Communication to the 
 Common Council of Milwaukee 
 
 from the 
 
 City Club of Milwaukee 
 
 Committee on Street Lighting 
 
 Subject: 
 
 The Pending Question of Street Lighting 
 in Milwaukee. 
 
The resolutions referred to in this communication are given below, as copied from the Journal 
 of Proceedings, Common Council, date of November 24, 1913. 
 
 FILE NUMBER 5839. 
 
 Resolution to direct the Commissioner of Public Works to advertise for 
 bids for furnishing electric power for lighting streets of the City 
 of Milwaukee. 
 
 Resolved, By the Common Council of the City of Milwaukee, that 
 the Commissioner of Public Works be and he is hereby authorized to 
 advertise, pursuant to law, for bids for furnishing to the City of 
 Milwaukee for three, five and ten years respectively electric power for 
 a minimum of twenty-three hundred electric arm lamps of the luminous 
 arc type, which shall be at least equal in illuminating power to the 
 electric arc lamps already installed, and covering the present arc light¬ 
 ing system of the city; and also for a minimum number of two hundred 
 electric incandescent lamps of the Tungsten filament (100 Watt) type. 
 Referred to the Committee on Finance. 
 
 FILE NUMBER 5830. 
 
 Resolution to make a survey to determine the number, etc., of lamps to 
 light the streets. 
 
 Resolved, That the Commissioner of Public Works be and he is 
 hereby authorized and directed to enter into an agreement with a firm 
 of electric lighting engineers who shall make a survey to determine the 
 number, character and location of lamps, gas and electric, needed to 
 light the streets and public buildings of the City of Milwaukee; and be 
 it further 
 
 Resolved, That such agreement shall be approved by the Common 
 Council of the City of Milwaukee before the contract shall be let; and 
 be it further 
 
 Resolved, That for that purpose there is hereby appropriated a sum 
 not to exceed $5,000.00. 
 
 Referred to the Committee on Finance. 
 
N ’14 Z.T. 
 
 3 52,5 , ‘ 
 
 Communication on Street Lighting in Milwaukee. 
 
 Milwaukee, Wis., January 3d, 1914. 
 
 To the Honorable 
 
 The President and Members of the Common Council of Milwaukee, 
 
 Gentlemen :— 
 
 The City Club of Milwaukee, through its Committee on Street Lighting, respect¬ 
 fully begs to lay before your honorable body certain considerations and suggestions pertaining to 
 the existing street lighting situation in Milwaukee. These considerations, as set forth below in 
 this communication, are derived from a careful study of the subject extending over a period of sev¬ 
 eral months. During this time the members of the committee have not only thoroughly reviewed 
 the engineering and business principles involved, but have also, as individuals, discussed the 
 existing street lighting situation with a considerable number of leading business men and public- 
 spirited citizens. 
 
 Our committee finds considerable difference of opinion to exist among citizens as to the desira¬ 
 bility of the city installing and operating a municipal lighting plant. Public opinion seems to be 
 fairly evenly divided on this subject, and the supporters of either side to the question generally 
 hold very decided opinions. Our committee has this phase of the subject still under considera¬ 
 tion and will report thereon at a future date. 
 
 In spite, however, of decided differences of opinion on the subject of municipal lighting plant, 
 our committee finds a general agreement of opinion on other phases of the street lighting problem. 
 All citizens are agreed that the present conditions of inadequate street lighting are well-nigh in¬ 
 tolerable, that these conditions are costing Milwaukee tens of thousands of dollars in commercial 
 and economic losses annually, that steps ought to be taken at once to provide for the installation 
 of an adequate street lighting system. All citizens are agreed that such system should be in¬ 
 stalled as will bring, for the money annually expended for street lighting, the best possible re¬ 
 sults in good lighting. This is recognized to be equally desirable, whether the current be furnished 
 by a municipal plant or by a private concern. 
 
