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    GOVERNMENT PROHIBITIONS ON VOLUNTEERFIRE FIGHTING IN NINETEENTH-CENTURYAMERICA: A PROPERTY RIGHTS PERSPECTIVEFRED S. MC CHESNEY*

    Oh the fireman'sheart is bold andfree,His motto is to save,He works without rewardor fee,Hurrah! or the firemanbrave.'I. INTRODUCTION

    WHY does governmentitself choose to provide goods and services(water, electricity, transportation, hospitals, and so forth) when privatefirms can produce them? The question has become increasingly topical asstate and local governments reconsider legal constraints on "contractingout" with private firms or volunteer organizations for a host of municipalgoods and services. Perhaps the hottest issue concerns the provision ofmunicipal fire services. Today, different institutional arrangements areused to deliver these services: government, volunteer, and private for-profit enterprises are observed in different cities. The systems are occa-sionally mixed. For the most part, however, larger American cities areserved solely by paid city employees, and private alternatives (eithervolunteer or for profit) are legally prohibited. Most smaller towns usevolunteers, but several are also required to use paid civil servants.The dominance of government fire fighters is puzzling, given the

    * School of Law, Emory University. Several persons commented helpfully on earlierdrafts. Comments from Louis De Alessi, Robert Tollison, E. G. West, and an anonymousreferee are especially appreciated, as are those of participants in the Law and Economicsworkshop at Emory University. George Horvath of the National Fire Protection Associationprovided research leads, and Kim Garman and Thomas Gannon contributed research assis-tance. Special thanks go to Madeleine and Elizabeth McChesney (ages seven and four);during their tours of fire stations with the author the questions addressed here first suggestedthemselves.' Song dedicated to volunteer firemen, quoted in Music Had Charms, 9 Am. Heritage 58(No. 3, 1958).

    [Journal of Legal Studies, vol. XV (January 1986)]? 1986 by The University of Chicago. All rights reserved. 0047-2530/86/1501-0001$01.5069

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    70 THE JOURNALOF LEGAL STUDIESeagerness and demonstrated ability of volunteers and for-profit firms toprovide fire services.2 The evidence suggests, for example, that private,for-profit production of fire services yields lower average costs than thecosts of government provision, for equivalent levels of output.3 Notwith-standing the efficiency of private forms of fire protection, city govern-ments justified their entry into fire fighting in the mid-nineteenth centuryas a response to market failure in the private sector: the inability tocontrol violence by competing fire fighters. Thatjustification apparently isaccepted unanimously by historians of theyeriod.The supposed market failure terminated a period in which fire-fightingservices were provided solely by private, volunteer effort. For the firsttwo hundred years following the settlement of North America, privatemutual societies and then private clubs produced fire protection services.But within some twenty years (1853-71), the claim that volunteers' "law-lessness" required public enterprise carried the day. Most large citieslegislated the volunteers out of existence and replaced them with tax-paidmunicipal departments (a process referred to here as "municipalization").Yet it was never considered whether violence could be controlled withoutdismantling the voluntary arrangements that had hitherto been employed.This article examines the conventional explanation offered for theemergence of government enterprise in fire fighting and rejects it as un-convincing. Section II presents in greater detail the market-failureview ofthe rise and fall of volunteer fire departments. Section III evaluates theconventional hypothesis from a property-rights perspective. Focusing onCincinnati (where the first and most celebrated shift to a salaried depart-ment occurred) and New York (the largest city to go public), the paperoffers an alternative hypothesis, that public enterprises emerged in cityafter city because they were advantageous to firemen, insurance com-panies, and politicians. Public enterprise permitted firemen to earn rentsby receiving pay for work formerly done at zero wage. It increased insur-ance companies' profits by relieving them of costs they otherwise wouldhave had to bear. Finally, municipalization gave city officials new pa-tronage positions to bestow. To hasten the shift to public control, politi-cians had an incentive to tolerate and even to encourage violence, astrategy they pursued by refusing to define and enforce private propertyrights in fire fighting. The absence of numerical data makes rigorous test-ing of the conventional and the alternative hypotheses impossible. Sec-

    2 See Jim Peron, Blazing Battles, Reason, November 1983, at 39.3 Rogers Ahlbrandt, Jr., Efficiency in the Provision of Fire Services, 16 Pub. Choice 1(1973).

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    VOLUNTEER FIRE FIGHTING 71tion IV instead presents considerable qualitative evidence in favor of thealternative interpretation, that the gains to various interest groups ac-counted for the rise of government fire fighting.

    II. A BRIEF HISTORY OF FIRE FIGHTING IN AMERICAUntil the twentieth century, large fires due to carelessness frequentlyrazed entire neighborhoods, even cities.4 Losses in many instances wereso great that neither the individuals at fault nor their insurance companiescould compensate the victims. The Great Chicago Fire of 1871, for ex-ample, began with a single small blaze but burned for three days, destroy-ing 17,500 buildings. Losses from the Chicago fire were almost $200 mil-lion. Only some $50 million was repaid by the 201 insurance companieswith property at risk, many of which became insolvent as a result of theblaze.5The Chicago disaster was hardly atypical. The first recorded fire inAmerica destroyed nearly every building in Jamestown in 1608. One thirdof Boston was lost to fire in 1653; devastating fires recurred there in 1673,1679, 1711, and 1760. New Orleans was gutted by fire twice in seven years(1788 and 1794). Fire wiped out almost all of Detroit in 1806. Half ofSavannah burned down in 1820. The Great New York Fire of 1835 de-

    stroyed seventeen blocks of lower Manhattan, in "the most destructivenon-military fire the world had known since London was turned to ashesin 1666.",6 Fire destroyed nearly all of San Francisco in 1851, and nearlyall of Sacramento in 1852. Flames gutted the ports of St. Louis in 1849 andCharleston in 1861.After 1900, changes in building materials, city design, and fire-fightingtechnology sharply reduced the number of urban conflagrations. The firedisasters of this century have struck single crowded buildings, such asChicago's Iroquois Theatre (602 killed in 1903) and New York's TriangleShirtwaist factory (146 killed in 1911). In earlier times, however, the

    4 This section presents the conventional view of the emergence of volunteer and, later,governmental fire fighting in American cities as generally accepted by historians today. Thatview is summarized in Paul C. Ditzel, Fire Engines, Firefighters: The Men, Equipment andMachines, from Colonial Days to the Present (1976); and Dennis Smith, History ofFirefighting in America: 300 Years of Courage (1978). Different accounts give varying datesfor some of the events discussed in this section.5 A Synoptical History of the Chicago Fire Department 55-56 (Benevolent Ass'n of thePaid Fire Dep't of Chicago, 1908).6 Smith, supra note 4, at 41. Some historians claim the Great New York Fire of 1835had

    national consequences. "The losses suffered, and unwise loans made to try to restore them,led to the Wall Street Panic of 1837, which resulted in the most serious depression Americahad suffered up to that time." Id. at 46. See also Robert S. Holzman, The Romance ofFirefighting 31 (1956); John V. Morris, Fires and Firefighters 127 (1953).

