vestigation of the gas service in New York City, advised that "the entire system of lighting the city should be under the control of practical chemists, whose duty it should be to determine the quality of gas furnished, and, in case the companies do not comply with the law, should have power to compel them to do so".20 A bill to this effect failed to pass, but it was clear that the single "Inspector of Gas Meters" was unable to prevent abuses.21 The rapid transit problem of New York City, at first as now not so much one of regulation as of getting sufficient service, became pressing as early as 1866, and was partially solved by the Rapid Transit Acts of 1875 and later years, creating temporary and later permanent commissions. Meanwhile the agitation for a railroad commission was revived, and in 1882 New York followed the lead of Massachusetts by creating an advisory Railroad Commission which lasted until 1907.22 The regulatory commission was gaining ground, from Massachusetts to California, in the nation as well as in the states. In 1885, as in 1869, New York and Massachusetts acted simultaneously. To gain its own ends against J. Edward Addicks, the Boston Gas Company induced the General Court of Massachusetts to create the Board of Gas Commissioners, a fairly successful advisory commission, still existing as the Board of Gas and Electric Light Commissioners.23 In the same year a committee of the New York Senate investigated the gas business in New York City, found the charges of extortion and poor service substantially true, and learned that competition had failed, and must fail, to regulate.24 The recommendations of this committee are remarkable, but only the price reduction was adopted as law.25 The legislature, contrary to the advice of 20 New York Gas Investigation Report (1869). 21 The office of inspector was created in 1859 and was not abolished until 1907. This commission was created only after a bitter struggle between Assembly and Senate, 1876-1882, and came out a distinctly "weak" commission, which became later a "refuge of incapable politicians". See J. H. Gray, "The Gas Supply of Boston," in the Quarterly Journal of Economics, vol. 12, pp. 419-46; vol. 12, pp. 15-44, 292-313; vol. 14, pp. 87-120. 24See note 9 for one bit of testimony. The recommendations are as follows (verbatim): Specific Remedies Recommended 1. The establishment of a board of lighting commissioners for the city of New York. the committee, attempted to enforce "greater freedom for the incorporation of gas companies, with a view of securing competition", while Governor Hill vetoed the bill creating "a commission of three members to control the gas companies of New York City" because the powers proposed were too drastic and the jurisdiction provided not state-wide.26 In 1887 he recommended an advisory commission, state-wide in authority, "to be maintained at the expense of the gas companies". In 1889 and in 1891 he recommended a state commission to supervise gas, electric light, telephone, and telegraph companies. In 1901 Governor Odell recommended the placing of gas and electric light companies under the Railroad Commission. It is evident that the movement for expert commissions to regulate municipal public services was almost synchronous with the movement for railroad commissions; without denying the influence which the succcess of railroad commissions had upon the movement, it still seems somewhat far-fetched to say that "the state public utility commission has been an evolution from the state railroad commission".27 2. Authority to such board to ascertain and certify the cash capital actually paid in by the bondholders and stockholders, and a limitation of dividend to ten per cent on that amount, and the credit of further net earnings to stockholders and consumers. 3. Authority to such board to supervise the conduct of such companies, and receive and investigate complaints made by consumers. 4. A reduction of the price of gas to $1.50 per thousand feet, with power to such board to further reduce the price as the circumstances may warrant. 5. Annual reports of the earnings, disbursements, gas manufactured, sold, and such other facts as will give publicity to the transactions of such company. 6. Prohibition against further increase of capital stock, and limitation upon the power to issue bonds or mortgages. 7. A fixed standard of the purity and illuminating power of gas, and a careful record of the same, and the pressure employed. 8. Prohibition against the laying of mains in the streets by companies other than those now entitled, without consent of the board of lighting commissioners and the Legislature. These recommendations have been embodied in a bill, which, with the evidence on which these conclusions are based, accompanies this report. EDWARD B. THOMAS, Committee. *See Annual Report of the First District Commission for the Year Ending Dec. 31, 1907, vol. 1, pp. 451-52, in appendix J. This appendix contains a brief résumé of "The History of State Regulation in New York." "C. L. King, The Regulation of Municipal Utilities (1912), p. 253. The creation of the Massachusetts Board of Gas and Electric Light Commissioners was the counsel of despair of the Boston Gas Company. In New York an inefficient Railroad Commis From 1885 to 1907 the feasibility of having state commissions to regulate municipal and other public utilities was discussed, indeed, but no action was taken.28 The municipal ownership propaganda held the center of the stage right up to the year 1907. In November, 1906, Mr. J. W. Garner wrote: "A steady expansion in the scope of municipal functions is clearly evident,"29 and it is true that some states were empowering cities to municipalize certain public service industries.30 But, on the other hand, state legislatures were intervening directly in local public service affairs, and were extending the powers of state supervisory boards over not only such industries but over municipalities themselves, and this was the more fruitful movement.31 It may justly be said that the creation of public service commissions in New York and Wisconsin in 1907 was only one step in advance upon a known road.32 In 1902 the gas companies in New York City became intractable and almost insulting, and the people were aroused to great anger against the combine and its