 Our committee believes that the above points of agreement are sufficient to afford a basis for 
 such immediate action as the best interests of Milwaukee require. In short, our committee believes 
 it entirely practicable to arrange at once for the installation of an adequate street lighting system 
 without prejudicing, either favorably or unfavorably, any action which the city may wish in the 
 future to take in the matter of municipal lighting plant. 
 
 In order to make our suggestions on this subject as definite and constructive as possible, our 
 committee presents these suggestions, and the reasons therefor, in the form of answers to three 
 questions. 
 
 Question 1. 
 
 Should a contract for street lighting be signed at this time with a private company? 
 
 If all differences of opinion could be reconciled at once, and general agreement could be ob¬ 
 tained to start forthwith on the erection of a municipal lighting plant, it would probably be at least 
 two years before such plant would be fully equipped and ready to furnish current for street 
 lighting. 
 
 On the other hand, no such unanimity of opinion exists, or is likely to exist in the near future 
 Any steps toward actually commencing work on the construction of a municipal plant are certain 
 within the next year or two at least, to be vigorously combatted by those opposed to such a plant’ 
 In short, even if an unquestionable and clear majority can be shown to favor the municipal plant 
 project, the minority opposition will, within the next year or two, undoubtedly have sufficient 
 strength to materially hamper the progress of the undertaking. 
 
 In view of the above situation it would be unreasonable to assume that Milwaukee will be in 
 a position, at an earlier time than three years from date, to obtain from a municipal plant the cur 
 rent required for street lighting. The probabilities are that it will be at least four or five years 
 from date before current could be obtained from a municipal plant. ^ 
 
It is unthinkable that the present grossly inadequate street lighting be endured for from three 
 to five years longer. In all sections of the city there is at present an insistent demand for better 
 street lighting. No new lamps, even of the present inefficient type, can be obtained or expected 
 under the present no-contract condition. Assuming that Milwaukee is to have a municipal plant, 
 it is certain that the community will not and should not await the completion of such a plant before 
 providing for new and better street lamps. 
 
 In view of the above considerations, there can he but one answer to the question here under 
 discussion. The city should enter into a contract with a private company for lighting the streets 
 of Milwaukee, because only under such a contract will it be possible to obtain at once the urgently 
 needed improvement in street lighting. Such contract should he for a sufficiently short period to 
 permit current to be furnished by a municipal plant, if, later, current shall be made available by 
 the completion of such plant. On the other hand, the longer the term for which the contract is 
 made, the more favorable are the rates which the city can obtain. 
 
 Our committee are unanimously of the opinion that a five-year contract for street lighting 
 should be entered into with a private company. Such contract should he terminable by the 
 city, upon reasonable notice in advance, at the end of the third or at the end of the fourth con¬ 
 tract year. If so terminated, the lighting company would, unless some provision to the contrary 
 were made, suffer a loss by having figured depreciation on a five-year basis, but only receiving 
 the payment of three years or four years to reimburse for depreciation. The contract should 
 therefore fix a definite sum to be paid by the city as liquidated damages, to cover unpaid-for 
 depreciation only, in case the contract should he terminated, at the option of the city, at the end 
 of three or of four years. 
 
 Question 2. 
 
 If a contract is to be signed, what is the proper basis for such a contract? 
 
 The usual form of street lighting contract is on the lamp-year basis. The city pays a fixed 
 sum per year for each lamp installed. This form of contract is open to a very serious objec¬ 
 tion, the basis of which is discussed in the following paragraphs. 
 
 At least 60% of the cost to a private company in furnishing street lighting is involved in 
 the interest and depreciation charges on the investment. Thus, when a city pays $60.00 per 
 lamp per year, only about $24.00 of this sum goes to repay the lighting company for the cur¬ 
 rent consumed and the maintenance attention required, while about $36.00 of this sum goes to 
 repay interest and depreciation on the investment. The figures here given apply to a ten-year 
 contract. For shorter term contracts, the interest and depreciation factor represents a still lar¬ 
 ger proportion of the total. 
 
