THE events which led to the passage of the Public Service Commissions Law in the state of New York are of such recent occurrence that it might not be unnatural to assume that they are still fresh in the minds of every one interested in public affairs; but in our country political memories are so very short that it is never safe to assume a clear recollection of the most elementary facts in the situation of even two years ago. Four years is a political generation — the life of a national administration — and our whole political thought and action is thereby chopped into very short units.
In New York State with its governor’s term of two years, our political memories tend to be even shorter than in national affairs; and certainly it seems as if recent events had moved with almost enough rapidity to justify our vagueness. It is but little more than three years since the struggle for control of a great life-insurance company brought about a sort of family quarrel among its directors ; that quarrel uncovered a grave condition of affairs in’ which of necessity the public was seriously interested; that interest led to a legislative investigation; that investigation brought to the front an experienced, able, and fearless lawyer who had hitherto lived but little in the public eye; and that able lawyer probed the life-insurance scandals with such marked ability, high professional standards, and remorseless vigor that, when the Republican party of the state, crippled by savage quarrels among its leaders and much discredited by its recent record, looked about for a candidate who could win the election of 1906 it recognized that he was the one man who could defeat the political combination which had been formed against it.
It certainly is no secret that among the states of the Union, New York has endured its full share of that reckless disregard of the rules of sound finance which has characterized the rapid development of our public utilities in the last fifty years. In fact, we have had rather more than our share of the violation of monetary sanity and economic morals (to say nothing of economic decency) that has accompanied that development. The scandals attendant upon the earlier operations of the New York Central Railroad, the performances of Jim Fiske and his printing-press in the manipulations of the Erie, the story of Jacob Sharpe and his Broadway franchise, and last but not least the Interborough-Metropolitan merger, are only the more striking chapters in a long story of intrigue, corruption, and disgrace. The annals of almost every city in the state can show their own version of the combination of scheming promoters, selfish investors, uninterested citizens, and greedy politicians; their own record of valuable rights given away without foresight and often with the most revolting concomitants of bribery and corruption.
It would, of course, be grossly unfair to blame the condition of things which resulted entirely upon the corporations which were formed to develop the public utilities and to which the public grants or franchises were given. At the best they were developing services of vast importance to the communities; at the worst we can only say that it seems to be human nature with too many people in the business world to grasp at what seems to be for their greatest pecuniary advantage, without troubling themselves very much about general ethical considerations. On the other hand the “plain people” — the very ones who ought to be most interested in good government, — have seemed to be the very ones most unconcerned.
For a number of years, however, there has been developing a distinct change in the temper of the public mind toward such matters. There has arisen a renewed sense of the hatefulness of public dishonesty, a renewal of belief in the public trust involved in public office. If some of the manifestations of awakened conscience seem rather too overstrained and sensational to be quite sound or lasting, yet such states of mind often aid in producing important political results — as was the case in the autumn of 1906.
At that time there seemed to come about a political crisis as sudden as it was unexpected, although to the more far-sighted it had been in truth preparing lor several years. A not unnatural sense of injury and grievance had grown up as the public had followed the testimony in different investigations which seemed to open up ever new vistas of corruption; as it had followed the proceedings in the Standard Oil cases; had perused the highly colored revelations of “high finance” — by “one of themselves;” and had watched the proceedings of various reckless promoters and financiers, seeing those favored individuals amassing vast fortunes the origin of which lay in the public franchises which had been procured upon such easy terms.
It is at periods like this, when the people has lost confidence in its servants, in its old leaders, in the very framework of the social structure, — apparently almost losing faith in democratic self-government itself, — and is calling for some political Moses to lead it out of bondage, that there comes the moment eagerly awaited by the demagogue. Trading upon the righteous anger of the just, upon the prejudices of the unreasoning, upon the cupidity of the mercenary, upon the timidity of the politician, the demagogue becomes suddenly a menace to society; a menace, not because he may not be entirely right in his analysis of the situation, but because from the nature of the case he is a destructive and not a constructive force; and because he is always seeking, not how to apply genuine remedies, not how to safeguard the interests of the mass, but only how to turn the situation to his own personal advantage; a menace, because, even if he is honest in his aims, he has faith in progress by revolution rather than progress by evolution, believing in miracles rather than in science.
