Charles McCarthy

“ The railroad was the first of the great monopolies to need regulation. The settler coming into a new, raw country was absolutely dependent upon transportation facilities; it was natural that he should treat the railroad like a spoiled child, and it was likewise natural that the railroad should take advantage of him. Human selfishness unless checked will always take such advantage. It must be remembered too that the securing of capital to bring a railroad into new territory was no easy task and the man who did it was entitled to a large reward. ”

“ Like the railroad commission all commissions are practically appointive. In dealing with complex economic subjects the legislature lays down general principles—determines the general policy and turns over to appointive commissioners the responsibility for the administration of these principles. The appointive method is used because it has been felt that it is just as ridiculous to elect a railroad commission as it would be to elect, on a state-wide ballot, a professor of comparative philology at the university. ”

“ The idea underlying the insurance legislation of Wisconsin is that the policy-holder is entitled to have placed before him in intelligible form the exact facts with regard to his insurance, and to insist that the companies shall, in every respect, live up to the true spirit and intent of their policy contracts, and that insurance should not be permitted where the expenses exceed a legitimate proportion of the insurance benefits furnished. ”

“ Old enterprises, which have yielded large profits for many years, could not justly complain if their returns should be based upon the present fair value of their physical structure, but when the losses incurred in the developing period of the business of any public utility have not been requited, it would be doing grave injustice to the investors in such concern to so limit the returns upon the capital actually and prudently sunk in the enterprise under economical administration. ”

“ It may suggest to the reader that not only is our legislative machinery, which has been so widely criticised in the past at fault, but that there may be other deep-seated faults which are not being corrected as rapidly as those committed by the legislature, and that the remedy in America does not merely consist of a few laws restricting corporations but that it must go deep down in the education of our lawyers, in the education of our people as to their rights, and in the changes in the forms of our government which will actually meet the economic stress of to-day. ”

“ The tax commission was the earliest of the great commissions to be formulated in Wisconsin, being created by chapter 206, laws of 1899. It consists of three appointive members and has a joint arrangement with the railroad commission for the use of experts in the rating of property. Gradually all the great corporations have been placed upon an ad valorem basis, so that here, too, physical valuation, with all of its advantages, is basic. As has been pointed out before, the fact that the ad valorem system of taxation was applied to railroads precipitated the railroad rate fight in 1903. ”

“ Without it civilization could never have existed. To illustrate, imagine a group of savages sitting in a circle feasting; the gaiety is suddenly interrupted by a huge savage who rushes into the circle, seizes the food and runs away with it. We can imagine our savages sitting in a circle, hungry and mourning over the loss of the food. One appeals to the other to rescue the food. ”

“ One of the most debatable parts of the law is the indeterminate permit. The men in favor of this bill had a hard struggle to include this feature. The fixed period had become so popular and there had been so many battles over it that it was very hard to convince the legislature that, if the stocks and bonds were terminated at a certain point, the consumers would lose in the end by the term franchise, as the consumers would have to provide for an amortization fund. Under the Wisconsin law corporations were permitted to surrender their franchises and receive an indeterminate permit. ”

“ It is my personal opinion that unearned depreciation, unearned interest on the investment, and any operating charges that have not been paid out of operating revenues, from the inception of the enterprise until it reaches the point where the operating revenues are sufficient to pay fair returns on the legitimate investment, are generally as much a part of the value of the active property as interest, taxes, insurance, and other fixed charges incurred during the period of construction. ”

“ The definition of property includes all franchises, rights of way, road bed, tracks, terminals, rolling stock, equipment and all other real and personal property of a company used in conducting the business, but excludes real estate not adjoining the tracks, stations or terminals; grain elevators and coal docks, ore docks, and merchandise docks, and real estate not necessarily used in operating the railroad are excepted, and shall be subject to taxation like the property of individuals. The true cash value of the railroad property is found by the tax commission (chapter 315, laws of 1903) . ”

“ The public utilities are now completely governed in Wisconsin by the railroad commission, an appointive board of three with practically unlimited power to hire experts. Chapter 593 of the laws of 1911 provided for further regulation of stocks and bonds, while physical connection of telephones was required under chapter 546 of the laws of 1911. The same policy pursued in the railroad commission law is carried out in the public utility act. Physical valuation is the foundation of it. It will be seen at once that if we have physical valuation we are getting at the basis of all regulation. ”

“ The sale of stock in life insurance companies is prohibited, unless the contract informs the purchaser of the amount of his money to be expended for the promotion of the company. The law now makes possible the organization of new life insurance companies on a sound and legitimate basis, and later amendments permit the organization of mutual companies for the insurance of employers against their liability for the injury or death of employees and for the insurance of deposits by banks. ”

