American Dreams, Lost and Found
The first thing, some of the older guys came up to me and said: "You got it made now, kid. All you have to do is take your seat and shut up. If you just listen to what we tell you, you're gonna be a big man in this town someday."
When I started stepping on toes, I didn't know I was stepping on toes. I was just representing the people who sent me to the City Council. I didn't know I was offending somebody else. I found out very quickly there were a number of special-interest groups who made city hall their private warren. There are thirty-two councilmen. Thirty-one to one was usually the score.
When I got elected mayor, just as I came to the Council, I was expected to represent the system. When I started to challenge it, the titans of Cleveland's business community began to get surly and used their clout in the media to disparage the administration. I came to understand that big business has a feudal view of the city, and that city hall was within their fiefdom.
When I was elected mayor on November 8, 1977, it was discovered that the previous administration had misspent tens of millions of dollars of bond funds. They could not be accounted for. The city was trying to negotiate the renewal of $14 million worth of notes held in local banks. One bank talked: the Cleveland Trust Company.
I had a meeting on the day of default at 8 o'clock in the morning, with the Council president, the chairman of the board of Cleveland Trust and a local businessman, a friend of mine. The conversation turned immediately to MUNY Light. The chairman of the board of Cleveland Trust made it very clear that if I sold MUNY Light to the Cleveland Electric Illuminating Company, he would extend credit and save the city from default. CEI's largest shareholder is Cleveland Trust. Four members of Cleveland Trust's board are directors of CEI. If I didn't agree, I could not expect any help from his bank.
MUNY Light has 46,000 customers in Cleveland. MUNY Light and CEI compete in most neighborhoods, street by street, house by house. MUNY Light's rates in the recent decades have been from 20 to 60 percent cheaper than CEI's, but MUNY Light's competitive advantage has depreciated over the years because of CEI's interference in MUNY's management.
From the moment Mr. Weir [Brock Weir, chairman of the board of CEI] told me his price, I decided that a fiscal default was better than a moral default. If I had cooperated with them and sold MUNY Light to the private utility, everyone's electric rates would've automatically gone up. It would have set the stage for never-ending increases, much the same way that Fort Wayne, Indiana, is faced with that problem after relinquishing its rights to a municipal electric system.