It is distinctly to the credit of the people of New York State that in the midst of a genuine crisis of political feeling there shoidd have been shown such careful weighing of all considerations before political action; that amid forceful appeals to passion and prejudice, based upon undoubted public grievances, there should have been upon both sides so much honest endeavor to think clearly and act justly. Probably at no election ever held in New York State was there so complete a breakdown of the ordinary political barriers. Republicans by thousands voted the Democratic ticket in whole or in part; Democrats by thousands voted the Republican ticket in whole or in part. While outwardly old party forms were maintained, in reality party ties in a large measure ceased to exist.
As the campaign developed it became a genuine choice between one who preached the gospel of disorder,1 under cover of a righteous outbreak against existing conditions on the one side, and on the other an exponent of calm, sane, and orderly progress. And it is a humorous illustration of the irony of history that the Republican party, which of the two political parties may fairly be held far the more responsible for the evils of the situation, should have been the one to place in nomination the genuine reformer; while the Democratic party should have thrown away the chance of a generation by allowing its opponents to play once more the old game so aptly described by Disraeli at the time of the repeal of the Corn Laws, when he averred that Peel had caught the Whigs in bathing and had run off with their clothes.
The result of the election was to seat in the governor’s chair an able and successful lawyer, a Republican who aims always to place state interests before partisan advantage, a man of the sincerest and most confirmed honesty, of a high ideal of public service, of determined convictions yet open mind; moreover, a man who realized fully that his election was simply an expression of public confidence in him personally in the midst of his party’s defeat. Governor Hughes realized to the full the political difficulties of the situation, and the dangerous temper of the public mind, along with the genuine grievances which lay behind and were the cause of it; so he at once set himself to grapple with the problem in the calm temper of a true statesman. The Public Service Commissions Bill was the outcome.
The law as it was passed contains five articles, the main points of which may be briefly touched upon.
1. By Article One the state is divided into two districts, with a separate and independent commission for each. The first district includes what is known as Greater New York,—the four counties of New York, Kings, Queens, and Richmond (or New York City, Brooklyn, Long Island City, and Staten Island), — and the second includes all other counties in the state. This division, suggested by the great difference in character of the problems in the two districts, has been already justified by experience.
The ten Commissioners, five for each district, are appointed by the Governor subject to the approval of the Senate, but removable by the Governor aloneThey must have no official relation to any corporation subject to the provisions of the act, nor own stocks or bonds therein. Neither shall they ask the appointment of any person to office by such corporations or receive from them any pass or reduction in fare.
Each Commission appoints its own counsel, secretary, and minor employees, and each single commissioner has full power to hold investigations and hearings, although an order must be approved by the Commission before it becomes operative. The Commission is not bound by the technical rules of evidence, but is free to get at the facts in the quickest and simplest way possible. All witnesses are duly protected, and the Commission can force attendance and secure testimony, refusal constituting a misdemeanor.
2. Article Two prescribes the duties of common carriers, which term includes, according to the wording of the act, “all railroad corporations, street-railroad corporations, express companies, car companies, sleeping-car companies, freight companies, freight-line companies, and all persons and associations of persons, whether incorporated or not, operating such agencies for public use in the conveyance of persons or property.”
Common carriers shall furnish to the public “such service and facilities as shall be safe and adequate and in all respects just and reasonable; ” and “all charges made or demanded . . . shall be just and reasonable and not more than allowed by law or by order of the Commission.” They shall provide proper switch and side-track connections; and shall file and keep open for “ public inspection schedules showing the rates of fare and charges for the transportation of passengers and property.”