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    72 THE JOURNAL OF LEGAL STUDIES

    possibility of more widespread devastation led homeowners, insurancecompanies, and city governments to evolve several techniques to reducethe probability and severity of fire-related losses.

    A. The Early Colonial PeriodThe danger of fire in the wooden, thatched-roof cities of early Americawas so great that the first colonists commonly provided for fire protectionbefore they organized police services or the municipal water supply.7 In1631 Boston became the first town to pass regulations against woodenchimneys and thatched roofs. New Amsterdam (New York) followed suitin 1648, but unlike Boston also appointed fire wardens to inspect homes

    for compliance and fine offenders.8 In New Amsterdam volunteers werealso appointed to patrol the streets at night. They carried rattles to soundthe alarm for fires; gathered buckets, hooks, and ladders; and directed thebucket brigades.Boston, however, adopted no enforcement or fire-fighting measures,relying solely on building regulations. As one student of the era remarks,"If fires could be legislated out of existence, Boston would have beenspared."9 Instead, Boston's inferior organization of fire protection wasdemonstrated frequently. "The fire precautions succeeded in protectingNew Amsterdam, and later New York, from a major city fire for nearly acentury. Boston, however, was less fortunate, and over the next twocenturies it repeatedly suffered major fires."'oThe two colonial cities were similar in one respect: voluntarism was theprimary source of labor. Understandably, in view of the results, the Bos-ton city government's regulations "did not much diminish the fears ofmany Bostonians anxious to protect their goods and property."" In theearly eighteenth century, then, Bostonians began to join together in"Mutual Fire Societies" of about twenty people, formally agreeing that

    7 Ditzel, supra note 4, at 6.8 "Householders at the time were fined twenty-five florins if fire occurred in their homes,and these fines were used to buy and maintain ladders to reach fires on roofs, hooks to pulldown burning buildings or buildings in the path of a fire, and fire buckets. All of thisequipment was to be 'in readiness at the corners of streets and in public houses, for time ofneed.' To even better insure fire protection a later ordinance called on citizens to fill three-gallon buckets of water at sunset and leave them on their doorstep." Smith, supra note 4, at5. The importance of hooks indicates the external costs created by a neighbor's fire. Hookswere often used, not just on burning buildings, but to pull down houses the flames had notyet reached in order to create a fire-break. Similarly, other inputs to the production of fireservices during this period were chains and gunpowder.9 Ditzel, supra note 4, at 22.1o Smith, supra note 4, at 5.' Id. at 11.

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    VOLUNTEER FIRE FIGHTING 73each person would come to the aid of the other to fight fires and stopvandalism and looting. Out of these Mutual Fire Societies grew the famil-iar system of organized volunteer fire companies.

    B. The Era of Volunteer Fire CompaniesBenjamin Franklin was familiar with Mutual Fire Societies when hemoved from Boston to Philadelphia. There, in 1736, he established thecolonies' first volunteer fire department, the Union Fire Company. UnlikeBoston's mutual societies, the Philadelphia volunteers answered not onlytheir own calls but those of any citizen in the neighborhood. Entry intothe industry was free, and new volunteer companies of thirty to forty menwere soon established in other neighborhoods.The first fire insurance company was also established in 1736 in CharlesTown (Charleston), South Carolina (its Articles of Agreement noting thatEnglish firms would not insure colonials). But a 1740 fire that destroyedwharves, warehouses, and 300 houses in Charles Town also bankruptedthat firm. Other American insurance firms were established but likewise

    perished financially after large conflagrations.In 1752 Franklin and others established the Philadelphia Contribu-tionship for the Insurance of Houses from Loss by Fire. As did Englishinsurance firms, the Contributionship adopted a "firemark,"or plaque, tobe attached to buildings to identify policyholders. A second Philadelphiafirm, the Mutual Assurance Company, was established in 1786 becausethe Philadelphia Contributionship refused to insure tree-fronted proper-ties. Trees obstructed firemen and their equipment and also helped spreadflames. Owners of the Mutual Company agreed to insure their own tree-shaded houses at a higher premium for the additional risks they faced.(Why the Contributionship did not simply increase its premiums for tree-lined properties is unclear.) It was, at least in part, the success of Philadel-phia's string of volunteer fire companies that permitted establishment ofthe two insurance companies and, unlike Charles Town's company, theirfinancial survival.12 Philadelphia's example did not go unnoticed in othercities, which also took up the organized system of trained, specializedvolunteers.The typical volunteer fire department was nonprofit and labor managed.Each had its own constitution and bylaws, and firemen selected their ownofficers. The willingness of labor to donate its services is noteworthy, as

    12 "The volunteer firemen were mostly responsible for the organization and establishmentof the first fire insurance companies in America." Alwin E. Bulau, Footprints of Assurance 4(1953).

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    74 THE JOURNAL OF LEGAL STUDIESfiremen aced considerabledangerand were actuallyexpectedto pay forthe privilege.13Memberspurchasedmuchof theirownequipment, nclud-ing largecapitalitems. For example, GeorgeWashingtonpurchasedthefireenginefor his volunteercompany.14One famousNew Yorkvolunteerfire fighter,ZopharMills, estimated that he personally spent $3,000 onbehalf of his fire club in seven years as a volunteer.15 Fire companiesinstituted strict rules-with financialpenalties-for the provision andmaintenanceof equipmentand performanceof duties. Volunteers triedfellow members for breakingrules, and fines paid by the guilty helpedfinancecompanysocial events and the purchaseof capitalequipment.16To avoid delays in respondingto fires at night, when firemenwould behome asleep, volunteers rented roomsnearbyor simplybroughtbunks tosleep in the station itself.17 Indeed, "bunking"becamecommonplaceascities grew. 8Not all the volunteer units' activities were self-financed.First localgovernmentsand then insurancecompaniesestablishedbonus systems,payingthe first companyor companiesto "get water" on a fire."9Fire-marks affixedto policyholders'houses identified he insurancecarrier owhom fire companieswould apply for payment."[T]hemarksvirtuallyguaranteed hat [firemen]would receive a bonus for holdingdamageto aminimum."20till, the costs in money, time, anddangerthat volunteersincurredwere considerable.

