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

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

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. Another type of non-public corporation is the holding company, where one corporations owns one or more other corporations. 

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)

1892 The Law of Incorporated Companies Operating under Municipal Franchises, Volume 1, General and Alabama to Montana | Volume 2, Nebraska through Wyoming and territories | Volume 3, general index |

1899 Municipal Monopolies:  A collection of papers by American Economists and Specialists, Revised edition, edited by Edward Webster Bemis
Pages 3-54:  Water-Works, by Moses Nelson Baker

1899 Fourteenth Annual Report of the Commissioner of Labor.  Water, Gas, and Electric-light Plants under Private and Municipal Ownership | also here |

1900 Address of Hazen S. Pingree Before Marquette Club of Chicago, "Municipal Ownership of Street Railways and Other Public Utilities.": Chicago, Illinois, January 27, 1900

1902 "Municipal Contracts and the Regulation of Rates," by Herbert Pope, Harvard Law Review 16(1):1-21 (November, 1902)

1904 "The Theory and the Law of Water Works Securities," by Ambrose Tighe, The Yale Law Journal 13(4):165-181 (February, 1904)
Several examples of private water company bondholders losing out

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

1906 "The Power of Municipal Corporations to Grant Exclusive Privileges," Michigan Law Review 5(1):42-44 (November, 1906)

1906 Municipal Control of Public Utilities, by Oscar Lewis Pond
A study of the attitude of our courts towards an increase in the sphere of municipal activity.

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)

1907 Municipal and Private Operation of Public Utilities: Report to the National Civic Federation Commission on Public Ownership and Operation | Part II - Volume I | Part II - Volume II |

1907 The Dangers of Municipal Ownership, by Robert Percival Porter

1908 "An Old and Successful Water Company," Public Service 5(5):154-155 (November, 1908)  American Water Works and Guarantee

1909 A Treatise on Franchises: Especially Those of Public Service Corporations; Containing Also in an Appendix the Public Service Commissions Law of New York and the Public Utility Law of Wisconsin, by Joseph Asbury Joyce

1910 Municipal Franchises: Introductory. Pipe and wire franchises, Volume 1 | Volume 2, Transportation franchises. Taxation and control of public utilities | by Delos Franklin Wilcox
Pages 397-449:  Chapter XIII. Water Works and Water Supply Franchises

1913 A treatise on the law of public utilities operating in cities and towns, by Oscar L. Pond

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)

1917 Essays in the Earlier History of American Corporations: Eighteenth century business corporations in the United States, Book 2, by Joseph Stancliffe Davis
Pages 247-254:  Corporations for Supplying Water

1936 "The Origin and Development of the Public Utility Holding Company," by Norman S. Buchanan, Journal of Political Economy 44(1):31-53 (February, 1936)

1942 The Economics of Public Utility Regulation, by Irston R. Barnes

1948 Business Incorporations in the United States, 1800–1943, by George Heberton Evans, Jr.  See Table 10 and Appendix 4 for water works incorporations..

1950 Excess Profits Tax on Corporations, 1950. Hearings to provide revenues by imposing a corporate excess profits tax, and for other purposes, December, 1950.
Pages 563-567:  Statement of John J. Barr, Appearing on Behalf of Privately Owned Water Utilites

1954 Integration of Public Utility Holding Companies, by Robert F. Ritchie

1983 "Public Versus Private Water Delivery: A Hedonic Cost Approach," by Susan Feigenbaum and Ronald Teeples, The Review of Economics and Statistics 45(4):672-678 (November 1983)

1984 The unheralded triumph, city government in America, 1870-1900, by Jon C. Teaford
Pages 217-250:  The Triumph of Technology

1986 "Public versus Private Water Delivery: A Critical Analysis of a Hedonic Cost Approach," Robert A. McGuire and Robert Ohsfeldt, Public Finance Quarterly 14(3):339-350 (July 1986)

1986 "The Relative Economic Efficiency of Private versus Municipal Waterworks in the 1890s," by William J. Hausman, David M. Kemme and John L. Neufeld, Business and Economic History 15:13-27 (1986)

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

1995 "NAWC History: 1895-1920," by T. Ward Welch, Water, The Magazine of the National Association of Water Companies, 35(4):16-22 (Winter, 1995)

1995 "NAWC History: 1921-1946," by T. Ward Welch, Water, The Magazine of the National Association of Water Companies, 36(1):8-15 (Spring, 1995)

1995 "NAWC History: 1946-1970," by T. Ward Welch, Water, The Magazine of the National Association of Water Companies, 36(2):7-19 (Summer, 1995)

1995 "NAWC History: 1970-1995," by T. Ward Welch, Water, The Magazine of the National Association of Water Companies, 36(3):4-14 (Fall, 1995)

1996 Restructuring America’s Water Industry: Comparing Investor Owned and Government Water Systems, by Kathy Neal, Patrick J. Maloney, Jonas A. Marson and Tamer E. Francis, January, 1996

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, 1800–1990, by Charles David Jacobson

2002 The world's water, 2002-2003 : the biennial report on freshwater resources, by Peter H. Gleick

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 |

2005 "Water, Water, Everywhere: Municipal Finance and Water Supply in American Cities," by David Cutler and Grant Miller, in Corruption and Reform: Lessons from America's Economic History, by Glaeser and Goldin

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

2009 "Private sector involvement in public water distribution: assessing local water systems in Massachusetts," by Corey Denenberg Dehner,  Doctoral dissertation in Law, Policy and Society, Northastern University, July 2009.