 Let us now see how the lamp-year basis of contract works out under actual conditions. 
 
 The signing of such a contract usually finds a city with a more or less inadequate street 
 lighting system. Generally the new contract provides for the adoption of an improved type 
 of street lamp. Upon the signing of such a contract, the lighting company proceeds to install 
 a very large number of the new type of lamp. This is due to the facts that, first, it is to the 
 interest of the lighting company to furnish just as much street lighting as the city is willing 
 to authorize; and second, that the new lamps have to be installed at once if the company is to 
 receive interest and depreciation on its investment throughout the entire period of the con¬ 
 tract. 
 
 At the end of the first year or two of such a contract a very considerable investment in 
 new lamps has been made. By this time it generally happens that improvements in street lamps 
 have been made, and that the lamp which was, perhaps, the most satisfactory lamp at the time 
 the contract was signed, is no longer the most satisfactory. Nevertheless, it is not to the inter¬ 
 est of the lighting company to make a change, both because such change would open anew for 
 discussion the question of rates, and because the adoption of a new and more satisfactory type 
 of lamp might tend to create a demand for investment in new distributing circuits and new 
 lamps before the investment in old circuits and old lamps had been entirely covered by the 
 interest and depreciation charges. The lighting company, therefore, and most naturally, pre¬ 
 fers to continue the installation of the type of lamp provided for in the contract, while the city 
 is in no position to know of the availability of the improved type of lamp. 
 
 During the last several years of any lamp-year contract, the lighting company naturally in¬ 
 stalls just as few new lamps as possible. Such new lamps involve an investment which will not 
 be entirely repaid by the investment charges accruing in the year or two which the contract 
 has yet to run. 
 
The lamp-year basis of contract involves, therefore, an unwisely large investment in one 
 type of lamp during the early period of the contract, and an unwisely small investment in any 
 type of lamp during the latter years of the contract. Moreover, the lamp-year basis of contract 
 involves such practical difficulties in making any change in the type of lamp that such changes 
 are very unlikely to be made. The end, therefore, of such a lamp-year contract usually finds 
 the city with an inadequate and partially antiquated system of street lighting. 
 
 Moreover, the lighting company most naturally and quite properly figures to be repaid dur¬ 
 ing the term of the contract for its investment in street lamps. At the end of the contract per¬ 
 iod, therefor, the city is in the position of having paid for the investment represented in the 
 lamps, but not having any legal title to the lamps. 
 
 In short, the lamp-year basis of contract inevitably results in the city’s receiving more or 
 less inadequate service during the latter years of the contract, and in the city’s being left at the 
 end of each contract period with an inadequate and partially antiquated system, the invest¬ 
 ment to provide for which the city has entirely repaid, though not thereby gaining any legal 
 title to the street lighting equipment. 
 
 No such difficulties as outlined above exist in the case of private lighting contracts. Take, 
 for instance, the case of a department store purchasing electric service. The store owns its own 
 lamps, reflectors, fixtures, electric motors, etc. As improved lamps, reflectors, or the like are 
 perfected and placed on the market, the store brings its equipment up to date. It purchases 
 electrical energy on the kilowatt-hour basis, as measured by an electric meter, and pays only 
 for the current actually donsumed. At the end of any contract period it actually owns the 
 lamps for which it has paid, and is at liberty to either renew the contract with the old light¬ 
 ing company or enter into a contract with a new lighting company on thoroughly equitable 
 terms. 
 
 Let us consider how the private basis of contract, the meter or kilowatt-hour basis, would 
 work out in the case of the city’s street lighting. 
 