    13 "More firefighters are killed in the performance of duty than are the members of anyother occupation-more than miners, construction workers, and police officers. The sever-ity rate of injuries among firefighters is the highest in the country." Smith, supra note 4, at173. "One firefighter is killed on the average of about every three days, and around half thenation's firefighters are injured every year." Ditzel, supra note 4, at 6.14 Holzman, supra note 6, at 13, 16-17."5George W. Sheldon, The Story of the Volunteer Fire Department of the City of NewYork 20 (1882).16 "A stranger present at the regular or special business meetings might have been ex-cused for supposing that a principal function of these [volunteer] organizations was theimposition of fines." Id. at 128. Failure to pay fines led to suits and expulsion. Id. at 133.17 Ditzel, supra note 4, at 64.18 Sheldon, supra note 15, at 148.'9 According to Herbert T. Jenness, Bucket Brigade to Flying Squadron 136 (1909),bonuses were awarded as early as 1739 in Boston. As this apparently antedates the privateinsurance system, cities must have taken the lead in paying bonuses, with insurance firmsfollowing suit as they were later created.20 Ditzel, supra note 4, at 37. There is disagreement whether volunteers would put outfires in uninsured homes. John Bainbridge, Biography of an Idea: The Story of Mutual Fireand Casualty Insurance 45-46 (1952), claims that "volunteer fire companies were pledged torespond to every fire." But see Insurance Co. of North America, American Fire Marks 10(1933): "But let the brigades find a burning house barren of a Fire Mark of any description!Then, with a sigh of 'false alarm,' they turned back, leaving the discomfited householder tohis buckets."

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    VOLUNTEERIREFIGHTING 75There were compensatingbenefits. Volunteerswere generallyexemptfrom uryandmilitiaduty21 ndsometimesfrom taxes.22Moreimportant,though,was the camaraderie.Volunteercompanieswere, in effect, pres-tigious fraternities or clubs.23Provisionof services by nonprofitclubsdoes not imply inefficiency, but heterogeneousclubs "can always beshown to be less desirablethanhomogeneousones."24This is illustratedby the compositionof volunteer ireclubs,which wereorganizedhomoge-neously alongethnic or professional ines. InChicago,forexample,mem-bers of fire clubs were predominantlyEnglishand German.Savannah'svolunteers were divided into white and black companies (slaves beingpaid by the hour for fightingfires). St. Louis clubs, such as the UnionCompany(businessmen)and the Liberty Company(foundryemployees),formedalongoccupational ines.25By providingfire services to the city in returnfor bonuses, the clubswere able to finance amenities and activities not availableto others.26They organized sports for members(one of the country's first baseballteams consisted of volunteerfiremen)and undertooknumerouscharitableactivities.27The volunteercompanyprovidedmemberswithsocialeventssuch as dinners,parties,andparades.28 erhapsmostimportant,heyalsosuppliedclub memberswith useful social connections,includingpoliticalcontacts. "The camaraderieof early volunteerfire companies provided

    springboardso betterjobs-not to mentionpoliticaloffice. Firefighterscould be expected to vote as a bloc for a fellow volunteer;their voteshelpedelect seven mayorsin New Yorkandeighteen n St. Louis."29Theprestigeandpoliticalvalueof membershipn fire-fightinglubs is attestedto by the list of volunteers from the late colonialera:Franklin,Washing-21 Holzman, supra note 6, at 3; Sheldon, supra note 15, at 61-62.22 In Chicago, for example, volunteers were exempt from payment of the road tax.George D. Bushnell, Chicago's Rowdy Firefighters, Chi. Hist., Fall-Winter 1973, at 234.23 See generally Mancur Olson, Jr., The Logic of Collective Action: Public Goods and theTheory of Groups (1965); James M. Buchanan, An Economic Theory of Clubs, in Readingsin Microeconomics (William Breit & Harold M. Hochman eds., 2d ed. 1971).24 Todd Sandler & John T. Tschirhart, The Economic Theory of Clubs: An EvaluativeSurvey, 18 J. Econ. Lit. 1481, 1492 (1980).25 Bushnell, supra note 22, at 234; John E. Maguire, Historical Souvenir: Savannah FireDepartment (Firemen's Relief Fund Ass'n 1906); A. B. Lampe, St. Louis Volunteer FireDepartment 1820-1850, 62 Mo. Hist. Rev. 235 (1968).26 "The firehouse was [the volunteer's] private club. Firefighters carpeted their bunk-rooms and meeting rooms, planted gardens, put in libraries, and hung pictures.... Therewere more amenities at the local firehouse than in their drab homes." Ditzel, supra note 4, at

    74-75.27 Holzman, supra note 6, at 44-47.28 Id. at 35.29 Ditzel, supra note 4, at 6.

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    76 THE JOURNAL OF LEGAL STUDIESton, Jefferson,Revere, SamuelAdams,Jay, Hancock,and Hamilton-aswell as Aaron Burr and Benedict Arnold.30

    In short,the benefits of fellowshipandpoliticsled individuals o organ-ize privateclubs. The clubs offered excludablebenefits,both social andprofessional,adequateto generatelaborinputsat zero pecuniarywage.To finance theiractivities, clubs suppliedfire services. As a by-productthey also supplied votes. Indeed, their ability to producevotes madevolunteerfire clubs perhaps he singlemost important roup n municipalpolitics. "Local governmentstrembledbefore the mighty politicalforcethatwas the volunteer firemancollectively."31Perhapsno othergood orservicehas ever been so widely producedby privatevolunteerclubs. Nobarrier o entry preventedother forms of fire-fighting ompanies(includ-ingfor-profit irms) romprovidingservices. Yet no otherform of organi-zation emerged until the volunteerswere legislativelyreplaced by pub-licly paidfire departments.Especially noteworthywas the choice of privateinsurancecompaniesnot to organizetheir own fire brigades,as they were free to do and asEnglish insurance companies in fact did.32American insurance firmsworkedquiteclosely with the volunteercompanies.Inaddition o payingbonuses, insurance companies purchased uniforms, fire engines, andother items for donation to the volunteers. They "came to all fires toencourage the volunteer firemento greaterefforts."33They organized"firepatrols,"squads of salvage men who removed portablevaluablesfromburningbuildingsand covered immobilepropertyto guardit fromsmoke and water. (Firepatrolsoften consisted of volunteersalso.)34Theyrendered a numberof other educationaland consultingservices.35Butinsurancecompaniesnever found it necessaryto incurthe costs of inte-gratingvertically ntoorganizationof their own fireservices;they left thatto the volunteer clubs.

    30 Smith, supra note 4, at 18-19.3 Holzman, supra note 6, at 3.32 For a discussion of the English fire brigades, see John Kenlon, Fires and Fire-Fighters226-27 (1913); Robert Considine, Man against Fire: Fire Insurance-Protection from Disas-ter 91-93 (1955). One writer claims that some American insurance firms maintained theirown fire companies. Kathleen J. Kiefer, Flying Sparks and Hooves: Prologue, 28 CincinnatiHist. Soc. Bull. 83 (1970). She does not document her claim, and this author has discoveredno other reference to any such company. Possibly Kiefer confuses the fire clubs withinsurance companies' volunteer fire patrols, discussed in text accompanying note 34 infra.33 Holzman, supra note 6, at 166.34 For discussion and a list of fire patrols established by insurance companies, see Jen-ness, supra note 19, at 95-99.35 Holzman, supra note 6, at 170-71.