2011 "Public Utility Ownership in 19th-century America: The 'Aberrant' Case of Water," by Scott E. Masten, Journal of Law, Economics, & Organization 27(3):604-654 (October 2011)

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

Franchises and Regulation
1872 Treatise on the law of municipal corporations, by John Forrest Dillon

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
Pages 397-449:  Chapter XIII. Water Works and Water Supply Franchises

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 |

1928 State Administrative Supervision Over Cities in the United States, by Schuyler Crawford Wallace
Pages 212-234:  Supervision of Municipally-Owned Utilities

1931 Principles of Public Utilities, by Eliot Jones and Truman Cicero Bigham

1942 State Supervision of Local Government: Its Development in Massachusetts, by Dale Pontius | also here |

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. 

1887 The Municipal Investment Company of Chicago was organized in 1887

1911 Municipal Bonds Held Void: Including Issues Enjoined, Registration Or Certification Denied, Issuance Not Compelled, Validation Refused and All Proceedings Determining Illegality, Maurice B. Dean

1923 State Supervision of Municipal Indebtedness, by Lane W. Lancaster

1925 "Modern Financing Methods of Water Companies," Fire and Water Engineering 77:16 (April 22, 1925) | also here |

1925 The Economics of Public Utilities: A Reference Book for Executives, Investors, Engineers, and Students,  by Luther Roberts Nash

1967 "The Effectiveness of Debt Limits on State and Local Government Borrowing," by William E. Mitchell, The Bulletin of the New York University, Institute of Finance,  45:1-55 (October 1967)

1997 A History of Corporate Finance, by Jonathan Barron Baskin and Paul J. Miranti, Jr.
Chapter Four:  Finance in the Age of Canals and Railroads, 1775-1900

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.

Existing Water Works Holding Companies
American Water Works Company
Suez Water Resources, Inc.
Aqua America, Inc.
California Water Service Group
Eversource Aquarion Holdings, Inc.
Connecticut Water Service, Inc.
SJW Corporation
American States Water Company
Artesian Resources Corporation
SouthWest Water Company
Middlesex Water Company
U.S. Water Services Corporation, owns several water systems in Florida.

Water Works Holding Companies No Longer In Existence
National Water Works Company
Federal Water Service Company
Community Water Service Company
General Waterworks Corporation
Consumers Water Company
Northeastern Water Company, merged into American Water Works Company in 1962.
American Water Supply Company, incorporated in Maine in 1888.
Comegys & Lewis, a partnership of Henry C. Comegys and Jared E. Lewis, built several water works from 1885 to 1889 before failing due to fraud.
Wheeler & Parks
The American Pipe Manufacturing Company
Moffett, Hodgkins & Clarke
Howland & Ellis
Turner, Clarke & Rawson

1995 Water:  The Magazine of the National Association of Water Companies 36(1):10  (Spring, 1995)
Pennsylvania Holding Companies by Farley Gannett (1927)
1. Federal Water Service Company, whose eight subsidiaries in the state were worth $36 million and served 600,000 people.
2. American Water Works & Electric Company, whose seven Pennsylvania companies were worth $20 million and served 30 communities. (Gannett said AWW&E's successes had led to the other consolidations in the state.)
3. Community Water Service Company, whose 13 subsidiaries were worth $15 million and served 20 communities. COMMUNITY WATER SERVICE COMPANY History: Incorporated in Delaware, July 24, 1925, as Community Service Co.; name changed to present title, June 10, 1926.
4. North American Water Works Corporation, a new company with 11 properties in the state worth $6 million and serving 19 communities.
5. Consumers Water Company, of Maine, which had recently bought two companies in western Pennsylvania, which served about a dozen towns.
6. Philadelphia Suburban Water Company, the $20 million Geist property that was buying up neighboring utilities west of Philadelphia

1969 The Hackensack Water Company, 1869-1969:  A Centennial History, by Adrian Coulter Leiby

1986 Reflections on Water:  A Centennial History of Philadelphia Suburban Water Company, compiled and edited by Jerry A. Sacchetti, Vice President - Public Relations

1991 A Dynasty of Water: The Story of American Water Works Company, by Gilbert Cross

Community Water System Survey
The U.S. Environmental Protection Agency (EPA) conducts the Community Water System (CWS) Survey to obtain data to support the development and evaluation of drinking water regulations. The vast majority of systems are small and privately owned, but most people are customers of large publicly-owned systems. This report identifies trends and key findings from the survey.
Information included in the survey reports includes:
    Water system size
    Water source
    System ownership category
    Treatment practices
    Storage and distribution
    Financial characteristics

Commercial and Financial Chronicle 1865-1969

NAWC documents

© 2015 Morris A. Pierce