There shall be no special rate, rebate, or unjust discrimination of any kind ; no “free ticket, free pass or free transportation of passengers or property,”exception being made of officers of the railway and certain other specified individuals. But this provision is not to prevent the issuing of mileage or commutation tickets.
There must be sufficient and suitable cars for freight in carload lots; sufficient cars and motive power on railroads and street railroads to meet all requirements for the transportation of passengers and property; the Commission being expressly given power to make suitable regulations for the furnishing of freight cars and for demurrage charges.
3. Article Tliree continues the provisions relating to common carriers, dealing especially with the powers of the Commission for carrying the provisions of Article Two into effect.
Power is given to the Commission: —
(a) To examine into the general condition, capitalization, franchises, and management of all common carriers;
(b) To examine all books, contracts, records, documents, and papers, and to compel their production;
(c) To conduct hearings and take testimony on any proposed change of law when requested to do so by the Legislature, by the Senate or Assembly Committee on Railroads, or by the Governor;
(d) To prescribe the form of annual reports;
(e) To investigate accidents;
(f) To investigate as to any act done, or omitted to be done, in violation of law or of any order of the Commission;
(g) To fix rates and service;
(h) To order repairs, improvements, or changes in tracks, switches, terminals, motive power, or any other property or device, in order to secure adequate service;
(i) To order changes in time schedules by increasing the number of trains, cars, or motive power, or by changes in the time of starting its trains or cars;
(j) To establish a uniform system of accounts and prescribe the manner in which they shall be kept.
The approval of the Commission is necessary for various things. Without it
(a) No construction of a railroad or street railroad, or extension of existing lines, shall be begun;
(b) No franchise shall be assigned or transferred;
(c) No railroad or street railroad or other stock corporation shall purchase or hold any capital stock of any other road ;
(d) No stocks, bonds, notes, or other evidences of indebtedness (except notes payable within twelve months) shall be issued;
(e) No merger or consolidation of existing companies shall be made; and in case such merger is approved, it is provided that the capital stock of the merger shall not exceed the sum at par of the capital stock of the corporations so consolidated, or any additional sum paid in cash.
The penalties for failure to comply with an order of the Commission are drastic. Each day’s violation constitutes a separate offense, and for each offense the penalty is $5000 if by a common carrier, $1000 if by other than a common carrier. Every individual who aids or abets any violation of an order of the Commission, or who fails to obey, or aids or abets any corporation in its failure to obey, is guilty of a misdemeanor. In case the Commission believes that a common carrier is violating the law or an order of the Commission, it may commence an action to secure relief by way of mandamus or injunction, and the court shall require an answer within twenty days.
4. Article Four applies practically similar provisions to the gas and electric companies. It also provides for inspection of all gas and electric meters. The Commission has the right to fix rates Upon proper complaints as to quality or price, not only of that supplied by private persons and corporations, but of that supplied by municipal lighting plants as well; it has power to examine the books and affairs of the producers, to approve of all incorporation and franchises, and of all stocks, bonds, and other indebtedness; in short, this article is similar in aim to the preceding, although, having been drafted with less success, it is in places somewhat obscure. It is to be hoped that amendments to the law will soon remedy these defects.
5. In Article Five the act comes to an end with the abolition of the former Railroad, Gas and Electricity, and New York City Rapid Transit Commissions, and the state inspectors of gas meters; followed by the necessary provisions for the transfer of records, the continuance of pending actions and proceedings, and the necessary appropriations.
But there has not been mentioned the most vital and far-reaching clause of the bill. In Section 55 occurs the following: “ The Commission shall have no power to authorize the capitalization of any franchise or the right to own, operate or enjoy any franchise whatever in excess of the amount (exclusive of any tax or annual charge) actually paid to the State or to a political subdivision thereof as the consideration for the grant of such franchise or right.” In other words, the law decrees that hereafter the grant given by state or municipality shall not be treated as a private asset of the corporation and its value represented in stock, but that the value of the franchise and the increment thereof shall remain forever the property of the state.