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    VOLUNTEER FIRE FIGHTING 77C. The Rise of Municipal Monopolies

    Following the Revolution, and as the country spread westward, frontieroutposts organized volunteer companies along the same lines as had beenfound efficient in the East.36 However, the character of the volunteerclubs was changing. The elite, homogeneous clubs of part-time firemenwith full-time professions elsewhere gradually gave way to more hetero-geneous outfits. Increasingly, clubs included men with little else to do butloll about at the firehouse. Club rolls began to include fewer latter-daycounterparts of Franklin and Washington and more of the unemployedand various hangers-on.37From all accounts, it was the cash bonus system that began to corruptthe elitism of the clubs. Fire clubs increasingly recruited professionalboxers and common thugs to battle other companies in order to be first onthe scene and win the bonuses. The result was a general rise in violenceincident to fires.Sometimes as soon as a companyheardan alarm, hey would senda smallboyrunningaheadto the scene of the fire whilethey got inharness o pulltheirenginethroughthe streets. The fleet-footed boy's job was to cover the water supplynearestthe fire witha barrel,or in some otherway obscure t, so that hiscompanycouldget firstwater even though hey werenot firstonthe scene. Oronecompany

    racingdown the street andfindingtself behindanothercompanymight umptheirengineupon the sidewalk,at theperilof pedestrians,andpasstheirrival..... Fistfightswere not uncommonbetweencompaniesvyingfor the honorof "firstin."'8Violence was apparently at its worst in New York and Philadelphia39where the wealth to be protected and hence the bonuses were greater andcompetition for the payments was thus increased. Violence by fireman inPhiladelphia in the early 1840s was particularly destructive.40 But themost celebrated incident of violence occurred during a fire at a Cincinnatiplaning mill in 1850. As the story goes, a dozen companies arrived at thefire and a riot ensued for the right to extinguish it. As the firemen brawled,

    36 For example, see Bushnell, supra note 22; Lampe, supra note 25.37 "As time went on, [volunteer clubs] attracted to their ranks a sizeable number of menwho can only be described as loafers, bullies, drunks or thieves." Bushnell, supra note 22, at238.38 Smith, supra note 4, at 39-40.39 See, for example, Morris, supra note 6, at 131-49. In Cincinnati, riots at fires wereknown as "the Philadelphia system" because of the violence problems for which Philadel-phia volunteers had become famous. Geoffrey Giglierano, A Creature of Law: Cincinnati'sPaid Fire Department, 40 Cincinnati Hist. Soc. Bull. 79, 84 (1982).40 Morris, supra note 6, at 139-41.

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    78 THEJOURNAL FLEGAL TUDIESthe fire completely demolished the mill.41The Cincinnati city governmentreacted by disbanding the volunteer companies and putting America'sfirst paid fire department into service in 1853. Volunteer clubs resistedextinction, the story continues, but citizen demands for full-time, profes-sional fire departments were too strong to ignore. Other cities followedsuit, municipalizing fire services over strong resistance from the part-timevolunteers.

    By 1871, when Philadelphia disbanded its volunteer contingents, mostlarge cities had outlawed private clubs in favor of tax-paid fire depart-ments. Authorities on the subject agree that violence was the cause.More thananythingelse, it was excess rowdyismthatbroughtabout the knell ofthe volunteer fire departments n the largercities. ... [D]iscipline,it was felt,requireda professional iredepartment,underauthority.42Brawlingwas common . . . and rivalriesbetween companieswere keen. ...Businessmen and citizens began to demand a paid, professionallytrained firedepartment.43Historians are also in agreement that the "rivalries andjealousies existedprimarily because fire insurance companies paid a bonus for putting out afire in an insured dwelling."44It is noteworthy that the principal complaint about the volunteer clubswas the violence that accompanied their services. The problem, that is,was not the clubs' efficiency at fighting fires, but violence over the right tofight them. To be sure, the fire-fighting efficiency of the volunteer clubsmay well have diminished, for several reasons. As wage rates rose gener-ally, voluntarism might attract lower-quality workers; changes in technol-ogy and city size might also make full-time professional forces moreefficient. But these changes would only explain why, with no barriers toentry, other private institutional forms would emerge to compete with thevolunteers. In fact, no competing organizations did emerge. Even if full-time professional departments were more efficient, this does not explainwhy government chose to define the exclusive rights to organize suchdepartments in themselves, and especially to outlaw private competition.

    41 The episodeof the Cincinnatiplaningmill brawlappears n almostall historiesof firefighting.For example,Smith,supranote 4, at 57.42 Holzman,supranote 6, at 60-61.43 Bushnell,supranote 22, at 237-41.44 Kiefer, supra note 32, at 87. See also Holzman,supra note 6, at 60-61 (insurancecompaniesresponsible or muchvolunteerrivalrybecauseof bonuses).

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    VOLUNTEER FIRE FIGHTING 79III. Two HYPOTHESESNGOVERNMENTNTERPRISEN FIREFIGHTING

    A. Defining Rights in the Public InterestThe economic theoryof propertyrightsoffers severalinsightsinto theproblemsthat volunteerfire clubs increasingly aced, insightsthat differfrom the conventional conclusionsjust discussed. Freedom of entryandcompetitionfor bonuses created a classic "commons"problemfor thevolunteers, one that resultedin increased violence to definerights.Pri-vate definitionof propertyrightsto avoid the inefficiencyof violence issometimes possible.45Private definitionof rightsmay be inefficientoreven impossible,however, if the numberof resourceclaimants s large.As the numberof claimantsgrows, private agreementsare increasinglybeset by free ridingand Prisoner's Dilemmaproblems.46Withoutforce,large numbers of claimantsmay doom any effort to define and enforcepropertyrightassignmentsby privateagreement.Its monopolyon the useof force thusmaymakegovernment he only possibledefinerandenforcerof propertyrights.Traditionalanalyseshave tended to view governmentas a public-interestmaximizer of social welfare, definingand enforcingrights n theirhighest-valueduses. In thatvein, the conventionalexplana-tion of city-ownedfiredepartmentsasserts thatpublic-spirited oliticiansbanned volunteers to solve the inefficiencies of violence created by thebonus system.But the public-interestexplanationis incomplete, at best. It fails toconsiderseveralapparent nefficienciesstemming rommunicipalization.Abrogating he system of paymentto privateclubs by insurancecom-panies (and so ultimately by policyholders)created a moralhazard,asindividuals who started fires in their homes no longer paid the direct costsof extinguishing hem. Perhapsmore substantialwere the welfarelossesfromthe new taxes needed to hirelaborinputs.47Ceterisparibus,Landes

    45 For example, California miners avoided violence over the limited gold territory byaltering contracts to use of the land. John Umbeck, A Theory of Contract Choice and theCalifornia Gold Rush, 20 J. Law & Econ. 421 (1977). Contracts, however, must alwaysprovide each party with at least as much as he could have obtained by use of violence. JohnUmbeck, Might Makes Rights: A Theory of the Formation and Initial Distribution of Prop-erty Rights, 19 Econ. Inq. 38 (1981).46 See Terry L. Anderson & Peter J. Hill, Privatizing the Commons: An Improvement? 50So. Econ. J. 438 (1983). For a discussion of how livestock associations' private agreementsto use of Western range lands failed, see Gary D. Libecap, Locking Up the Range: FederalLand Controls and Grazing 18-20 (1981).47 See John D. Wilson, The Excise Tax Effects of the Property Tax, 24 J. Pub. Econ. 309(1984), and the references cited therein.