 Such a basis would naturally involve the city’s owning the street lamps, and the poles or 
 standards supporting same. If the street lamps were thus owned by the city, there would be 
 no incentive to install a large number during the early period of a contract and an insufficient 
 number during the latter period of a contract. Indeed, the question of financing sucli a pur¬ 
 chase would tend to discourage the city from making an excessively large purchase of lamps at 
 one time. This would be highly advisable, in view of the constant improvements which are be¬ 
 ing made in street lamps. As new and improved lamps were introduced on the market, no ele¬ 
 ment of self-interest, such as exists in the case of the lamp-year basis of contract, would stand 
 in the way of the city’s promptly availing itself of such improvements. Finally, the city would 
 pay the actual investment cost of the lamps once only, and would then own them, instead of 
 paying such investment cost, in whole or in part, twice over, as happens on the lamp-year basis 
 of contract when the same lamps are employed during two different contract periods. 
 
 The application of the above basis of contract to our Milwaukee street lighting situation 
 could be made somewhat as follows. Street lamps at present installed would be rented from 
 the Milwaukee Electric Railway and Light Co. on a per month basis. The amount of such 
 monthly rental should be low, for it should be remembered that the city has already repaid to 
 the Electric Co., through lamp-year payments under the old contract, the investment cost in¬ 
 volved in these lamps. Nevertheless, the city should undoubtedly pay the Electric Co. a small 
 rental, as otherwise the city would be compelled to provide for new lamps at a considerably 
 larger expense. 
 
 The street lighting system proposed by the Milwaukee Electric Railway & Light Co., the 
 system referred to in the recent report by the Railway Commission on this subject, contemplates 
 the installation of 3,809 new street lamps. The investment cost involved in providing for these 
 lamps must obviously be repaid to the Electric Co. during ten years, the term of the proposed 
 contract. A like sum of money devoted year by year directly to the purchase of new lamps 
 would enable the city to acquire new lamps at the rate of 380 lamps per year. At the end of 
 any year or succession of years, the city would find itself no more out of pocket than would 
 have been the case had street lighting been purchased on a lamp-year basis. On the other hand, 
 the city would have something to show for the money expended, and would actually own the 
 lamps. 
 
It may be objected that under the lamp-year basis the city would at once find itself served 
 by a new and up-to-date system, whereas under the kilowatt-hour basis of contract the city 
 could only gradually acquire such a system.. This objection reveals a blessing rather than an 
 evil. Improvements are being made too rapidly in the development of street lamps to make it 
 possible to wisely make so large an investment as would be represented by an immediate re¬ 
 habilitation of the entire system. By the city’s adopting the plan of annually applying direct¬ 
 ly to the purchase of lamps the sum of money which would otherwise be paid to a private light¬ 
 ing company for interest and depreciation on their investment, the city at the end of a five- 
 year or ten-year period would find itself the actual owner of a street lighting equipment in 
 which only a small portion of the lamps would be of antiquated type. By the plan of a pri¬ 
 vate company making the larger part of the investment at once, the city then paying interest 
 and depreciation on the investment, the end of a five or ten year period would find the major 
 portion of the street lighting equipment of an antiquated type, but even to such antiquated type 
 of lamp the city would have no legal title. 
 
 Our committee believes that there can be only one really valid objection to the kilowatt- 
 hour basis of contract. This objection arises from the fact that, if the city is to own the lamps 
 and supporting poles, the city must likewise purchase, install and maintain such lamps and 
 poles. It must, of course, be recognized that the city is not at present organized to properly 
 and economically assume the responsibility for such purchase, installation and maintenance. 
 
 The above objection is doubtless a valid one,but it is not difficult to dispose of it on a thor¬ 
 oughly practical basis. The city could, of course, give the Commissioner of Public Works the 
 necessary additional support to organize his department to efficiently take care of this work. A 
 simpler and probably better plan, however, would be to have the purchase, installation and 
 maintenance of street lamps taken care of during the term of the proposed contract by the 
 lighting company, just as is done at the present time, the city paying actual cost of labor and 
 material, plus a percentage to cover the overhead expenses to which the lighting company would 
 be put in performing this service. Under such arrangement, it would be very simple to protect 
 the city against any possible overcharge for labor or material. The final power to specify type 
 of material should, of course, rest with the city. 
 
