on Municipal Government. The Relation of the Municipality to the Water Supply, A Symposium," by Frederic Rex, Chicago, Ill.; Henry Ralph Ringe, Philadelphia, Pa.; Henry Jones Ford, Baltimore, Md.; Edward W. Bemis, Cleveland, O.; Prof. A. C. Richardson, Buffalo, N.Y.; Murray Gross, University of Pennsylvania, Philadelphia, Pa.; Max B. May, Cincinnati, O.; James J. McLoughlin, New Orleans, La.; Delos F. Wilcox, Secretary, Municipal League, Detroit, Mi.; Daniel E. Garges, Washington, D.C.; Frank E. Lakey, Boston, Mass.; and W. G. Joerns, Duluth, Minn.  The Annals of the American Academy of Political and Social Science 30:129-164 (November 1907)

1988 "Water works, electric utilities, and cable television: Contrasting historical patterns of ownership and regulation," by Charles David Jacobson. PhD dissertation in History, Carnegie Mellon University.
Boston, San Francisco and Seattle

1999 "Corruption, Reform, and Institutional Change:  Public Choice in 19th Century Urban America.  The Municipal Reform Movement and street sweeping in 1903. The municipalization of American waterworks from 1800 to 1925," by Richard Alan Levitan, PhD dissertation in Economics, University of Pennsylvania

2001 Ties That Bind:  Economic and Political Dilemmas of Urban Utility Networks, 18001990, by Charles David Jacobson

2003 "Municipalizing American Waterworks, 1897-1915," by Werner Troeksen and Rick Geddes, Journal of Law, Economics and Organization 19(2):373-400 (October, 2003)  | also here |

2006 "Regime Change and Corruption:  A History of Public Utility Regulation," by Werner Troesken from Corruption and Reform: Lessons from America's Economic History, edited by Edward L. Glaeser and Claudia Goldin

2018 "Who Is Paying to Fix Outdated Water and Sewer Systems? You Are," The Wall Street Journal, March 15, 2018

Franchises and Regulation
1892 Economic Legislation of All the States: The Law of Incorporated Companies Operating Under Municipal Franchises, Such as Illuminating Gas Companies, Fuel Gas Companies, Electric Central Station Companies, Telephone Companies, Street Railway Companies, Water Companies, Etc., Preceded by a Suggestive Discussion of the Economic Principles Involved in the Operation, Control, and Service of Such Companies, Volume 1 - Alabama through Montana, by Allen Ripley Foote and Charles Edward Everett | Volume 2 - Nebraska through Wyoming, plus Territories | Volume 3 - Reference material |

1910 Municipal Franchises; a Description of the Terms and Conditions Upon which Private Corporations Enjoy Privileges in the Street of American Cities, by Delos Franklin Wilcox

1913 Commission Regulation of Public Utilities: A Compilation and Analysis of Laws of Forty-three States and of the Federal Government for the Regulation by Central Commissions of Railroads and Other Public Utilities, by National Civic Federation, Department on Regulation of Interstate and Municipal Utilities,

1915 "Franchises of Public Utilities as they were and as they are," by Henry C. Hodgkins, Journal of the American Water Works Association 2(4):739-758 (December, 1915) | Also here |

Financing
Financing the construction, operation and maintenance of water works systems has involved many different types of funding sources,

Many early systems were built using equity from assessments on shares in the entity.  Investor-owned public utilities still rely on this funding source.

Bequests have been used to fund several water works systems.

Donations have been made to several systems.

Lotteries were used as funding sources on some early systems.

Secured loans were used to build some early water works.

Bonds became the most common method of funding water works.  The first revenue bonds were issued in 1895 to rehabilitate the water system in Spokane, Washington. 

2005 Water, Water Everywhere:  Municipal Finance and Water Supply in American Cities, by David Cutler and Grand Miller,
National Bureau of Economic Research Working Paper 11096, January 2005.

2009 "Municipal bonds and water the US experience in financing its water supply and implications for developing countries," by Daniel Platz, Daniel, New School University, ProQuest Dissertations Publishing, 2009.

Special Districts

The first water works owned by a special district was in Pittsfield, Massachusetts, where the fire district was authorized to construct water works in 1852, but local voters did not approve the project until 1855.

1958 "The Legal and Governmental Status of the Metropolitan Special District," by Robert W. Tobin.  University of Miami Law Review 13(2):129-151  (Winter 1958)

Water Rights
The West Needs Water Markets

Water Works Developers
Water systems were owned on an individually basis until the 1870s, although manufacturers and contractors would sometimes take stock or bonds in water systems to facilitate their construction.  The first company to be formed for the purpose of developing and owning multiple systems was the National Water Works Company of New York, which was incorporated on February 13, 1873 with a capital stock of one million dollars "to establish, construct, and maintain Water Works in or adjacent to any city, town or village in the United States of America, or elsewhere, and to supply the said city, town or village and the inhabitants thereof with water."  Several other similar companies were formed in the 1880s and developed a large number of water works.





2015 Morris A. Pierce