“ With the introduction of industrial accident insurance, the department bids fair to develop into as great an institution as the railroad commission. Certainly as time goes on, it will have to assume some position similar to that of the German department if the kind of legislation which is now being undertaken continues to be enacted. It is the intention of the legislators to make the office of the insurance commissioner as important as any in the state. ”

“ While the state has the power to absolutely control all public service corporations, it is well to bear in mind that local municipal government, in so far as practicable, is the true policy to pursue and wise state supervision, when dealing with public utilities situated within the corporate limits of cities, will emphasize this principle rather than ignore or override it. The initiative in all local public utility matters should remain with the local authorities. ”

“ Conceived in the womb of usurpation, nurtured by the power of might, these dynasties take no note of the progress of the world of thought or of changed conditions, but, like their Bourbon prototypes, they neither move forward nor backward, they neither learn nor forget. ”

“ One mutual employer's liability insurance company is already doing business and others are about to be organized. A committee of the State Bankers' Association is at work formulating a plan for the organization of a bankers' mutual insurance company for the protection of depositors. Provision has been made for the granting of life insurance and annuities by the state in the state life fund on an absolutely safe plan of collecting a sufficient advance premium and returning the savings. ”

“ The court decisions throughout the country have involved the stock watering situation to such a degree that it is very hard to delegate power to a commission, and it is very probable that this stock and bond law goes as far in this matter as the decisions of the courts will permit. The fixing of rates within the state is an easy thing compared with the complex problem of trying to place a valuation upon the assets and expansion and absorbing power of a corporation existing in several states. ”

“ There must be a medical examination on every application for life insurance. The medical examiner receives a fee of two dollars paid from a deposit made by the applicant. No commissions or fees are paid to any person, except that the person transmitting an application, whether the insured or any other, is entitled to deduct a fee of twenty-five cents from the initial premium payment and any person transmitting any premium may also deduct a fee of one per cent of the premium. These deductions are made by the insured when he transmits his own premium. ”

“ Nothing in this law has excited greater interest nor greater antagonism than this very question of home rule and the relations in general to municipalities. When the public utility act was first proposed there is no doubt but that the public utilities of the state thought they would gain by placing in the hands of some kind of a weak commission, a power which would protect them from the localities. They were constantly in fear of the encroachments of municipal ownership and the concerns which were granted spurious franchises in so-called competition. ”

“ A permanent staff of experts is thus provided so that the municipality can tell upon what basis the commission places its rates. The law also provides for schemes which will be stimulants to corporations, such as sliding scales and other devices of this kind, merely, however, allowing the commission to pass upon these scales. The depreciation accounting was received with open arms by the managers of the companies. The greedy stockholders in a company would press the managers for a higher rate of dividend, who were thus often between the devil and the deep sea. ”

“ The legislature is seldom impatient; it has recently adopted the expedient of drafting tentative bills, giving hearings and redrafting bills through investigating committees, a long while before the opening of the legislative session. The procedure by which the legislature passed the railroad commission act is now practically a settled policy. A committee is granted plenty of time and expert help if it will produce results, and the legislature is apparently willing to prolong the session to any length in order that it may do its work thoroughly and well. ”

“ No public service corporation shall hereafter issue for any purposes connected with or relating to any part of its business, any stocks, certificates of stock, bonds, notes, or other evidences of indebtedness, to an amount exceeding that which may from time to time be reasonably necessary for the purpose for which such issue of stock, certificates of stock, bonds, notes, or other evidences of indebtedness may be authorized. ”

“ Is it not a serious matter that these crude devices above pictured have had to be used because justice could not be obtained and that, because wealth and strength did have in fact such a place in our courts, such legislative devices were necessary in order to carry out in these modern days that justice which was guaranteed in our constitution? ”

“ The burden of proof is upon you to show that my rulings are unjust. This man cannot make any progress toward real justice in the face of all the difficulties which beset him." And it is not always a single individual who is too weak. ”

“ How helpless against a combination of railways is the city of twenty-five thousand inhabitants when struggling to do such a seemingly small and entirely right thing as to provide gates at grade railway crossings. The writer has one case in mind. The very modest efforts of the city were met with the threat that the railway shops would be removed to a village some thirty miles distant and in an adjoining state. Even the city of Chicago has had a mighty struggle, continuing for years, in its efforts to protect life at railway crossings. ”

“ All the remaining surplus is distributed annually to the policy-holders, beginning the first year and continuing every year while the insurance is in force.
"The accounts are kept by the commissioner of insurance and audited as the accounts of other state officers. Valuations and reports are required the same as from life insurance companies. The bonds of the state treasurer, the commissioner of insurance, of all county, city, village, and town treasurers, and of every state depository, must include a liability for all premiums and other money received for the life fund. ”