friend, Tammany. In 1905 a joint legislative committee, headed by Frederick C. Stevens and counselled by Charles E. Hughes, investigated affairs. and found conditions deplorable. The committee's report pointed out especially the failure of competition to prevent exorbitant rates and overcapitalization,33 and it advised regulation by a permanent state commission. The legislature reduced prices somewhat and created an advisory Commission of Gas and Electricity, which existed July 20, 1905 to June 30, 1907. sion had to be destroyed to make room for the Public Service Commissions in 1907. However, in Wisconsin the duties of public service regulation were given (1907) to the Railroad Commission. For interesting discussions coming about the year 1900, see E. W. Bemis, Municipal Monopolies (1899), pp. 631-80; L. S. Rowe, in the Annals of the American Academy, vol. 15, pp. 9-20, in supplement of 1900; A. R. Foote, Municipal Public Service Industries (1899). American Political Science Review (Nov., 1906), vol. 1, p. 120. 30See "Notes on Current Legislation" in the American Political Science Review for 1906 for examples. 31Ibid. 32Cf. an editorial in Engineering News (June 13, 1907), vol. 57, p. 652. 83The capitalization of franchise and good-will values was particularly pointed out. Extortion had been made the excuse for more extortion; the Consolidated company had "capitalized its grip upon the public". For brief accounts of the events reviewed in this paragraph, see R. C. Monroe, Annals of the American Academy (Jan., 1906), vol. 27, pp. 200-202; Annual Report of the Public Service Commission for the First District for Year Ending Dec. 31, 1907. vol. 1, pp. 451-52. After some investigation this commission advised that the price of gas in New York City be reduced to eighty cents; this became law,34 but the Consolidated Gas Company prevented its enforcement by an injunction.35 The reform wave was strong in New York that year, and this blocking of the legislature's will had considerable influence in putting the people behind Charles E. Hughes, whose success in the gas and insurance investigations had made him a popular candidate for governor, and who now advocated regulation of public services by powerful commissions. The election put him in office and gave him a legislature ready to do what the people desired. Within six months the notable Public Service Commissions Law had been. passsed.36 The bill was drawn by Mr. Alfred R. Page, of the Senate, and Mr. Edwin A. Merritt, Jr., of the Assembly, assisted by Governor Hughes and his counsel, Dean Ernest W. Huffcutt. The ultra-democrats, the Hearst papers, and the corporations found equally good, though somewhat diverse, reasons for opposing the bill, the latter having a special publicity bureau. But in the end the bill, amended for the better, passed almost unanimously, becoming law June 6, 1907.37 It went into effect July 1, and in the meantime Governor Hughes appointed the ten commissioners without yielding to any political demands,3 and without reappointing any of those "incapable politicians", the former railroad commissioners, who, together with the rapid transit commissioners, the inspector of gas meters, and the gas and electric light commissioners, found themselves deprived of office by the act. II. PROVISIONS OF THE LAW 38 The Public Service Commissions Law of New York was amended in 1910, 1911, and 1912, but the amendments have not been of great importance save that in 1910 the Second District 24 Laws 1906, chap. 125. *See "Notes on Current Legislation" in the American Political Science Review (Nov., 1906), vol. 1, p. 98. Besides the official message and the newspaper accounts, editorials in the Nation, vol. 84, the Outlook, vol. 85, and Engineering News, vol. 57, p. 300, throw interesting side-lights on the passage of the bill. Without the acceptance of New York City, however. See editorial in the Nation (Jan. 30, 1908), vol. 86, p. 94. Commission was given jurisdiction over all telephone and telegraph companies in the State.39 The law as herein described is "As Revised and Amended to Close of Legislature of 1912", and issued in an eighty-page pamphlet by the commissions.40 It is a document of about twenty-eight thousand words,41 and is divided into six chapters. For purposes of analysis and discussion, this outline will be followed: (1) The organization of the commissions; (2) definition of the duties of public utilities; (3) the powers of the commissions to investigate public service industries and to force them to perform their duties; and (4) procedure before the commissions, and court review.42 1. THE ORGANIZATION OF THE COMMISSIONS Conditions in New York State are unique. Over half of its people are in one great urban district, and the whole state has over four times the population of Minnesota in not much over half its territory. The needs of the Greater New York district are distinct from those of the rest of the State. Recognizing these facts, Governor Hughes and the legislature of 1907 created two commissions, one for this great urban district, the other for the up-state district, with a careful division of authority. The First District (New York City) includes the counties of New York (the city), Kings, Queens (on Long Island, embracing Brooklyn), and Richmond (Staten Island). The remainder of the State, including the most of Long Island, is designated the Second District, popularly the Up-State District. The First District Commission has its headquarters in New York City, the Second District Commission in Albany. The jurisdictions of the commissions are not absolutely controlled by the boundary line fixed between the two districts. There is a very complex arrangement involving overlapping on both sides, but the whole is strictly harmonious.43 The First District Commission is not given any power of regulating telephone and telegraph companies, though technically there may be some exclusively in the first district which do not come under the control of the Second District Commission. 40This pamphlet is used by the author throughout. 41Computed by the author. 42This outline has the sanction of E. H. Downey, and is practically founded upon his plan. See Regulation of Urban Utilities in Iowa, pp. 86-7. 43 See chart attached as appendix I, page 41, which is an attempt to portray in con |