To call this law a piece of radical legislation is to speak mildly; it seems to mark an epoch in the history of New York State; for the corporations affected by the stringent provisions of the law are among those upon which the whole structure of our present business system rests. Without the railroads modern commerce would be impossible; without the street railroads our cities could not spread their vast populations out into their ever-growing suburbs, and social conditions would be completely altered; gas and electricity are not merely essential to our comfort, they are necessary to the existing order - all of these public utilities are vital elements in the lives of every one of us, and a law which compels such a complete readjustment of their relations to the state on the one side and the public on the other is not merely radical, it is revolutionary.
To many people the bare suggestion that state or municipality shall undertake to regulate any business hitherto in private hands is at once denounced as “socialism.” I must confess to having only the vaguest notion of what “socialism ” is, but judging from the current use of the term it means anything you want the state to do that I do not want it to do. It has been urged against the Public Service Commissions Law that it is “socialism.” Perhaps it is; but people are not going to be frightened by a mere word. Before we begin to tremble suppose we look the facts squarely in the face and see what this law is intended to accomplish; and recall why it seemed necessary for such a law to be passed. And it might be well for us to disabuse our minds of preconceived notions and prejudices for things as they are, and think rather of things as they ought to be.
The English race, including ourselves as at least a political branch thereof, has certainly never shown any great liking for monopolies. When such were fostered by government and bestowed by royal prerogative they were the objects of popular hatred and the causes of rebellion; and the feeling against them to-day is less strong only because we have felt ourselves to so large an extent free of them. Some of us, to be sure, have seen in the iniquities of our tariff some of the worst features of monopolies; but we have never as yet succeeded in impressing these views very deeply upon the mass of our fellow citizens. The general public, feeling that it owned and could control the government, has been singularly careless and thoughtless in the matter until of late; for it felt that in any event the remedy was close at hand. The old cure for monopolies was a simple one — abolish government protection and let competition have its way. And in most cases where a monopoly seeks to control the output of some ordinary article of trade or manufacture, this remedy has been successful; and the belief that “competition is the life of trade ” has been until lately one of the articles of commercial orthodoxy.
When our great modern public utilities first came into being, they were not recognized as infant monopolies. When a man wished to build a railroad he was regarded only as a daring adventurer who was about to start a new and superior line of coaches on a strange private highway, — merely a new element of competition. It was the same with a gas company, gas being at first only a newfangled light trying to prove its doubtful superiority over lamps anti candles. Electricity was in its turn only a competitor of gas; a street-car line a competitor of the more expensive cab company; an inter urban trolley a competitor of the railway. All these were merely new and comparative conveniences which science was putting within our reach, which we could trust private ownership to develop and which competition would regulate. The ordinary American merchant or manufacturer, intent upon his own business and satisfied if he was making it pay, was also satisfied if he was getting from railroad, express company, telegraph, or telephone the service that his own particular business required; and he was little inclined to question the right of investors, who were bringing to him the business advantage of a very useful public service, to do what he himself was doing — make as much money as possible on the investment. And while merchants and manufacturers were thus absorbed and the general public indifferent, what was originally a mere competitive public convenience was fast becoming a public utility; and then, before we realized it, it had become an absolute public necessity. We suddenly woke to find the business world struggling to readjust itself to new and strange conditions — to the pressure of brutal bigness: enormous railway systems, gigantic mergers, worldwide trusts, accumulators of fabulous millions; the vast scale of the operations seemed in itself terrifying.