 Under the above contract basis, the city would pay for its street lighting month by month 
 on a kilowatt-hour basis, just as does the private consumer, and in addition would pay for 
 the installation of new lamps and the maintenance of old lamps, just as the private consumer 
 pays the electrical contractor for new material installed or old material repaired. Such a con¬ 
 tract basis would insure the city of receiving a dollar’s worth of service for every dollar ex¬ 
 pended, and would remove the evil, unavoidable under the lamp-year basis of contract, of the 
 city being involved in an unwise investment in street lamps, for which investment it must of 
 course pay. 
 
 It should be noted that, at the end of the contract period on the kilowatt-hour basis, the 
 city is in a position to freely decide as between renewing the contract with the same company, 
 obtaining current from a municipal plant, or signing a contract with another lighting company 
 Under the lamp-year basis of contract, the city has repaid the cost of the lamps but does not 
 own them; and to furnish the current from a municipal plant or to sign a new contract with a 
 different private company would involve investment in a complete equipment of new lamps, 
 the city, of course, in any case bearing the cost of such investment. It seems to our committee 
 incontestible that any contract should be of such a character as not, at the expiration of the 
 contract, to place a large premium on renewing it on similar terms. 
 
 For the above reasons, our committee is very strongly of the opinion that any contract 
 made with a private lighting company should be on the kilowatt-hour basis described above, 
 rather than on the lamp-year basis. 
 
 Question 3. 
 
 In what way should the city determine the type of street lighting system to be employed? 
 
 It has been the general practice of the past, not only in Milwaukee but elsewhere, when a 
 new contract for street lighting was being arranged for, to invite the lighting company or 
 companies to submit bids. This is as indefinite as it would be to invite a building contractor 
 to submit bids on “building a house.” Such contractor must know the size and type of house 
 and the quality of material to be used before he can submit an intelligent and fair bid. Just 
 so the lighting company must know the approximate number and type of street lights to be 
 furnished, the type of lamp support or suspension, and the amount of underground and over¬ 
 head circuits required, before such lighting company can submit an intelligent and fair bid. 
 
When, therefore, a lighting company is invited to submit bids, it necessarily proceeds to draw up 
 some definite plan for lighting the streets of the city, and then submits its bids on the basis of 
 this plan. 
 
 No prudent business man would for a moment think of erecting a costly structure on plans 
 submitted by the building contractor. He employs an architect to draw up the plans. The 
 building contractor may know what kind of material will give best service at the lowest cost; 
 he may know what plan of house can be put up most cheaply; but he is not com¬ 
 petent to determine what type of building will give the owner the most satisfactory service. More¬ 
 over, the contractor is an interested party to the building contract; and even if he did have all 
 requisite knowledge to properly plan the building, he would have a powerful incentive of strong 
 self-interest to draw up the plans with reference to the type of building which would permit him 
 to make the largest margin of profit, rather than with reference to what would give the owner the 
 best possible service. 
 
 The analogy suggested above can be applie d to the street lighting situation with perfect fair¬ 
 ness. In the next five years Milwaukee will be obliged to spend a total of about one and one- 
 quarter million dollars for its street lighting. To spend this large sum in accordance with plans 
 drawn up by a lighting company would be the height of business folly. Even if the lighting com¬ 
 pany had competent illumination experts, it is too directly interested as a party to the street 
 lighting contract to make it wise or proper for the city to permit it to propose, and in practical 
 effect to determine, the type of street lighting system to be employed. 
 
 The losses due to unscientific street lighting, to the failure of the city to employ competent 
 experts to lay out the system, are greater than most citizens realize. Data before our committee 
 shows very conclusively that the effectiveness of our present street lighting system could be at least 
 doubled, without increase in annual expenditure, by installing a properly designed street 
 lighting system in place of our present unscientific one. This means that the city is wasting many 
 thousands of dollars annually. Surely this is a source of waste which should be stopped without 
 delay. 
 
