On April 1, 1919, Seattle takes over ownership and operation of the streetcar system serving the city from the Puget Sound Traction, Light & Power Company. The system is renamed the Seattle Municipal Railway.
In 1900, Stone and Webster, the Boston utility giant, had completed acquisition of 22 competing street railways in Seattle as well as the main power company. First named Seattle Electric Co., the system was renamed Puget Sound Traction, Light & Power Company (also known as Puget Power). Seattle voters countered the monopoly by forming Seattle City Light in 1902 and by purchasing two streetcar lines in 1911 and 1913.
During World War I, the private Puget Sound Traction attempted to make up operating losses by cutting wages. This triggered a strike and the federal government intervened to keep the shipyards open. Stone and Webster was ready to sell the unprofitable operation and Seattle Mayor Ole Hanson (1874-1940) offered to buy it. Voters approved the $15 million deal on November 5, 1918. The price was later shown to be about three times the actual value.
Seattle officials learned that they could not retain the popular nickel fare and still pay off the debt, even after the purchase price was renegotiated to $10 million. Seattle defaulted on the loans before borrowing enough money to revamp the system in 1939.