The old theory was that railroad or gas company, trolley or power company, under a minimum of public supervision, should be managed like private business corporations, — primarily, if not exclusively, for the financial benefit of the investors. To be sure, under the fostering care of the older generation of railroad manipulators, that theory received some rather severe shocks, and we realized that the investors frequently failed to get their share of the profits; nevertheless, whatever the practice, the theory was still held to be sound. But under the new order, our ideas have changed, as we have seen these great railroad systems utilized by commercial monopolies to fasten their hold upon the public and crush out competition with remorseless vigor; as we have seen valuable franchises secured for favored individuals, all too frequently by methods utterly abhorrent both in law and morals; as we have come to realize the power which lies in the hands of an irresponsible board of directors to stimulate artificially one community while it may destroy another; as the knowledge has been slowly burned into our consciousness that public-service corporations were after all managed by men very human in their weaknesses, greedy for power and wealth, and no more successful in resisting temptation than the rest of mankind. Studying these corporations more closely, we have seen the newer companies — railroads, interurban electric roads, and lighting companies — being managed primarily if not exclusively for the benefit, not of the investors, but of those who could induce investors to invest. A new form of human pest has thus made its appearance — the promoter; and a new science of commerce and banking has made its appearance, which I think has not been named yet. “New ” did I say ? To some of us these new friends look most uncommonly like our old acquaintances Dick Turpin and Jack Sheppard in a fresh disguise; and the new commerce and banking have a most unseemly resemblance to an old amusement known as highway robbery. Wordsworth’s Rob Roy was not the first to invent that
That they should take who have the power
And they should keep who can.
Nor has he been the last.
In this latest variation of the old game the interests of the investor and the interests of the public alike have been overlooked; but it is all a very logical outcome of the original mistake — the theory that a public utility is a mere matter of private business. We should not therefore expend our rhetoric against the corporations, — they were often more sinned against than sinning, for had it not been for our own blindness they would never have been left to pursue their objects too frequently in what now seems to us a highly predatory manner.
If it has taken us a long time to realize that public-service corporations are in their nature monopolistic, it is also taking us a long time to get over the idea that the safeguard of the public is competition. Therefore, legislatures have chartered rival raihoads, and common councils have granted franchises to rival trolley, gas, and electric companies; only to find that almost inevitably, after a brief period of cut-throat competition, with threatened failure to both companies, there was a consolidation, overcapitalization, and relatively, if not actually, higher charges; and thus for the poor consumer the last state was worse than the first.
In New York we seem at last to have waked up to the fact that in these public utilities there not only never has been any genuine competition, but from the nature of the case there never could be; we are also learning that if justice is to be done to the public as well as to the corporation, — to the buyer as well as to the seller, — something else must be substituted in place of competition, and that something we are now to try in the shape of state regulation.
The policy of state interference in any business is not one that we naturally take kindly to in this country; and we have certainly not been hasty in trying it in New York State. So long ago as 1879, the Hepburn Committee investigation pointed out some of the evils of rebates and other railway practices as clearly as has ever been done; yet it was 1906 before the legislature took any effective action in regard to the matter; and our municipalities as well as the state have been very slow to exert their powers. Of course, opinions will continue to differ as to the advisability of state interference; but in the judgment of those who read best the trend of the public mind, the time has gone by when there can be much dispute over the main contention; the only question is how far the state shall go. For the exact point where private action may best end, and the community itself should take hold, has certainly not been discovered yet; nor is it likely ever to be settled, for social conditions shift quite as rapidly as social experiments are made; and where can we draw the dividing line ?
Some lawyers will tell us that there is no dividing line in this particular matter, that there is no essential difference between a public-service corporation and any other, and that it is simply a question of public policy as to what business the state shall undertake to regulate, and what it shall leave without interference. Others will say that however hard it is to draw a dividing line, yet there is certain territory which is quite obviously on one side of the line, wherever the line may be, and certain territory quite as obviously on the other. Also it seems to be true that a certain business may stand on one side of the line in one generation and occupy the other side in tire next. For many centuries it was public policy to subject the innkeeper to stringent regulation in the public interest; but with the growth of modern conditions it has ceased to be necessary, and a modern hotel company can hardly be classed as a public-service corporation. On the other hand, when a virtual monopoly in the supply of some necessity of life has come into existence, that business certainly is drifting over the line into territory where some sort of public regulation seems inevitable.