 A subject which has received too little attention in the past is the possible extended use of 
 gas in street lighting. It is entirely possible to design a type of gas lamp which will light the 
 streets just as effectively and just as attractively as the best electric lamp. The choice between 
 gas and electric street lighting, assuming each installed on the best possible basis, is wholly a ques¬ 
 tion as to which type of lighting can be furnished the more cheaply. In the business districts, 
 where large light units are required, it is probable that electric lamps can be used to advantage. 
 In the residence districts, on the other hand, where best results require the use of small light 
 units, it is probable that gas street lighting, equally as satisfactory as electric street lighting, can 
 be furnished at a lesser cost. 
 
 In the interest of economy in street lighting, this subject should be thoroughly investigated. 
 Pending the results of such investigation, any contract entered into by the city for street lighting 
 by electricity should be of such a character as to permit a considerable extension in gas street 
 lighting, if this shall be found to be desirable. 
 
 In view of the above considerations, our committee considers it self-evident that a competent 
 Illuminating Engineer, who is an expert on the subject of street lighting, should be retained by the 
 city at an early date. Only by the employment of such a competent expert can the city wisely 
 and intelligently determine what type of street lighting system will give Milwaukee the largest 
 returns for the annual expenditure made. 
 
 The cost for the services of such an expert would be but a small fraction of the amount which 
 he can save to the city in a single year. Such expert services would cost the city only about 
 one-half of one per cent of the total street lighting expenditure involved. The business man finds 
 it wise policy to employ engineering specialists fo r problems of a like character, though such ser¬ 
 vices regularly cost him from five to ten per cent of the expenditure. Because of the magnitude 
 of the street lighting expenditure, the city can o btain competent engineering services at an insig¬ 
 nificant percentage of the total cost involved. 
 
RECOMMENDATIONS, 
 
 The City Club, through its Committee on Street Lighting, respectfully recommends to your 
 honorable body: 
 
 1. That the city at an early date enter into contract with a private company or companies 
 for lighting the streets of Milwaukee; and that the contract term be five years, with such proviso 
 for termination after three years or four years as discussed above. 
 
 2. That the contract be drawn on the basis of the city buying electrical energy on a kilo¬ 
 watt-hour basis, the city owning its own lamps and the poles supporting same. 
 
 3. That the city at an early date employ a competent engineer to make a thorough study 
 of the problem and to recommend the type or types of street lamps to be used and the proposed 
 mounting height and location of such lamps to produce the best results. 
 
 4. That the relative suitability and cost of gas and electricity for street lighting be thor¬ 
 oughly investigated as a part of the engineering study referred to above. 
 
 The City Club, through its Committee on Street Lighting, would further respectfully recom¬ 
 mend : 
 
 5. That Resolution File No. 5839, now pending before your honorable body, be rejected as 
 inconsistent with the best interests of the city, f or the reasons set forth in this communication. 
 
 6. That Resolution File No. 5830, now pending before your honorable body, be approved. 
 
 Our committee considers this resolution to embody the essential features of Recommendations 3 
 and 4, as made above. 
 
 Respectfully submitted, 
 
 E. C. WALL, 
 
 Chairman Committee on Street Lighting, 
 
 Sanitation and Paving. 
 
 ( HAROLD IT. SEAMAN, 
 
 \ Chairman Sub-Committee on Street Lighting. 
 
 Sub-Committee \ FRED S. HUNT, 
 
 ) TIIEO. OTJEN, 
 
 V ARTHUR J. SWEET, 
 
 EDWARD H. BAIR, 
 
 M. H. BRAND, 
 
 R. R. FREEMAN, 
 
 NATHAN PERELES, JR., 
 
 LOUIS F. REINHARD, 
 
 V. G. ROBERTS,