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THE REGULATION OF THE LONDON WATER SUPPLY 1851 - John Stuart Mill, The Collected Works of John Stuart Mill, Volume V - Essays on Economics and Society Part II 
The Collected Works of John Stuart Mill, Volume V - Essays on Economics and Society Part II, ed. John M. Robson, introduction by Lord Robbins (Toronto: University of Toronto Press, London: Routledge and Kegan Paul, 1967).
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THE REGULATION OF THE LONDON WATER SUPPLY
Public Agency v. Trading Companies: The Economical and Administrative Principles of Water-Supply for the Metropolis. Correspondence between John Stuart Mill, Esq., Author of “Principles of Political Economy,” and the Metropolitan Sanitary Association on the Proper Agency for Regulating the Water-Supply for the Metropolis, as a Question of Economical and Administrative Principle. London: Metropolitan Sanitary Association, [1851,] 19-23. Not republished. Headed “Letter by John Stuart Mill, Esq.,” dated 15 February, 1851, and addressed “To the Honorary Secretaries of the Metropolitan Sanitary Association” (M. W. Lusignan and Adolphus Barnett). Identified in JSM’s bibliography as “A letter to the Metropolitan Sanitary Association, in answer to an application for my opinion on the Water supply of the Metropolis—dated 15 February 1851 and printed by the Association in a pamphlet entitled ‘Memorials on Sanitary Reform’ ” (MacMinn, 76). No corrections or variants in Somerville College copy. The pamphlet consists of a “Memorial” addressed to Lord John Russell, the Prime Minister, and Sir George Grey, the Home Secretary, by the Honorary Secretaries of the Association; a letter covering the Memorial; the letter asking for JSM’s opinion; his letter, with a postscript by the Secretaries; and two Appendixes.
In a letter to Edwin Chadwick, dated only “Thursday”, JSM says in part: “I shall not give the Assn a long answer. If they want me as an authority against the nonsense of the Economist &c. they will get what they want.” (Letter in University College, London.)
The Regulation of the London Water Supply
gentlemen,—The subject on which the Committee of the Metropolitan Sanitary Association has done me the honour of asking my opinion is a question of general policy rather than of political economy.
The water supply of London may be provided in three modes:—By trading companies, as at present; by a functionary, or a board of functionaries, appointed by Government; or by some local or municipal authority. Each of these modes of supply has its advocates.
The defenders, on principle, of the existing system, rely mainly on general arguments against the interference of public authority in operations which can be adequately performed by the free agency of individuals. They contend, that the supply of water is no more a fit subject for Government interference, than the supply of food, and should be left, as that is, to the ordinary operations of industry.
The maxim, that the supply of the physical wants of the community should be left to private agency is, like other general maxims, liable to mislead, if applied without consideration of the reasons on which it is grounded. The policy of depending on individuals for the supply of the markets, assumes the existence of competition. If the supply be in the hands of an individual secured against competition, he will best promote his interest and his ease by making the article dear and bad; and there will be no escape from these influences but by laying on him a legal obligation, that is, by making him a public functionary.
Now, in the case of water-supply, there is virtually no competition. Even the possibility of it is limited to a very small number of individuals or companies, whose interest prompts them, except during occasional short periods, not to compete but to combine. In such a case, the system of private supply loses all that, in other cases, forms its recommendation. The article being one of indispensable necessity, the arrangement between the companies and the consumer is as much compulsory as if the rate were imposed by Government; and the only security for the efficient performance by the companies of what they undertake, is public opinion, a check which would operate much more effectually on a public board.
To establish the alleged parity between the supply of water and that of food, it would be necessary to suppose, that food could only be brought to London at so great an expense, and by arrangements on so large a scale, as to limit the supply to seven or eight associations. Were these the necessary conditions of the supply of food, the public would certainly require that either the article should be supplied, or the terms of its supply fixed and controlled, by a public authority. The question is not between free trade and a Government monopoly. The case is one of those in which a practical monopoly is unavoidable; and the possession of the monopoly by individuals constitutes not freedom but slavery; it delivers over the public to the mercy of those individuals.
The cases to which the water-supply of towns bears most analogy, are such as the making of roads and bridges, the paving, lighting, and cleansing of streets. The nearest analogy of all is the drainage of towns, with which the supply of water has a natural connexion. Of all these operations it may reasonably be affirmed to be the duty of Government, not necessarily to perform them itself, but to ensure their being adequately performed. I do not say that it ought not to be lawful to build a house without proper drainage and a proper water-supply; but assuredly every one who owns or builds houses in a town should have the means of effectual drainage and water-supply put in his power, at the smallest practicable expense.
The principle, therefore, of Government regulations, I conceive to be indisputable. But it remains to be considered whether the Government may best discharge this function by itself undertaking the operations for the supply of water, or by controlling the operations of others.
It is quite possible, especially when private companies have long since established themselves, and have taken possession of the supply, that the most eligible mode of proceeding might be to leave the operations in the hands of the companies; prescribing such conditions as to quantity and quality of water, convenience of supply, and rate of charge, as to ensure the best provision at the cheapest rate which local facilities and the state of science and engineering may admit of.
