MOOF. 


FABIAN TRACT, No. 

~nbon's~afcr ~ri 


It costs less than £700,000 a year to supply London 
with water ; but London has to pay over {1,700 000 for the 
water so supplied. The balance pays div1dends to shareholders 
on stock, of wh1ch the market value 1s probably now £33,000,000. 
But this nominal capital value of thirty-three mtllwns sterhng 
is merely the inflation due to fond anttcipation of purchase by 
the public at an extravagant price. The actual capital 
expend1ture has been only a little over fourteen mill10ns sterling.
Twenty years ago the proprietors valued their investment on the 
Stock Exchange at not more than £140 for each £100 of outlay. 
In 1883, aft10:r the Conservative Government's prodigal offer of 
1871!-80, it stood at £:H3, and now it stand!> on an average at 
about £227 per £100. But London is not bound by these 
extravagant estimates; and the London County Council m;ty, if 
it chooses, give the companies the go-by, and imitate M,wchester 
and Liverpool in seeking for Itself an unpolluted supply from afar. 

London is at present supplied with Wdter from the works of 
eight ~ompanies of pnvate shareholders, whose expenditure, 
largely swollen by the former reckless competitiOn between rival 
compames, by legal and Parliamentary charges, and by the 
wasteful extravagance engendered by abundant wealth. It is 
probable that duplicates of the existing works, mains and other 
plant could be constructed for a much smaller sum-say, ten 
millions sterling, which could be raised on the credit of the 
County Counc1l at about S per cent. 

Even 0n the inflated outlay, a splendid dividend is paid.
'I'he companies make an annual profit of more than a million 
stirling, equal to over 7! per cent. on the whole, notwithstandinglavish pay and pension to all the superior employes, and hand· 
some fees to directors. The ordinary shareholders often get as 
much as 11 per cent., as, for instance, in the case of the New 
River Company for the last five years.• 

RATES PER CENT. OF DIVIDENDS. 

(Corrected from "Stock E xchange Year Book, 1891.") 

• The shareholders of the New River Company possess, moreover. anomalous 
electoral privileges. The owner of ever s_o. small a fractional part (providedthat it produces £2 a year) of one of the ongmal shares possesses a vote as a 
freeholder in every county constituency in which the company owns propert-;, 
or through which its pipes pass. These shares also escape probate duty, and 
pay only succession in place of legacy duty. One of the original " Adventurer's 
Shares" was sold by auction in 188J for £122,800. The original capitalcontributed on this share was probably about !100. 

These excellent dividends are earned owing to the extra-
no limit to the possible tribute thus leviable upon London, in 
return for a supply of an article of prime necessity to its 
inhabitants. The actual figures for 1887 to 1889 are given below. 
Number of Houses and Average Daily A mount of Water supplied by 
the Metropolitan Water Companies in the Years I88], I888, and 188g. 
ln 1889 the number of houses supplied had grown to 752,788, 
and the water rentals to · so that, wh1lst 
the number of houses supplied had in 15 years risen 46 per cent., 
the rental received had risen 71 per cent. The average payment 
per house rose from £1 18s. Od. to £2 4s. 5d., whilst the q'Jantityof water supplied to each house, has, on the whole, positivelydecreased. 
The result is shown in the growing profits of the companies. 
Net Water Rental of the Metropolitan Water Companies for the Six 
Years 1884 to 1889. 
{ 
These excellent dividends are earned owing to the extra-
no limit to the possible tribute thus leviable upon London, in 
return for a supply of an article of prime necessity to its 
inhabitants. The actual figures for 1887 to 1889 are given below. 
Number of Houses and Average Daily A mount of Water supplied by 
the Metropolitan Water Companies in the Years I88], I888, and 188g. 
ln 1889 the number of houses supplied had grown to 752,788, 
and the water rentals to · so that, wh1lst 
the number of houses supplied had in 15 years risen 46 per cent., 
the rental received had risen 71 per cent. The average payment 
per house rose from £1 18s. Od. to £2 4s. 5d., whilst the q'Jantityof water supplied to each house, has, on the whole, positivelydecreased. 
The result is shown in the growing profits of the companies. 
Net Water Rental of the Metropolitan Water Companies for the Six 
Years 1884 to 1889. 
{ 
ordinary legal rights possessed by the companies, under their 
private Acts of Parliament, to levy a water rate in proportion to 
the rental, without reference to the amount of water supplied.
As London Houses increase in number or size (about 2 per cent. 
per annum) and those already built rise in value (about 1 per cent. 
per annum), so the water revenue goes up. It rose 58 per cent. 
(more than half as much again) between 1872 and 1883, thoughthe number of houses only rose 32 per cent., and the quantity of 
water delivered per house was nearly always less than in 1872. 

