State and municipal commissions.

Public Service Commissions.—Public service commissions are in some cases maintained by the cities; but more often they are state-appointed bodies. There are two reasons which make it desirable that the regulation of public utilities should be in the hands of the state rather than under the control of the cities. In the first place the jurisdiction of the city officials does not extend beyond the city limits, whereas public service companies often do a considerable part of their business outside. It is not uncommon, for example, to find the same street railway, electric lighting, and telephone company operating in several neighboring communities.[[235]] Municipal regulation, in such cases, would subject the company to different rules in each community.

There is a second reason, namely, that public regulation is always expensive. A public service commission must have skilled investigators to assist it in deciding the technical questions which arise, and these experts are costly to employ. Large cities can afford it, but in the case of small communities it is better to have a single state commission perform the functions of regulation for them all. In this way, moreover, the regulations can be made uniform. Public service commissions consist of three or five members; in cities they are appointed as a rule by the mayor; in states they are usually appointed by the governor; but in some states they are elected by popular vote. Appointment is now regarded as the more satisfactory method.

Work of these commissions.

The work of a public service commission covers a wide range. Its chief function is to see that the companies live up to the terms of their franchises and obey the laws relating to public utilities. It hears complaints from city officials and citizens, investigates these complaints, obtains the company’s side of the case, and makes such decision as the matter seems to require. It prevents discriminations in favor of one community against another, and insists that equally good service be given to all; it requires financial reports from the various companies and often has power to fix the maximum rates which they may charge. In some states it is the practice to grant “indeterminate” franchises, or franchises which run for no stated term of years, coupled with the provision that the franchise may be canceled at any time by order of the public service commission if the company does not comply with the conditions. It can easily be seen, therefore, that public service commissions have a degree of authority which can readily be abused unless the commissioners are fair-minded and absolutely honest men. Their position is like that of judges, in a sense, for their function is to hold evenly the scales of justice between the companies on the one hand and the public on the other. Fairness is the essence of successful regulation.

Has regulation been satisfactory?

Public Ownership.—By the methods which have been described in the foregoing pages the government has been able to protect, fairly well, on the whole, the interests of the public. Railroads, telegraph companies, electric lighting plants, and other similar corporations are no longer able to do as they please. On the contrary their owners are inclined to feel that public regulation has gone too far and has become oppressive. Yet regulation has not always been satisfactory to the public. The complaint is often made that members of public service commissions are chosen for political reasons and that their work, in such cases, is neither effective nor impartial. The success of regulation has varied in different parts of the country. In some states it has been satisfactory to both sides; in others it has satisfied neither.

Would public ownership be better?

Because regulation has not proved successful in all cases the proposal is sometimes made that the utilities should be taken over and operated by the government itself. Those who support this policy of public ownership believe that the national government should take over the railroads, telegraphs, and telephone lines, while the states and the cities should become owners of all the street railways, gas companies, and electric lighting concerns. These utilities should then be publicly managed, they argue, just as the postal service is now conducted by the national government, or as water supplies are now provided by the cities.[[236]]

Public ownership overseas.