Gambar halaman

would be an end of legislation to impose special taxes and excises upon public-service corporations, whose use of the public streets is, after all, required by the public for its own convenience. If, however, it shall be necessary in particular instances to acquiesce in a popular demand for special payment for the use of public streets, the public should be educated to the knowledge of the effect upon rates and facilities which the application of such a theory involves.

Another proposition which is fundamentally important, both to the companies and to the public, is that the franchises of the companies should be for such terms and upon such conditions as will best subserve the interests of both. As in the case of taxation, the interests of both are really the same. The undue restriction of franchises is analogous in its results to the imposition of unwarrantable taxes. Both operate to deprive the company of the incentive and the ability to give the public the best service at the lowest rates. A short-term franchise involves the necessity of the creation of a sinking fund, at the expense of the consumer, to protect the stockholder against loss of his investment before the end of the period of natural use. It also removes all incentive for the company to make permanent improvements, particularly in the latter part of the term of its franchise. A short-term franchise operates to induce the company to adjust its charges in view of the limited time in which it is permitted to recoup its investment and make its profits. The natural results are higher prices, larger reserve funds, poorer equipment, less efficiency of service, than would be the case if the tenure of the company were more extended. A long-time limited franchise is subject to the same objections, except that the inevitable day of inadequate equipment and poor service is longer postponed, and the accumulation of necessary reserves involves a smaller tax on the consumer because extended over a longer period.

It follows, therefore, that unlimited franchises, reasonably restricted in their terms and conditions and properly guarded against abuses, will produce the best results for the public, because they will enable the corporations to prosecute their business on a permanent instead of a temporary basis. There is no magic in this result. It is exactly the same as can be predicated of any private business. If one's opportunity to make money is brief, he will make money as fast as he can, without much reference to the future. If, on the other hand, he is in business to stay, and has regard to his future as well as his present financial condition, he builds for the future as well as for the present, and will not be tempted by the prospect of immediate profits to sacrifice either his future financial ability or reputation.

The subjects of Municipal Ownership and of Public Regulation and Control of public utilities are intimately connected with each other. Neither can be adequately discussed without reference to the other. Indeed, one is the alternative of the other. Municipal ownership is demanded largely because of the absence of proper public regulation and control. Public regulation and control, if efficient, removes the necessity or excuse for municipal ownership by securing fair treatment for the public.

If, therefore, a system of public regulation and control, which is at once fair to the corporate interests involved and efficient in securing the results to which the public is equitably entitled, can be evolved and put into operation, municipal ownership can no longer be alleged to be essential to the public interest. What the public wants is efficient and adequate service at fair prices. This is all that could be hoped for from municipal ownership, which, if successful in those particulars, would involve financial risks and political consequences which it is of the highest importance to avoid. Leaving out of consideration those political theorists who adhere to the doctrine that the government should govern as much instead of as little as possible, and that a public official should be substituted for a private citizen whenever and wherever possible, the great body of our people prefer the original American idea, that the functions of government should whenever practicable be restricted rather than enlarged, and that undertakings of an essentially business character are best entrusted to private enterprise rather than to political manipulation. The public funds should be employed solely for public purposes and the tax levy should not be subjected to the perils of commercial enterprises.

But, adhering to these sound tenets, a large body of the public feels itself driven to the more or less favorable consideration of municipal ownership, by the feeling that in no other way less objectionable on general principles can those results to which the public is entitled be obtained. Where private enterprise results only in private gain and not at all or only insufficiently in public advantage, the demand for municipal ownership is natural and inevitable. This fact alone suggests the antidote. If private enterprise results to the public advantage as well as in private gain, the basis for the demand for public ownership

is gone.

Assuming, however, as a knowledge of human nature cornpels us to assume, that a recognition of these fundamental principles can not be expected on the part of all owners of private industries, we are forced to the consideration of measures to compensate for that fact. That which is now uppermost in the public mind is public supervision and control. In the judgment of your committee some form of such supervision and control is inevitable in many if not all of the important states of the Union, and we believe that it should be welcomed by the parties in interest, provided it is put, as we believe it can be, in such form as to preserve the rights and properties of the companies as well as to promote the interests of the public. The practical question is not so much whether there is to be such regulation and control as it is what the nature and form of them are to be. The public demand for it is shown, not only in the pronounced attitude of the President of the United States with respect to interstate railroads, but by the extreme activity of many important state legislatures that are now sitting or have just adjourned. Bills proposing public regulation and control of public service corporations have this year been introduced into the legislatures of at least fourteen states. They deal with the subject in a variety of ways. The diversity of their provisions indicates at once the widespread interest in the subject and the merely tentative hold which as yet those dealing with it often have upon the true principles that underlie it.

