Public service corporation

“ The writer believes that, under one form of agreement or another, nearly every kind of public service can be more economically and better performed by a public service corporation than by the public itself through employees directly hired. But if America is not to pass speedily into Government ownership and operation of all public utilities, there must be a pronounced change of attitude on the part of the public toward capital now invested in public service corporations. ”

“ The public service corporation which is administered, not to render service to the public, but to permit stock speculators to reap a harvest, can hardly hope for the same brand of justice, and it is hardly to be expected that such a corporation will welcome publicity. ”

“ Our duty plainly consists, first, in regarding a public service corporation as a public agent, and, second, in allotting such values that this public agent will receive a full and fair return for every dollar judiciously and honestly spent in building and developing its property. ”

“ The legislature, however, shall never enact any law permitting any public-service corporation to consolidate with any other public-service corporation organized under the laws of any other state or of the United States owning or controlling a parallel or competing line in the state. ”

“ It is not like the butcher, who has his stall in the public market in a row of twenty similar stalls, and who competes for trade among the passing throng. The public service corporation has, in great degree, the character of a monopoly. The quasi-public element in the public service corporation is recognized originally and conclusively by the grant of any franchise carrying special privileges or providing for exclusion of other similar corporations. ”

“ Now, while it may be argued in the case of public service corporations that the people who have put their money into these enterprises, have done it with their eyes open and with full knowledge that they were subject to governmental regulation and control, there is nothing in that argument which makes public interference any more palatable to the man or group of men who are interfered with. ”

“ But it was not only at the granting of the franchise that the boss and his machine sought for spoils. A public service corporation, being constantly asked for favors, is a continuing opportunity for the political manipulator. Public service corporations could share their patronage with the politician in exchange for favors. Through their control of many jobs, and through their influence with banks, they could show a wide assortment of favors to the politician in return for his influence ”

“ A public service plant is a device which is intended to perform a given service forever. It is true that its parts are subject to wear, and must be renewed from time to time; but the plant as a whole is everlasting, or practically so. Managers of public service corporations, perceiving this fundamental truth, have rarely established sinking funds 279for the redemption of any considerable part of the plant. In a great railway system the renewal of a freight car is not a proportionately larger item of expense than is the renewal of a tooth in a steam shovel bucket owned by a contractor. ”

“ The slight gain to the consumer, which he would obtain from a reduction in the rates charged by Public Service Corporations, is as nothing compared with his share in the ruin which would be brought about by denying to private property its just reward, thus unsettling values and destroying confidence. On the other hand, the companies to be regulated will find it to their lasting interest to furnish freely the information upon which a just regulation can be based. ”

“ The relations between the corporations and the public that they serve have been clearly defined by the Courts, as the foregoing quotations show.
That the mutual relations existing between the management of the corporations and the public are far from what they should be, there can be no doubt. On the one hand, the great mass of the voting public is uninformed as to actual revenues, disbursements, and operations of the corporations, as to whether their income is unreasonably large, or whether they are struggling to exist. ”

“ He also proposed making corporations share with the Government and States a certain part of their net earnings, public service corporations to a greater extent than others. Dru’s plan contemplated that either the Government or the State in which the home or headquarters of any corporation was located was to have representation upon the boards of such corporation, in order that the interests of the National, State, or City Government could be protected, and so as to insure publicity in the event it was needful to correct abuses. ”

“ Each of the four types of government, national, State, county and city, is a corporation for public service, and the standard form provides for the nomination and election of an executive and legislative body by the people, these officers to be given full power of appointment and of removal and to be held responsible for the quality of public service just as the elective officers of private corporations are held responsible to the stockholders for quality in private service. ”

“ A corporation maintaining a public highway, although it owns the property it employs for accomplishing public objects, must be held to have accepted its rights, privileges, and franchises subject to the condition that the government creating it, or the government within whose limits it conducts its business, may by legislation protect the people against unreasonable charges for the services rendered by it. ”

“ If the interest of a corporation is so essentially hostile to the public interest as to require the sort of official supervision provided by the New York Public Service Commission Law, the logical inference therefrom is not a system of semi-official and semi-private management, but a system of exclusively public management. ”

“ One has but to contemplate the varied and often antagonistic legislation promulgated by the several States, relating to corporation management, and the many rulings and decisions of the different courts and commissions on the subject of regulation, assessment, and adjudication of corporate rates, revenues, taxes, and tolls, to become convinced of the complicated and tangled condition of the situation, and to realize the necessity for the early establishment of some logical basis on which to establish the fabric of corporate control. ”

“ The Corporation is surely dependent on the State and the good will of the people for its welfare. Mistakes have been made, no doubt, just because this common ground has not been reached, and the writer thinks that it is largely within the province of the Engineer to establish it. ”

“ In this light they are seen to be properly inventions that deserve social endorsement, in so far as they promote the public weal. There is no more sacredness about a corporation in itself, apart from its service to society, than there is about an ox-yoke or a tide-mill. Charter privileges imply corresponding corporate services; they imply that the party making the grant, as well as the party accepting it, is better off because of the arrangement than before. ”