If the saving to be obtained by a consolidation of establishments and of works be a sufficient reason against keeping up a plurality of companies, it might be expedient to entrust the whole to a single company, giving the preference to that which would undertake to conform to the prescribed conditions at the lowest rates of charge.
It does not, however, appear to me that this last plan would have any real advantage over that (for instance) of a board elected by the ratepayers. Individuals acting for their own pecuniary interests are likely to be in general more careful and economical than a public board; but the Directors of a Joint Stock Company are not acting for their own pecuniary interests, but for those of their constituents. The management of a company is representative management, as much as that of an elective public board, and experience shows that it is quite as liable to be corrupt or negligent.
Whether the operations are actually conducted or merely controlled in behalf of the public, an officer or officers would be required for the purpose. It is, then, to be next considered, whether these should be state or municipal officers; whether they should be appointed by, and responsible to, the general government, or the local government of the town.
In the case of London, unfortunately, this question is not at present a practical one. There is no local government of London. There is a very badly constituted and badly administered local government of one section of London. Beyond this there are only parochial authorities.
The municipal administration of a town, whether great or small, ought to be undivided. Most of the matters of business which belong to local administration concern the whole town, not the separate parts of it, and must be all taken in at one view, to enable any part to be well managed. Such are the drainage, the water-supply, the police, the management of the markets, and of the port. Besides, the administration of an entire town, being a larger object, attracts more attention, excites more discussion, and is carried on under greater responsibility to public opinion; while, for the same reason, it will naturally be sought by a far superior class of persons. Were there a General Council, or Board of Administration for all London, invested with power over every branch of its local affairs, a place in that Council or Board would, like a place in the Municipal Commission of Paris, be sought and diligently filled by persons of high character and standing, as men not only of business capacity, but of general instruction and cultivation. The contrast between such persons and those who usually compose parish vestries, or the Common Council and Court of Aldermen, is too obvious to require comment.
Were such a body in existence, I should have no hesitation in expressing an opinion, that to it and not to Parliament or the general government should be given the charge of the operations for the water-supply of the capital. The jealousy which prevails in this country of any extension of the coercive and compulsory powers of the general government I conceive to be, though not always wisely directed, and often acting the most strongly in the wrong places, yet, on the whole, a most salutary sentiment, and one to which this country owes the chief points of superiority which its government possesses over those of the Continent. Nor does it appear to me that a government agency is by any means peculiarly suited for conducting business of this character. A Government board is an excellent organ for giving the first start to an improved system. The time when an improvement is introduced is always a time when much attention is directed to the subject; and the interest felt in it by the public and by the Government insures, in the first choice of officers, a certain degree of attention to superior qualifications, and on the part of the officers themselves a considerable amount of zeal and activity. In ordinary times such boards are apt to become indifferent and inactive; and little being required of them, those who appoint them soon think that anybody is good enough for the office, and it becomes a mere job for personal connexions or Parliamentary adherents. No doubt, the same tendency exists, and perhaps to as great an extent, in appointments by municipal authorities; but the mischief of local jobbing does not extend much beyond the matter immediately concerned; while jobbing by a minister or a political party helps to give undue influence in the legislature. Besides, a body popularly elected for local business only is likely to be held by the opinion of its constituents (if sufficiently numerous and intelligent) to a stricter responsibility for the due performance of its one business, than will usually be felt by the general government, for what can after all be only one of its minor occupations.
While, however, it appears to me preferable on the whole that the Government should not habitually conduct the operations for local purposes, there is no similar reason against its appointing persons to watch and advise those who do. I consider no municipal government to be complete without an accredited representative on the part of the general government. I conceive it to be one of the duties of the general government to hold the local government to the performance of its duties. There are two modes in which the general government might exercise this superintendance. It might have an officer attached to each municipal corporation or county board, who, like the préfect in France, but without his compulsory powers, might give advice and suggestions to the local body in all things pertaining to its functions; and if it failed of the due performance of them, might report to Parliament, that the necessary means might be taken to compel performance. Or, instead of a functionary attached to each local corporation, and taking cognizance of all subjects, there might be a board for each distinct subject, corresponding on that subject with all the corporations. There might be a Drainage Board, a Waterworks Board, and so forth; or, rather, for the sake of undivided responsibility, a General Commissioner of Waterworks or of Drainage, whose business should be to make himself master of his particular subject; to communicate his best ideas and information on that subject to the various local elective bodies; to give his opinion on all their plans; to suggest plans to them when they proposed none of their own; and to report annually to Parliament the state of that particular branch of local administration throughout the country. This functionary should, I think, have no power of over-ruling the decisions of the local bodies, but he might recommend to Parliament to do so, if he saw need.
This would, I conceive, be in itself the best mode of providing for questions of local administration, similar to that of water-supply; and when a local body, such as I have described, shall exist in London, I am of opinion that the water arrangements should, under some such securities as I have suggested, be delivered up to its charge. For the present it seems to me that the authority to which the work may most fittingly be entrusted is a Commissioner, appointed by the Government, and responsible to Parliament like the Commissioners of Poor Laws.[*] Whether this officer should reform the water system of London by the formation of new arrangements, or by employing, under a rigid system of controul, the existing water companies is a question, not of principle, but of practical expediency, which can only be decided on by those who are accurately acquainted with the matters of fact on which it depends.
[[*] ]See 4 & 5 William IV, c.76.