The most conspicuous of these measures is the so-called Public Utilities Bill pending in the legislature of New York as this report is being formulated. As this is likely to be enacted, and may furnish the basis for legislation in other jurisdictions, a brief statement of its essential provisions will be useful.

It provides for two commissions, one for the city of Greater New York and the other for the rest of the state. Each commission is to consist of five members, with salaries of $15,000

[ocr errors]

each; counsel to the commissioners at $10,000 each; secretaries, experts, accountants, and other employees. The tenure of office of the commissioners is for five years. An initial appropriation of $300,000 is made for the use of the commissioners and for the payment of salaries and disbursements under the act.

All the railroads, street railways, gas and electric companies of the state are placed under the control of the commissioners, who are given the most ample powers for the regulation of rates, the limitation of capital, the requirement of service, and the general supervision of the business and affairs of the companies. The mayor of New York puts the combined capitalization of the companies at $3,322,537,916; their gross earnings at approximately $533,000,000; the number of their employees at upward of 300,000, and the number of their security-holders at not less than 100,000. The powers of the commissioners are alike administrative, judicial and inquisitorial. Practically all the activities of the corporations are subject to their regulation and control. In short, their authority over the interests subjected to their supervision seems to be practically unlimited.

It will thus be seen that, in the most important state of the Union, the theory of public regulation and control of publicservice corporations is to be put into practice in its integrity and entirety; and, further, that the New York law gives little if any opportunity for the operation of what might be termed automatic or semi-automatic regulation and control, but reposes practically the whole authority in that regard in boards of officials who must necessarily exercise the widest discretion. This act can hardly be said to establish a system of laws and not of men. Everything depends upon the men who shall be clothed with the great authority of applying and administering the law.

Whatever may be the advantages to the public interests attainable by the application and operation of this law under favorable conditions, it can not be denied that it has great opportunities for evil under other conditions. The act reposes in the governor of the state complete powers of removal of the commissioners for cause, and if a time should come when the office of governor should be used for political or personal advantage rather than for the public good, it is manifest that tremendous harm could be done by the removal of desirable and the appointment of undesirable commissioners. Indeed, it is difficult to suggest any other political machine which would be anything like as effective in its operations and as baneful in its consequences. The result might well be to discredit the whole idea of public regulation and control of public service corporations.*

While an agreement may be reached upon the general principle that public regulation and control of public-service corporations is desirable in the public interest, and is not necessarily inimical to the safety and value of corporate investments, it is another and much more difficult matter to agree upon the nature and scope of it. Three systems may be suggested: First, one like the Massachusetts and New York systems, under which everything is practically left to the judicial or quasi-judicial discretion of state officials, clothed with amplest power. Second, a system that, so far as possible, will be automatic or semiautomatic in its operation, through the application of statutory requirements to existing conditions by administrative officials. Third, a system that will be a compromise between, or involve an application in part of the features of, both of the foregoing.

In our discussion of this matter we assume the soundness of the economic proposition that the lighting business is essentially non-competitive in its nature; that competition not only involves the duplication of investments and of obstructions in the public ways, but must result in present waste and an ultimate additional burden on the public to compensate therefor. Competitive public utilities of the same nature inevitably result in burdening the service and its customers with duplicate plants, the fixed charges of which more than offset such reductions in rates as may result from competition. Our discussion of the

* Since the above was written the mayor of the city of New York has exercised his so-called veto power in connection with this bill, saying among other things: "The commissioners are to be appointed by the governor, and as they may be removed by him, or his successors, they will become the direct representatives and agents of each succeeding governor.

All members may be of the same political party. What may be will be. And if this bill becomes a law, we shall, in the near future, see these commissions composed entirely of political partisans, with great consequent injury to the state and the properties affected. The power to regulate rates and fares may be used to destroy. Under given conditions

it will be used to influence, coerce and to secure the money with which to corrupt the electorate.

It is no answer that the present governor will not prostitute his office by the selection of men capable of such acts.

The governor's tenure of office is short. and it will not be long before we will have a governor who will not hesitate to use this power.”

« SebelumnyaLanjutkan »