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    VOLUNTEER FIRE FIGHTING 81ment, ratherthanprivate,use of resources. Even if nonoptimalsocially,public ownership would emerge when it offered greaternet benefits togovernmentdefinersof rights.In effect, governmentmust be includedamongthe aspirants or scarceproperty rights. From the self-interestperspective,when their net gainsare greaterfrom definingprivate rights, governmentactors will definethem. Whengreatergainsare available romdefiningrights nthemselves,government officials will so define them. Under the self-interest hy-pothesis as appliedto municipal irecompanies, the questionis whethersome personsfoundthatconversionto governmentownershipworkedtotheir advantage,and whether it was worthwhilefor politiciansto effec-tuate it.49Threegroups gainedfromthe shift to taxpayer-supportedirefighting.The insurancecompanies, which paid privatevolunteersper fire extin-guishedandpurchasedfireengines, uniforms,and otherthingsfor dona-tion to the volunteer clubs, benefited from having local governmentsalone pay for both labor and capital. In addition,if volunteer laborwasbecominginefficient,municipalization elieved the insurancecompaniesof the costly organizationandoperationof their own firebrigades.Underordinary circumstances, the various savings to insurance companieswould increaseprofits temporarilybut would not be a source of perma-nent rents: as costs fell in a competitive industry, so would premiums.The shift to governmentfire fightingwould be a source only of limitedquasi rents.The mid-nineteenthcentury was not an era of vigorous competitionamonginsurancefirms,however. Priorto the CivilWar,local rate-fixingagreementswere concludedamonginsurance irms n variouspartsof thecountry, includingCincinnatiand New York, which proved largelyinef-

    49 "Individuals with a comparative advantage in the use of political power have an incen-tive to use the state to redistribute resources toward themselves. At the same time, politi-cians have an incentive to provide services to buy political support. Under these conditionsgovernment ownership may be used partly to mask wealth transfers." Louis De Alessi, Onthe Nature and Consequences of Private and Public Enterprises, 67 Minn. L. Rev. 191, 199(1982). For example, public ownership of urban transit emerged as the number of transitusers, and thus the potential beneficiaries from any subsequent subsidies, increased. B.Peter Pashigian, Consequences and Causes of Public Ownership of Urban Transit Facilities,84 J. Pol. Econ. 1239 (1976). A priori, it is unlikely that the same model explains the shift topublic fire fighting. Direct income redistribution via government enterprise is only possiblewhen the group using the service differs from that paying for it. In fire fighting, all house-holds are protected by the public fire department, but all pay for the service through theirproperty taxes. A shift from private to higher-cost public fire protection services simplymeans that everyone pays more taxes than had been paid when the service was providedprivately.

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    82 THE JOURNAL OF LEGAL STUDIESfective.50But a new organization,the National Board of Fire Under-writers, was established in 1866. Its purposes were publicly stated (agenerationbefore the ShermanAct) as the establishment and mainte-nanceof "uniform ates of premium" nd a "uniform ateof compensationto agentsandbrokers."''The National Boardestablished475localcollec-tive rate-settingboards, representing90 percentof insurancepremiumsand 95 percent of total fire insurancecapital.52 "Rateswere raised andstandardized,"53 nd rate enforcement was vigorous: "During 1875,'Schoolmaster'Montgomeryand his assistants, the supervisingagents,hadused the birch rather reelyuponfractiouspupilsin the local boards.There had been twenty-nine trials; one hundred and twenty-one localagents had been convicted of violatingrules and tariffs;fines had beenimposed to the extent of more than six thousanddollars, and, what isremarkable,most of it hadbeen collected."54The abilityof the NationalBoard to compelcollective actionand the coincidencebetween insurancecompanyand firemen interests were illustrated n 1874,when the Boarddemanded hatChicago'scity governmentestablisha specialfirepatrolofat least 100men, improvethe firedepartment,and instituteotherchanges.Whenthe government initiallyrefused to do so, the National Board or-dered its membercompaniesto cancel all fire insurancecontractsin thecity, which they did. City officialsthen capitulated,and the boycott waslifted.55The National Board cartel survivedfor a decade,duringwhichbusinessbecame more "assuredand profitable."56 ocal agreements finallycol-lapsed, but state governmentenforcement of rates fixed by the rating

    50 Werner Sichel, Fire Insurance: Imperfectly Regulated Collusion 25-26 (August 1964)(unpublished Ph.D. dissertation, Northwestern Univ.). "[T]he [cartel] regulations set downwere often not adhered to." Id. at 26."5 Harry Chase Brearley, The History of the National Board of Fire Underwriters 13(1916). "The deadly cutthroat competition of the insurance market place, forcing premiumrates down and agents' commissions up," allegedly was "choking the profit from the fireinsurance industry." A. L. Todd, A Spark Lighted in Portland: The Record of the NationalBoard of Fire Underwriters 8 (1966). National rate fixing was established privately only afterefforts at federal legislation failed. Brearley, supra, at 5. It is interesting that consumergroups at the time supported establishment of the national rate-fixing system, though theylater complained of the rates set. H. Roger Grant, Insurance Reform: Consumer Action inthe Progressive Era 74-76 (1979).52 Sichel, supra note 50, at 27; Brearley, supra note 51, at 37.53 Brearley, supra note 51, at 24. At one point, for example, the Board increased rates 30percent for smaller towns and 50 percent for larger cities. Id. at 35.54 Id. at 52.55 Todd, supra note 51, at 28-29.56 Brearley, supra note 51, at 24.

