II.

Regulation of Public Service Corporations

"I am here retained by the people of the State of New York to see that justice is done and with no disposition to injure any investment, but with every desire to give the fullest opportunity to enterprise and with every purpose to shield and protect every just property interest. I stand for the people of the State of New York against extortion, against favoritism, against financial scandal, and against everything that goes to corrupt our politics, by interference with the freedom of our Legislature and administration. I stand for honest government and effective regulation by the State of public-service corporations."-From Governor Hughes's Speech before the Elmira Chamber of Commerce, May 3, 1907.

I.

Message to the Legislature, January 2, 1907, Recommending the Passage of a Public-Service Commissions Law.

Proper means for the regulation of the operations of railroad corporations should be supplied. For want of it, pernicious favoritism has been practised. Secret rebates have been allowed, and there have been unjust discriminations in rates and in furnishing facilities for transportation. Those who have sought to monopolize trade have thus been enabled to crush competition and to grow in wealth and power by crowding out their rivals who have been deprived of access to markets upon equal terms. These abuses are not to be tolerated. Congress has legislated upon the subject with reference to interstate commerce, where naturally the evil has been most prominent.

But domestic commerce must be regulated by the State, and the State should exercise its power to secure impartial treatment to shippers and the maintenance of reasonable rates. There

is also need of regulation and strict supervision to ensure adequate service and due regard for the convenience and safety of the public. The most practicable way of attaining these ends is for the Legislature to confer proper power upon a subordinate administrative body.

We have now a Board of Railroad Commissioners of five members. It is charged specifically with important duties. The execution of mortgages and the increase or reduction of capital stock are subject to its approval, its certificate that public convenience and necessity require the construction of a projected railroad is required before construction can be begun, and it deals with changes in highway grade crossings, and various other matters in a definitive way.

The law also provides that the board "shall have general supervision of all railroads and shall examine the same and keep informed as to their condition and the manner in which they are operated for the security and accommodation of the public and their compliance with the provisions of their charters and of law." If in the judgment of the board it appears "that any change of the rates of fare for transporting freight or passengers or in the mode of operating the road or conducting

its business is reasonable and expedient in order to promote the security, convenience, and accommodation of the public," it may after notice and hearing fix a time within which the changes shall be made.

But the action of the board in the exercise of this general power of supervision amounts to a recommendation. If its direction is not complied with, the law provides that the matter shall be presented to the Attorney-General for his consideration and action, and shall be reported to the Legislature. So, if it appears that any railroad corporation has violated the law or unjustly discriminates in its charges, and the wrongful conduct is continued after notice, the matter is to be brought to the attention of the Attorney-General, “who shall take such proceedings thereon as may be necessary for the protection of the public interests."

The present scheme of regulation is inadequate. There is a lack of precision in the definition of the powers of the board and an absence of suitable means to compel compliance with its decisions. No penalties are provided for disobedience to orders of the board made within its proper authority. Nor is the board authorized to institute and