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I’ve been working on a project to understand how early municipal socialists approached public finance. I read Sherquist’s recent book on international municipal socialism (on Mike Glass’s recommendation) and assembled a bunch of notes on places that aren’t Milwaukee, Wisconsin, since most of the writing on municipal socialists focuses on them. My notes didn’t work in the piece I’d put them together for, so I’m sending along my notes here—maybe at some point they can become their own essay somewhere.

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Municipal socialism didn’t just happen in Milwaukee. It was a global phenomenon and looking at how other socialists took up and took on capital locally (or were taken up and taken on by it) has important lessons for us. This is what I’ll attempt: an internationalist look at municipal socialist finance. Stromquist’s recent magnum opus on this subject will be a touchstone, but historical sources abound.

There were municipal socialists in Milwaukee of course, but also throughout the US and the rest of the world. There were socialists in Schenectady, NY and Bridgeport, CT; Hamilton and Cleveland, Ohio; socialists in London and Liverpool, UK; Offenbach and Brandenburg, Germany; Vienna, Austria; Melbourne and Richmond and New South Wales, Australia; Malmo, Sweden; Wellington, New Zealand. Municipal socialists encountered and danced with the dialectic of public finance in several instructive ways. 

The Paris Commune’s declaration to the French people included such concerns, though we rarely do today: “The rights inherent in the Commune are: The vote of the communal budget, receipts and expenses; fixing and distributing taxation; directing local services…the administration of the assets belonging to the Commune.”

Along these lines, we can examine several sites of fiscal practice, which, when taken up by municipal socialists, exerted core effectivities: (i) taxation—income, wealth, sales, sins; (ii) bonding, borrowing and repayment; (iv) committee work, specifically budgeting deliberations and protocols. Want to work socializing relations of production? You might have to work on these. Municipal socialists did. 

Bonding

There are several common water metaphors in municipal bonding lingo. Localities float bonds, for instance, and contribute to a sinking fund: putting tax revenues into an account that will be paid out to the bondholders and big banks. In Hamilton, Ohio, this floating-sinking dialectic worked against municipal socialists in the wake of a historic, literal spring flood. 

Socialists had won a majority on the city council of Hamilton, which needed significant infrastructural work after the waters receded. To do this work, they needed liquidity (there’s what water trope again), which meant bonded debt. Yet municipalities in Ohio had to get approval from state bodies to issue debt. Hamilton socialists used their municipal majority and passed local bond resolutions to take out loans to fix up their town, but the Industrial Commission of Ohio rejected them. State borrowing authorities also rejected requests for revenue. The county budget committee did the same. As tax revenues declined in the wake of the disaster and stymied in their ability to bond, they had fewer and fewer resources with which to serve the people. The city went under.

On the other side of the globe in Wellington, New Zealand, socialists faced another catastrophe that would require new debt to address: an outbreak of bubonic plague. They wanted to protect the city, but this required big capital-intensive projects that could only be financed with new debt. They didn’t have a municipal majority, and property-owning officials controlled the city government. The latter wouldn’t permit any new bonds, maintaining a veto over debt referenda, and maintaining control over whom could vote on such referenda, limiting such voting rights to householders and ratepayers: in other words, the bourgeoisie. Like the refusal to fix flooded Hamilton, Wellington’s propertied class blocked attempts to prevent the plague by blocking new bonds. “Only the vote of a majority of all registered property owners could encumber city debt, and Wellington ratepayers repeatedly refused to do so.”

Debt similarly gave socialists problems in Malmo, Sweden. In that city, Sweden social democrats’ coalition broke on the rocks of a ⅔  majority requirement to vote on any spending that would incur debt, c. 1921. They were forced to compromise with conservatives, refusing new spending due to that inability to use their simple majority to approve the debt-incurring budget items, preventing needed revenues for city infrastructure to preserve their fragile position in the municipality. It stymied their entire agenda. They wanted to create a jobs program in the wake of World War 1, for example, but new spending required debt and debt required a supermajority vote on the city council, which they didn’t have. 

Yet there’s always freedom to wrest from necessity in public finance, even the constraining world of bonding. There were ways socialists played tricks on the bond market regime to win victories that the regime wouldn't necessarily have endorsed. The same law that prevented new debt in Wellington created an opportunity for women’s suffrage in New York and Florida. New York authorized votes on bond issues by “property owners” in 1906 and in Florida voting was authorized “for offices and on issues determined by city or town” in 1915. Not until 1920 would full suffrage for women be granted,” Sherquist writes—and yet women could vote in bond elections before anything else because of creative interpretation of these laws. New York and Florida socialists permit women's voting on bond referenda via regulations around having “property owners” be able to vote, using the leverage of the gender ambiguity of “property owner” and the ubiquity of the municipal bond market to get women voting rights before it was nationally accepted.

Committees

The world is run by committees, from the most innocuous and small-seeming committees to the committees that set interest rates, approve budgets, and permit new legislation on taxation. A structural history of the committee begs to be written. Municipal socialists had run-in with key finance committees. 

In Dayton, Ohio, shut out of committees across the local government of which they were nominally in charge, municipal socialists couldn’t get private companies who paid flat electric rates to be metered, losing revenue. They wanted the companies to pay commensurately for the energy they used. They faced a loss on this initiative when a local Committee on Committees was taken over by a nonsocialist caucus. That Committee of Committees was in charge of recommending leadership for various committees, and they ultimately shut the socialists ou  of prime committee spots, like the finance committee, where they could enact their agenda. Sherquist notes: “Since, under council rules, all matters pertaining to expenditure of city funds first required recommendation from an appropriate committee, there appeared little prospect that the Socialists could move their agenda significantly forward.”

There was a similar dynamic in Australia, except with a dialectically opposite outcome. Socialists used municipal committee structures to win their agenda. In Richmond, Greater Melbourne, led by Jim Sutch, elected municipal socialists faced the “annual ritual of appointing standing committees,” which became a “point of conflict.” It was 1901 and they were surrounded by liberals, not holding a clear majority on the council. But Sutch executed a complex maneuver, rope-a-doping the liberals through some deft committee protocols. 

Sutch brought a motion “to convert the local finance committee into a committee of the whole,” a flashy move that was clearly a play to use their near-majority to get socialist control of the budget process. To the liberals, the socialists seemed to “overplay their hand,” since they didn’t have enough votes to carry it through. In response, the nonsocialist majority, along with the nonsocialist mayor, “passed an amendment appointing a committee of five that largely represented labor’s opponents,” that would now be in charge of the budget process. Little did the liberals know this was all a feint. Sutch knew the terrain. Socialists won two local elections the next year, taking a clear majority and then easily accomplishing “the selection of a new finance committee that would consist of a majority of three labor councillors.” By creating that smaller committee, the liberals played right into the socialists’ hands, who could now control the budget.

That three dimensional chess turned the tide, opening up the possibility for several working class finance policies. There was an “increased rate on the unimproved capital value of land in the city as the basis for meeting city obligations in the coming year.” Then a socialist won the mayoral election and another socialist majority on the finance committee. Under their control there was “a complete revolution in the finances,” including refinancing “burdensome debt, on more favorable terms, and with increased revenues on unimproved land that had been historically grossly undervalued it was able to reduce rates on improvements. ”