All the businesses which are placed under the jurisdiction and supervision of the New York Public Service Commissions are, more or less, monopolies depending upon some form of public grant or franchise. Not only are our railways great state highways, but the companies that own them own also the means of traversing them and of transporting goods along them. Our street railways occupy the public thoroughfares under exclusive grants from municipalities. The gas companies must get permission from the city to dig up the public streets, and electric-light companies to erect their poles. Express, freight-line, and sleeping-car companies only supplement the work of the railway. Not one would be able to exist except for the public grant which is its foundation; it is therefore to the state that we must now turn for relief against the power of the monopolies which have been allowed to rise upon that foundation.
When we come to a consideration of these franchises the first thing we find is, that, although in most cases the corporation had paid nothing to the state or municipality for the franchise, yet no sooner has the franchise been secured than it has been capitalized, often at an enormously inflated valuation, and the resulting securities have been marketed in the same way as those for which good solid cash has been paid.
Now, as a matter of fact, the value of a franchise is very fluctuating — a thing impossible to fix. The franchise of a non-existent railroad is of no inherent value; on the other hand the value of the same franchise, after fifty years’ development of the road and growth of the communities about it, may almost exceed imagination; but since the state has claimed the right to regulate rates, thus demolishing the theory that the railroad conducts a private business, the value of every railroad franchise in the state as a basis for an issue of securities is very materially diminished if not obliterated.
If the franchise is something of value, the state should certainly not give it away; if it is of no value, then the corporation should not capitalize it; but to secure it for nothing and then capitalize it, is “special privilege ” with a vengeance. The worst of the matter however is this, that when the corporation proceeded to capitalize the franchise, upon the theory that it represented an asset upon which returns in the shape of dividends should be paid, — the same as if it were money invested in the enterprise, — the corporation was on the one hand receiving from the state a gift of more or less value, and on the other forcing the state to pay perpetual tribute upon the very thing it had given away — to the tune of many times its actual value when the promoters were clever enough to “discount the future ” in their issues of stock. When you come to dissect the matter and look it over coolly it does seem as if this were on the whole the most skillful confidence game which has ever been worked on the public; for the experienced financier, after capitalizing his franchise, could unload the watered securities on the “widow and orphan,” and place the resulting cash in “gilt-edged ” investments far removed from inquisitive legislators and public-service commissions.
This is not saying — and let this point be made quite clear — that there have not been many noble and high-minded men connected with our public-service corporations; that the development of public utilities has not been of immense value to the community; nor that they have not often been conducted with the highest motives of philanthropic enterprise, But it is an assertion that the theory underlying the treatment of the franchise was wrong and the system built upon it was bad; and that the time has now come to open our eyes and look facts squarely in the face. When we do so, we find that the right of the legislature of state or city to give away a franchise in perpetuity cannot be successfully defended.
The legislature is the agent of the existing population, and its members, as our accredited representatives, may barter away present rights — vours or mine of to-day; but they may not dispose of rights which belong to our children and our children’s children as much as to us, for the future is not ours to give. They may allow private development and management of public utilities for the sake of immediate public advantage, and any such investment should be protected from unjust and unreasonable competition, and should be held sacred for the investors; but the franchise itself is something which may not be given away because it is not within the province of the legislature to give away that which does not belong to the existing community. A franchise granted by the legislature of fifty years ago, for instance, belonged then to us of to-day quite as much if not more than to our grandfathers who handed it over to some railroad in perpetuity; it belongs to us now as it will belong to our grandchildren in their turn. The action of the legislature of two generations ago in giving away our birthright is not morally a binding contract upon us to-day, when it comes in conflict with present or future public interest; and the vested rights of the private inheritors of that franchise will not finally stand when they come in conflict with the vested rights of the state.