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    VOLUNTEERFIRE FIGHTING 83bureausthereafterreplacedthem." Thus the lower costs thatmunicipali-zationofferedrepresentedmorethan transitional ainsfor insurancecom-panies. As their costs fell, even greatercartel profitswould result, firstunderprivaterate agreementsand then undergovernment-enforcedatefixing.Anothergroupstood to earn substantialreturnsfrom a shift to publicfirecompanies:firementhemselves. Publicownershipoffered them sev-eral advantages.Workpreviouslydonated without direct compensationnow was remuneratedat a civil servant'ssalary.The inabilityto call onvolunteersduringmoments of peak demand for fire services also neces-sitated an "inventory"of fire fightersto be maintainedat the station;firemen were paid even when there was no work to be done. The cityrelieved firemenof expenses they hadpreviouslypaidthemselves(equip-ment, food, and bunks).Not all firemengained. Goingpublicforcedthepart-timevolunteerwitha full-timeprofession to choose between the two. But throughoutthenineteenthcenturythe ratio of employedvolunteers to those with lower(or zero)opportunitycosts in forgone employmentsteadilydeclined,par-ticularlywith the additionof rowdiesandeven criminals o the ranks ofonce-patricianclubs. To an increasing percentageof volunteers, then,goingpublic promisednet benefits. Still, the politicalcosts of requiringpowerfulgroupto choose between two desirableoccupations gave citygovernmentsan incentive to try to avoid forcingan all-or-nothinghoiceon incumbent iremen.The finalgroupof beneficiaries rommunicipalizationwere city politi-cians. Openingsfor new public employees offered new possibilitiesforvotes andpatronageappointmentsand so providedadditional upport orpolitical organizations.Additional tax revenues needed for fire depart-ment labor and equipmentalso gave governmentofficialsgreatercom-mand over resources and new ways to influencevotingpatterns.58 t isprobablyno coincidence that most largecities shiftedto publicfiredepart-mentsduring he era of "machine" r "boss"city government.Patronage,the use of municipalemployment o furtherpoliticalgoals,was character-

    57 State fixing and regulation of insurance rates began at the start of the twentieth century.See Kent H. Parker, Ratemaking in Fire Insurance, in Property and Liability InsuranceHandbook (John Douglas Long & Davis W. Gregg eds. 1965). "Regulation" simply meantstate enforcement of rates set by insurance rating bureaus. A detailed study of state fireregulation is found in Sichel, supra note 50, who concludes that regulatory agencies did notsolve problems of private collusion among fire insurance firms, but instead furthered monop-oly. Over time also, fire insurance regulation was increasingly beneficial to mutual firms, atthe expense of stock firms.58 See James Q. Wilson, The Economy of Patronage, 69 J. Pol. Econ. 369, 378-79 (1961).

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    84 THE JOURNAL OF LEGAL STUDIESistic of "boss"government.59At aboutthis time, localgovernmentbeganto produce services other than fire fightingthat were alreadyavailableprivately,such as education.60The move to public enterprisewas not costless politically,as it requiredlevying taxes. Althoughthe outputof fire departments s highlyvisibleandso easier tojustifypolitically,61 oter-taxpayerswill resistpoliticians'creationof new patronage obs if the service is alreadyavailableprivatelyat zero price. Taxpayers'resistancewill diminish,however,to the extentthey are convincedthatexistingservices are somehowinadequate.Fire-manviolence thereforecould be useful to politicians.It is easier to argueforless violence and better service than t is to argue or more bureaucratsandhighertaxes. Violence furnisheda usefulargument or local govern-ment monopoly,just as greatersafety affordeda usefuljustification aterfor suppressingprivate itneys' attemptsto competewith municipalities'streetcar monopolies.62In other words, politicianshad an incentive to foster some confusion,violence, or other illegality among private-rightsclaimantsin order toadvance their own claims for governmentownership.Its monopolyonforceenablesgovernment o defineand enforcerights.Government ouldtolerateviolence by refusingto definerights,increasing iremen's ncen-tives to try to define rights by self-help and, if necessary, violence.Libecap noted the same phenomenonin the federalgovernment'shan-dlingof Westernrangelands,where the government's"inconsistencyofenforcement"created "general confusion regarding property rights,"whichin turngave ranchersan incentiveto fence federal andsillegallytodefine their own rights.63Likewise, public officials had an incentivetowithhold police protectionfrom private actors faced with violence byother firemenor vandals and looters. Resultingchaos and violationsoflaw all would furnisha defensiblereason for publiccontrol of fire-fightingservices.

    9 Gerald Gunderson, A New Economic History of America 416 (1976).60 E. G. West, The Political Economy of American Public School Legislation, 10 J. Law& Econ. 101 (1967)."' See Cotton M. Lindsay, A Theory of Government Enterprise, 84 J. Pol. Econ. 1061(1976). Lindsay notes that government enterprises delivering a service also produced pri-vately have an incentive to overproduce those aspects of the services that are most visibleand underproduce the service's invisible attributes.62 Ross D. Eckert & George W. Hilton, The Jitneys, 15 J. Law & Econ. 293, 307 (1972).Likewise, public officials would have an incentive to increase the demand for their servicesby misrepresenting the amount of illegality by private actors. West, supra note 60, notes asimilar phenomenon in the rise of public education, whose supporters argued it was neededfor all children to attend school-when education was already universal under a privateeducation system.63 Libecap, supra note 46, at 33.

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    86 THE JOURNAL OF LEGAL STUDIESdence of violence and the timingof going public seems negative, ratherthan positive as the public-interesthypothesiswould predict. Thoughittends to refuteone implicationof the public-interestmodel, the negativecorrelationbetweenviolence andmunicipalization oes notprovethat theinterest-grouphypothesis is correct. Indeed,a principalweakness of theself-interestmodel is its inability to generate testable implicationsonthe timingof municipalizationacross cities, which would first requireasuitablemeasure for violence.The self-interest model predictsthat individualclubs wouldtake somesteps to control theviolenceanddefine their ownpropertyrights.Thereisscattered evidence to that effect. Firemenadopteduniformsandbadgesto separatethemselves from bystandersat fires and so reducelooting-only uniformed firemen would be allowed inside police lines to enterburningbuildings.68 orsimilarreasons,New York firemen ook to wear-ing red shirts.69New York volunteers tried to end fightsover access towaterhydrantsby forming"hydrant ompanies,"whichwere to supervisehydrantuse.70 Several Philadelphiacompanies agreed to use differentstreetswhen responding o an alarmto avoidpotentiallyviolent confron-tations.71Apparently,none of the privateagreements ucceeded forlong,doubtless because of the incentives to cheat on the cooperativesolution.More instructiveperhaps s the municipalresponseto violence. Even ifvolunteers tried to define rights so as to control violence by their ownmembers,the self-interesthypothesis predictsthatcity hallhadan incen-tive to let violence persist, or even to furtherit. There is considerableevidence, in fact, that lack of cooperationand active interference rompolice andpoliticiansplayeda largepart n municipalviolence. One com-pany in Boston solved the problemof violence over access to sources ofwaterby equippinganengineto carry ts own water.Thecity governmentoutlawedthe innovation.72 InNew Yorkefficientfirefighting equired o-operationbetween firemenand the police, as the latter were responsiblefor detectionof fires and maintenanceof order at the scene. Police, how-ever, simply refused to turn out for fires, apparentlywith impunity."[P]reventionand detection of looting and thievery at fires [in NewYork],as well as the preservationof order at fires,were primarilypolice

    68 Sheldon, supra note 15, at 65-70.69 Supposedly this inspired Garibaldi, who was living in exile in New York when the newuniform was adopted, to use the same uniform in Italy for his revolutionary army. Holzman,supra note 6, at 38.70 Ditzel, supra note 4, at 66.71 Morris, supra note 6, at 78-79.72 Ditzel, supra note 4, at 62.