“ On the other hand, perfect frankness compels the admission that the state of public opinion which compelled the passage of these laws has been caused largely by the corporation officials themselves. There is probably no more loyal body of men in America to-day than the officials and employees of railroads. Their loyalty, however, is all to "our company." They enter its service as boys or young men; they grow up to the full strength of manhood working for its good; they take little or no part in public affairs; they have no time for the study of public questions. ”

“ Unless it can then be shown that public interests would be benefited by the changes proposed, the Department might have difficulty to overcome this opposition.
In the next place, corporate control moves within narrower limits and exercises its power in more direct fashion. In theory a corporation is composed of its stockholders, a majority of whom nominate the board of directors. This board in turn appoints the permanent officials and they exercise full control in operation. ”

“ It has also frequently happened that corporations have been aided to a very large extent by public funds, by the voting of aid bonds, by the donation of large tracts of land, by payment for certain service at such rates as would largely relieve the company from loss in operation, by the remission of taxes, or by the direct donation of funds. ”

“ As a general thing, it was felt by the men responsible for this regulation that service was the first thing to be sought and if proper service could be attained with a fair return to the corporation, that was all that was necessary. ”

“ The public cannot properly be subjected to unreasonable rates in order simply that stockholders may earn dividends. The legislature has the authority in every case, where its power has not been restrained by contract, to proceed upon the ground that the public may not rightfully be required to submit to unreasonable exactions for the use of a public highway established and maintained under legislative authority. ”

“ It appears necessary, therefore, to consider briefly the relation which these interests bear to one another, to study the causes which have led to mutual misunderstandings, and to note the proper relations which should, if possible, be established and maintained between the people and those corporations organized to perform certain of the functions of the State. ”

“ The company is clearly entitled to earn a reasonable profit on the actual capital invested, in addition to the legitimate cost of operation, payment of taxes, and sinking funds to cover depreciation and obsolescence.
The public is clearly entitled to good service at the lowest rates that will permit the company to earn its reasonable profit and expenses. Increases in tonnage, population, and consequent net earnings 8of the corporation should entitle the public to a benefit in reduced charges for service, when the increased earning is of a permanent character. ”

“ OTHER PUBLIC SERVICE CORPORATIONS There is a demand from many quarters for the better regulation of all public service corporations and a movement is now on foot to place those not now subject to control under the jurisdiction of some commission. Experience has shown that just rates and treatment come only through such effective regulation and there is no excuse for further delaying action in this State. ”

“ It grew up, as many old corporations have grown up, with the tacit consent of the Crown, from a body of men who once held their lands in common, and of their own free will devoted a portion of those lands to the public service. ”

“ The better regulation of corporations was accomplished by a comprehensive Public Utilities Law, fixing the responsibility on officers of corporations for all violations, and vesting power in a commission to make rates and physical valuation of public service companies. ”

“ The right of the Commonwealth, through such instrumentalities as it may select, to prescribe and define the public duties of all common carriers and public service corporations, to regulate and control them in the performance of their public duties, and to fix and limit their charges therefor, shall never be surrendered nor abridged.
SEC. 165. The General Assembly shall enact laws preventing all trusts, combinations and monopolies, inimical to the public welfare. ”

“ 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. ”

“ The corporation which is honestly and fairly organized, whose managers in the conduct of its business recognize their obligation to deal squarely with their stockholders, their competitors, and the public, has nothing to fear from such supervision. The purpose of this Bureau is not to embarrass or assail legitimate business, but to aid in bringing about a better industrial condition—a condition under which there shall be obedience to law and recognition of public obligation by all corporations, great or small. ”

“ The consolidation of effort, the reduction in the number of separate express agencies, the minimizing of accounting, the simplification of management, the pooling of equipment and facilities,—these administrative reforms should result in a marked decrease in relative operating expenses. The transfer of control from a moneyed group—or rather from three moneyed groups—interested primarily in private profits to a public official seeking only service to the public, this similarly is a definite achievement. ”

“ But in the many analogous cases which it is best to resign to voluntary agency, the community needs some other security for the fit performance of the service than the interest of the managers; and it is the part of government, either to subject the business to reasonable conditions for the general advantage, or to retain such power over it, that the profits of the monopoly may at least be obtained for the public. ”

“ The private corporation whatever its public duties is organized for private ends and may be presumed to intend to make whatever profit the business will allow. The municipal corporation is allowed to go into the business only on the theory that thereby the public welfare will be subserved. ”

“ Municipal corporations undoubtedly are invested with certain powers, which, from their nature, are discretionary, such as the power to adopt regulations or bylaws for the management of their own affairs, or for the preservation of the public health, or to pass ordinances prescribing and regulating the duties of policemen and firemen, and for many other useful and important objects within the scope of their charters. ”