There is 


The water supplied is, moreover, often of doubtful quality. ? 
•. 
F ive companies derive it wholly or partially from the River co 
o I 
Thames; the two largest mainly from the River Lea; and only 
one (Kent) from deep wells. As the population in these river 
valleys increases, and as the extensive use of manures on the 
land becomes more general, the sources of supply become steadily 
more polluted. Lcndon must, ere long, imitate Glasgow,
Liverpool, and Manchester in seeking a supply of water from 
some lonely lake. We want an aqueduct from the Welsh hills, 
to lay on a constant ~;upply of pure, soft water. But the 
existing "water lords" will not willingly see their polluted supplymade obsolete.~: 

The necessity for their suppression by a public authority is 
admitted; and as long ago as 1879 the Conservative Government 
decided upon this course. The price proposed to be paid(£33,118,000) was, however, so outrageous that the Government 
was obliged, by the public outcry, to abandon the scheme. After 
13 more years' extortion, the companies would now, no doubt, 
demand even heavier terms than in 1879. 

The water companies possess, however, no legal monopoly. 
In the past, indeed, active rivalry, frequently existed between 
them ; and even now two companies, in several instances, supplythe same area. It is quite open to the County Council to obtain 
Parliamentary powers to construct a competing supply; and the 
defunct Metropolitan Board of Works had fully decided to take 
this step. The London County Council should promptly seek 
power to construct a new supply, and, at the same time, to 
arrange to take over the existing service at a fair price. There 
being no legal monopoly, the shareholders can have no "vested 
interest " in the present excessive dividends. It is accordinglyquite unnecessary to offer them anything more than the actual 
value of their mains and other street plant. Even if they were 
reimbursed their whole extravagant outlay (£14,140,434), the 
interest payable by the County Council on a loan of this amount 
would not exceed £425,000, or £650,000 less than is now paid to 
the share and bondholders, irrespective of the saving likely to 
accrue from unification of man21gement. This amount is equal 
to 6d. in the pound of London's rates, and would amply suffice 
to provide any improved service required, as well as afford a 
useful surplus towards the cost of London government. The 
metropolis should no longer lag behind nearly every importa~t 
provincial town, in permitting its water supply to remam m 
private hands. 

With a municipal water supply, the present survivals of 
the evil cistern arrangement must disappear, and a " constant 
supply" be made universal. The present statistics on this point 
are as follows :


• •· Farnham, Guildford, and Woking still deliver untreated sewage into 
feeders of the River Thames. Staines contiues to pollute the main stream . 
. . . Instances of the pollution of the River Lea are not wanting." (P. 137, Local 
Government Report, 1887-8, C-5,526). 


Stntistics of the Number of Houses Sup/!lied, a11d Proportion of them ti'ith a 
"CoHstant Supply" of Water, and the Average Daily Supply. 
The existing "water-rate" ( 4 per cent. on the rateable value, 
and upwards) m1ght continue to be levied as part of the CountyCouncil rate; but there is no reason why any special chargeshould be made for water, any more than for roads, drainage, 
police, or other services of public utility. We can, at least, 
afford "Communism in water. 
Stntistics of the Number of Houses Sup/!lied, a11d Proportion of them ti'ith a 
"CoHstant Supply" of Water, and the Average Daily Supply. 
The existing "water-rate" ( 4 per cent. on the rateable value, 
and upwards) m1ght continue to be levied as part of the CountyCouncil rate; but there is no reason why any special chargeshould be made for water, any more than for roads, drainage, 
police, or other services of public utility. We can, at least, 
afford "Communism in water.