Readings on the Relation of Government to Property and Industry

By Samuel P. Orth | Go to book overview

V
COMMISSIONS AND BOARDS

COMMISSION REGULATION OF PUBLIC UTILITIES: A SURVEY OF LEGISLATION

BY I. LEO SHARFMAN OF THE UNIVERSITY OF MICHIGAN

(From the Annals of the American Academy of Political and Social Science, May, 1914)

The machinery devised for governmental regulation is most frequently a commission or board. The more important commissions are appointed, usually, after investigations which are conducted either by members of the legislature or Congress, or by special investigating commissions, or by officers of the government under special instructions. -- EDITOR'S NOTE.


I. THE SCOPE OF UTILITY LEGISLATION

In the early days of the development of public utility properties there was little or no regulation for the safeguarding of public welfare. In order to afford effective stimulus for inventive genius and business initiative it was necessary to provide a free field for private enterprise, unhampered by legislative restriction. The technique of utility operation, in which so high a degree of efficiency has now been attained, had yet to be worked out; and the permanent necessity and financial practicability of the utility services, which have now been recognized beyond recall, had yet to be established. In these monopolistic industries, as in private business, public welfare counseled a policy of laissez-faire. In spite of their monopolistic character, it was felt that the public service industries, in order to be ready for public control no less than for public ownership, must first have reached a stage of maturity consistent with the lessened opportunities for private gain necessarily involved in a system of effective public regulation. During the first half of the nineteenth century, therefore, franchise privileges were freely granted by the state legislatures. These franchises extended for long periods and often in perpetuity. As a result, the privileges essential for supplying the future, as well as the then-

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