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    VOLUNTEER FIRE FIGHTING 87functions. A fire alarm was a signal for the sheriff, deputy sheriffs, con-stables, and marshalls, just as it was for firemen, inhabitants, the mayor,the recorder and alderman. . . . Yet the city's magistrates were hard put toenforce this provision of the law: the fact was that constables and mar-shalls continued to resent and evade this duty."73 New York's chief en-gineer, Alfred Carson, complained persistently to city hall about the lackof police protection, as did his predecessors,74 but the politicians wereunresponsive.I have had manyof these villains arrestedfor upsettingourengines, cuttingthehose, beatingour firemenalmost to death, etc., buttheywere no soonerin prisonthan the captainsof police, the Aldermen,andjudges of police would dischargethem, to commitfresh attacks on firemen he followingnight. ... Some meansshouldbe devisedwherebythe firemenmaybe able to perform heirdutywithoutincurringhe dangerof havingtheirlimbsbroken, or their lives jeopardized,bythese desperadoes.It is useless to look to the policejustices fortheremedy.THEYDARE OTAPPLYT, thepoliticalnfluence f thesevillains s so great.75Similar problems existed in Cincinnati. In March 1853 the CincinnatiDaily Enquirer wrote, "These rowdies ... are beyond the reach of moralsuasion, and seemingly as far beyond the reach of civil restraint. ... Whyis it tolerated? everybody asks. Where are the police? exclaim others. Ah,it is election times, others respond, and the paid guardians of the city willdo nothing to hazard their chances for votes! ... [The rowdies] are dealtwith tenderly and mildly."'"76Sometimes the political interference was more direct than mere refusalto enforce the law. Chief Engineer Carson once expelled William (later"Boss") Tweed from the fire department for leading his company in anattack on another. But "Tammany knew a good man in the making and hewas quickly restored to his post."77 Here, then, is an important implica-tion of the self-interest hypothesis corroborated by the evidence. Volun-teers faced substantial problems from city police and politicians' tolera-tion and even encourgement of violence.

    B. HiringAlso probative is the evidence on hiring for the paid positions. Underthe public-interest hypothesis, cities would use some form of merit selec-

    73 Stephen F. Ginsberg, The Police and Fire Protection in New York City: 1800-50, 69N.Y. Hist. 133, 140-41 (1971).74 Id. at 149.75 Reports of New York Chief Engineer Alfred Carson, quoted in Morris, supra note 6,138-39, 141.76 Quoted in Kiefer, supra note 32, at 102.77 Morris, supra note 6, at 142.

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    88 THE JOURNAL OF LEGAL STUDIEStion to attract the best firemenand screen out the violent and unfit.Theself-interesthypothesis predictsthatinsteadvolunteerswouldbe allowedunder "grandfather"clauses into the paid system, and that even someviolent volunteerswould findemployment.No case has been foundin whicha city used merit criteria or the newpositions. Grandfathering f volunteers was routine.An editorialin theMemphisDailyAppealin 1858,surveyingmunicipalizationnothercities,noted that when a departmentwent public t was the volunteerswho wereselected for the force, and that they were paidwell.78 In Cincinnati, ol-lowing the decision to go public, "[a]ll the volunteercompanies wereeager to become paidorganizations."79 In New York, "all the engineersandfiremen,andnearlyall the privatemembersof the newcompanies ..had been membersof the VolunteerFireDepartment."80 Incity aftercity,the new paidfire chief was also a formervolunteer.81Arguably, hiring of former volunteers is not inconsistent with thepublic-interesthypothesis, as fire-fighting xperiencecan be a proxyforquality. But if quality ratherthan patronagewas the reason for grand-fathering,the paid spots would be rationedaccordingto lengthof volun-teer experience. There is no evidence that seniorityas a volunteer wasever a factor in awardingthe more limited numberof new municipalpositions.

    Otheraspects of the hiringprocess offerperhapsmorepersuasiveevi-dence againstthe public-interestmodel. As the patronagemodel wouldpredict, paid New York firemenwere requiredto be city residents-acriterionseeminglyunrelatedto one's fire-fighting bilitybut importantfor voting purposes.82 n New York, the positionof Fire Commissionerwas explicitly designated a patronage appointment.83Chicago's newmunicipaldepartment"wasexploitedby politicians,beinglookeduponaspart of the spoils system," as even the paid firemen themselves ad-mitted.84Further, even the most violent firemenalso got governmentjobs. As new chief of Cincinnati'spaiddepartment, hecity "chose one ofthe mightiestbrawlersof the volunteersystem."85

    78 The editorial is cited in James Boyd Jones, Jr., The Memphis Firefighter Strikes, 1858and 1860, at 53 (East Tenn. Hist. Soc. Pub. 1977).79 Kiefer, supra note 32, at 105.80soSheldon, supra note 15, at 463.81 For example, James Boyd Jones, Jr., Mose the Bowery B'hoy and the NashvilleVolunteer Fire Department, 1849-60, 40 Tenn. Hist. Q. 170, 181(1981); Jenness, supra note19, at 86 (Philadelphia); Lampe, supra note 25, at 255 (St. Louis).82 Kenlon, supra note 32, at 250.83 Id. at 259.84 Benevolent Ass'n of the Paid Fire Dep't of Chicago, supra note 5, at 59.85 Holzman, supra note 6, at 69.