Some people will tell you that the state is nothing more than the sum of its inhabitants; and that when you speak of the state as more than that, you are using the term of a sentimental abstraction which does not exist. Yet any man who can feel the thrill of patriotism knows that this is not so. The state is the future; it is the sum of its inhabitants not only of to-day, but of to-morrow, the day after, and so on to the end of time. And it is exactly the rights of the state of the future that have been forgotten in our dealing with the public-service corporations.
There are therefore three parties in interest; the Public, the community of today, demanding fair treatment for every individual, large manufacturer or small, rich and poor alike; the Public-Service Corporation, demanding just and liberal treatment for those who are willing to invest their capital in developing a public utility; and the State, standing for the whole community in its continuing capacity from generation to generation, — from now into the far distant future,— and demanding that these great questions shall not be considered as of to-day, but that the decision in all matters of public policy shall take the road which leads often away from immediate results toward the best results for the time to come. And of these interests the last is by no means the least important, “Conscience and the present constitution of things are not corresponding terms. It is conscience and the issue of things which go together.” 2 It is because of its endeavor to restore a proper balance to these three interests that the Public Service Commissions Law marks so great a step in advance.
A few words in closing as to the practical operation of the law in New York. The Commissions have been in existence only nine months — and that is a short time for a revolution to be consume mated ; but already experience has shown the immense value of the law. Merchants and manufacturers have a powerful tribunal before which they can plead for justice and efficiency; any individual with a well-grounded complaint against a corporation can have it brought to its attention by the Commission far more forcibly than he himself can bring it; the issues of stocks and bonds by these corporations are for the first time subjected to rigid scrutiny, and it is safe to say that very little water will leak into such securities in the future; — in every way the rights and interests of the public are being safeguarded as never before, and the public is becoming aware of the fact. For the first time in their history these great corporations realize fully that there is a higher power above them — a power to which the public can now appeal: they have been shorn of their ability to dispense life or death to businesses, to tyrannize over individuals, or to ignore the interests of the public — for above them is the state, demanding justice and fair treatment for every one of its citizens and enabled to enforce its demands.
It is only fair to add that on their part the corporations have shown both good sense and good temper in accepting the law graciously, and doing all in their power thus far in carrying out its provisions and the orders and requests of the Commission. Many a complaint never reaches the Commission; the complaint is remedied by the corporation as soon as it is made known. In truth, the wiser among the corporation managers see plainly that the law null be their best defense against dangerous legislation; that the Commission will stand as a barrier against injustice to the corporations on the one hand, while it affords relief to the public against injustice on the other.
It will lead to a safer and better condition of things all around — the public will see that its rights are safeguarded, and demagogic appeals will lose their force and effectiveness; the corporations will be protected against destructive competition and blackmail, and assured of a fair return on honest investment; hence should result a return of public confidence in the securities of the corporations — which ought in turn to be as good and conservative investments as any municipal bonds. There will be two classes of people, but I think only two, who will suffer from the law, — those among the capitalists and promoters who are too greedy to be content with their fair share, who wish to reap where they have not sown; and the demagogues and agitators who will feel themselves cheated out of their best weapons of attack. But if both these classes could be put permanently out of business the world would be duly grateful.
That all these desirable things will come at once no one will expect; that they are coming, and that the Public Service Commissions Law will justify the expectations of its promoter, many of us fervently hope and believe. That act is upon the statute book not merely because a governor of New York wished to alter the law, but because public opinion justly demanded a change in existing conditions. The old footing of the public-service corporations was intolerable; something new had to be substituted for the false and outworn theory of competition, in order to protect the public and the state. Governor Hughes recognized the voice of the people demanding reform, and the result was an effective piece of legislation which fairly entitles its author to be considered as that rather rare personality in American politics — a constructive statesman.
For my own part and speaking as a Democrat, I welcome a law which seems to me not only essentially Democratic in principle, but in line with frequent declarations of the party policy — an effort to root out one of the most insidious forms of special privilege and to regulate in the name of the people these great monopolies which have been for many years disturbing factors in our social and political development.