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    VOLUNTEER FIRE FIGHTING 89The public-interestexplanationof municipalization mphasizesthat itoccurredover strong oppositionfrom the volunteers. But the facts appearotherwise.Acquiescence, notobstruction,was the rule incity aftercity.86The volunteers'acquiescenceis all the moreremarkable, iventhat somewould certainlyhave preferrednot to lose their full-timeprofessionsinorder to remain firemen. But here too, the hiringpatterns reflect thedemandsof the grandfathered olunteers.Despiteclaimsthatmunicipali-zation was needed to ensure a professional,full-timeforce, cities oftenbegan by payingfiremenpart-time or work that earlierwas volunteeredand allowed them to keep theirfull-timeprofessions. For example, Cin-cinnati hired firemenonly part-time rom 1853 to 1873.87Firemencon-tinued their full-timejobs but received an annualsalaryto provide ser-

    vices they previously suppliedas volunteersat zero price. Savannah's iredepartmentwent paid in 1875, but was not limited to full-time firemenuntil 1890.88Boston began by payingfiremenper fireextinguished,thenswitched to salariedpart-time abor before finallymovingto a full-timepaid system.89On two occasions, however, volunteers successfully resisted cities'attemptsto assert controlover firefighting.InCincinnatihe CityCouncilordered confiscationof the equipmentof one companyinvolved in theplaningmill brawl, effectively disbandingthe club. The volunteercom-pany successfully sued andhadthe City Council'sorder nvalidated.90In1836 New York City passed a resolutioninstallinga paid maintenancecrew in each company and setting a $500 salary for the assistant en-gineers, who were to supervisethe maintenancemen. The City Councilalso firedthe volunteers' chief engineer.The firemenreactedwith a gen-eral strike, then went to the polls andvoted out enoughof those backingthe resolution to secure its repeal.91In both the Cincinnatiand New York rebuffs to attempted politicalcontrol, volunteers defeated plans that did not include provision forsalaried firemen. The New York press of 1836noted that the assistantengineers"cheerfullyconcurred" n the resolutioncreating heirsalaries,

    86 For example, Jones, supra note 81, at 180 ("instead of striking, volunteers acquiesced"in Nashville); Lampe, supra note 25, at 257 (St. Louis volunteers disbanded, sold equip-ment, and gave proceeds to charity); Giglierano, supra note 39, at 90 (Cincinnati volunteers"disbanded in a fairly orderly manner").87 Kiefer, supra note 32, at 105.88 Maguire, supra note 25, at 34-37.89 Giglierano, supra note 39, at 80-81.90 Kiefer, supra note 32, at 92, 106 n.5.91 The New York incident is discussed at length in Stephen F. Ginsberg, Above the Law:Volunteer Firemen in New York City, 1836-1837, 67 N.Y. Hist. 165 (1969).

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    90 THE JOURNAL OF LEGAL STUDIESbut there was nothing in it for the rank and file.92 Indeed, the resolutionspecified that the paid maintenance crew could not be firemen, but onlyoutside government appointees.When municipalization was attempted a second time in 1865, the NewYork volunteers reacted docilely (despite predictions of violence and de-struction). Rather than striking as in 1836, they quietly inventoried alltheir equipment for delivery to the city. Unlike the 1836 resolution, how-ever, the new legislation provided that firemen themselves were to bepaid, not just the engineers. No merit standards were used to select thepaid firemen, although New York eventually adopted rigorous mental andphysical examinations to select new firemen.93Instead, as noted above,the new paid force was simply appointed from the ranks of the volunteers.

    C. Insurance Companies and Bonus PaymentsThe public- and self-interest models have competing implications forbonus payments. The conventional view sees city governments as inter-vening to halt a wasteful and destructive system of private insurancebonuses. This public-interest model cannot explain why governmentscontinued, or even increased, their own bonus system during the volun-teer era, if it was the source of violence. The self-interest perspectivenotes that some violence was actually beneficial to patronage-mindedpoliticians but not to insurance firms. Thus one would expect to find thatcity-paid bonuses were of increasing prominence during the period ofviolence, and that private firms were actually reducing or ending thepayments that fostered violence. One would also predict that insurancefirms would reduce in-kind contributions to volunteers, but that municipalcontributions would increase. The evidence on bonus and in-kind pay-ments is meager, but what is available supports the self-interest hy-pothesis.First, the relative importance of private bonuses appears slight. In Bos-ton volunteers successfully struck in 1823 to have the city's bonus raisedfrom $15 to $65 for the first company to reach a fire. At almost the sametime in New England the regular bonus payment of the Hartford FireInsurance Company was only five dollars.94Nor were the insurance com-panies indifferent to the incentive effects of bonuses. The case of thenation's first firm, the Philadelphia Contributionship, is revealing.

    It had been the custom of the Contributionshipor many years priorto 1845todistributeamong approvedvolunteerunits sums of money totalinga thousand92 Id. at 172-73.93 Kenlon, supra note 32, at 251-54.94 Hawthorne Daniel, The Hartford of Hartford 50 (1960).

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    VOLUNTEERIREFIGHTING 91dollarsa year for their encouragement.As the years passed and the volunteercompaniesmultiplied, . . [a]lltoo oftenrivalcompaniesmeetingat the scene of afire foughteach other instead of the flames. Efforts of the Contributionshipocorrectthe situationby publishing egulations or their conductdid not appear ohave much effect. In [1842],the committeechargedwithdistributinghe custom-arythousanddollarswas cautionedthatthe moneyshouldbe given only to thosecompanies characterizedby orderlyconduct. In the following year, 1843, theMechanicsEngine Companyin applyingfor financialaid stated that they had"neverbeen engagedin any of those riots which have lately thrownso muchodium on the Fire Department."The next year . . . foundthe firecompaniesunusuallyrestive anddisorderly,andopposedto reforms aiddownin an ordinancepassedforthe betterregulatingof theirconduct. Theirbehaviorat this time broughtmattersto a head, andtheContributionship iscontinued ts programof financialassistance.95Similarly, the importance of private, in-kind contributions seems to havedeclined over time. While insurance firms provided many of the earlyhand-pumper engines used by volunteer clubs, their role once the volun-teers switched to steam engines was slight compared to that of municipali-ties. For example, the first steam engine used in New York City wasdonated by insurance companies, but thereafter new engines were pur-chased by the city.96The role of the insurance companies in municipalization itself is alsoconsistent with the self-interest model. Insurance companies worked(sometimes covertly) to introduce paid fire departments in many cities97and played an especially active role in the municipalization of New Yorkfiremen. "As the new legislation for a paid department was debated, fireinsurance companies combined forces to expose as many derogatory factsand rumors against the volunteer system as they could uncover or exag-gerate."98Insurance companies had a $50,000 fund for lobbying in favor ofmunicipalization and were also accused of bribery to secure passage ofthe municipalization act.99 Apparently, then, municipalization did offersubstantial rents to insurance firms, at least some of which were dis-sipated in rent-seeking behavior to secure passage of legislation.

    95 Nicholas B. Wainwright, A Philadelphia Story: The Philadelphia Contributionship forthe Insurance of Houses from Loss by Fire 116-17 (1952).9 Sheldon, supra note 15, at 87-88; Morris, supra note 6, at 171.97 Holzman, supra note 6, at 171. Insurance company support of municipalization is saidto have been surreptitious in order to avoid problems with volunteers. See, for example,Wainwright, supra note 95, at 143-44 ("agitation in favor of a paid department was favorablylooked upon by the Contributionship despite the fact that it could take no open part for fearof offending the volunteers").98 Morris, supra note 6, at 193.99 Id.

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