that commodity when desired by the holder, but instead of being able, as formerly, to compel the holder to accept payment of such orders in coal, the holder may, under the act, compel defendant to pay them in money. In this way and to this extent the defendant's right of contract is affected. Under the act, as formerly, every employee of the defendant may receive the whole or a part of his wages in coal orders, and may collect the orders in coal, or transfer them to some one else for other merchandise or for money. His condition is bettered by the act, in that it naturally enables him to get a better price for his coal orders than formerly, and thereby gives him more for his labor; and yet, although the defendant may not in that transaction realize the expected profit on the amount of coal called for in the orders, it in no event pays more in dollars and cents for the labor than the contract price. The scope and purpose of the act are thus indicated. The legislature evidently deemed the laborer at some disadvantage under existing laws and customs, and by this act undertook to ameliorate his condition in some measure by enabling him or his bona fide transferee, at his election and at a proper time, to demand and receive his unpaid wages in money rather than in something less valuable. Its tendency, though slight it may be, is to place the employer and employee upon equal ground in the matter of wages, and, so far as calculated to accomplish that end, it deserves commendation. Being general in its operation and enforceable by ordinary suit, and being unimpeached and unimpeachable upon other constitutional grounds, the act is entitled to full recognition as the 'law of the land' and 'due process of law' as to the matters embraced, without reference to the state's police power, as was held of an act imposing far greater restrictions upon the right of contract, in the case of Dugger vs. Mechanics' & T. Ins. Co., 95 Tenn. 245, 28 L. R. A. 796, 32 S. W. 5, and as had been previously decided in respect of other limiting statutes therein mentioned. 95 Tenn. 253, 254, 28 L. R. A. 799, 32 S. W. 6, 7. Furthermore, the passage of this act was a legitimate exercise of police power, and upon that ground also the legislation is well sustained. The first right of a state, as of a man, is self-protection, and with the state that right involves the universally acknowledged power and duty to enact and enforce all such laws, not in plain conflict with some provision of the state or federal constitution, as may rightly be deemed necessary or expedient for the safety, health, morals, comfort, and welfare of its people. The act before us is, perhaps less stringent than any one considered in any of the cases mentioned. It is neither prohibitory nor penal; not special, but general; tending towards equality between employer and employee in the matter of wages; intended and well calculated to promote peace and good order, and to prevent strife, violence, and bloodshed. Such being the character, purpose, and tendency of the act, we have no hesitation in holding that

it is valid, both as general legislation, without reference to the state's reserved police power, and also as a wholesome regulation adopted in the proper exercise of that power."

Perhaps, however, the real reasons for these decisions and the reasons which will appeal with the greatest force to the public as a whole are those which are contained in the opinion of the court in the case of Peel Splint Co. vs. State,1 which was decided about the same time and in which the supreme court of West Virginia said:

We base the decision in this case. First, upon the ground that the defendant is a corporation in the enjoyment of unusual and extraordinary privileges which enables it and other similar associations to surround themselves with a vast retinue of laborers, who need to be protected against the fraudulent or suspicious devices in the weighing of coal or payment of wages for labor; Secondly, the defendant is a licensee, pursuing a vocation which the state has taken under its general supervision for the purpose of securing the safety of employees, by ventilation, inspection and government report, and the defendant, therefore, must submit to such regulations as the sovereign thinks conducive to public health, public morals and public security. We do not base this decision so much upon the ground that the business is affected by the public use, but upon still higher ground, that the public tranquillity, the good and safety of society, demand, where the number of employees is such that specific contracts with such laborers would be improbable, if not impossible, that in general contracts justice shall prevail as between operator and miner; and, in a company's dealings with a multitude of miners with which the state has by special legislation enabled the owners and operators to surround themselves, that all opportunities for fraud shall be removed. The state is frequently called upon to suppress strikes; to discountenance labor conspiracies; to denounce boycotting as injurious to trade and commerce; and it cannot be possible that the same police power may not be invoked to protect the laborer from being made the victim of the compulsory power of that artificial combination of capital which special state legislation has originated and rendered possible. It is a fact worthy of consideration and one of such historical notoriety that the court may recognize it judicially, that every disturbance of the peace of any magnitude in this state since the civil war has been evolved from the disturbed relations between powerful corporations and their servants and employees. It cannot be possible that the state has no police power adequate to the protection of society against the re-occurrence of these disturbances, which threaten to shake civil order to its very foundations. Collisions between the capitalist and the working man endanger the safety of the state, stay the wheels of commerce, discourage manufacturing enterprise, destroy public confidence and at times throw an idle population upon the bosom of the community.2

136 W.Va. 802.

The reasoning of this case was affirmed and its language quoted with approval by the Supreme Court of the United States in the case of Knoxville Iron Co. vs. Harbison, 183 U.S. 13, 22 Sup. Ct. 1.

The significance of these cases, and of the judicial change of front and public policy in them expressed is very great. In them is an assertion of the rights of the independent public which in labor disputes have heretofore been too often ignored. They, it will be seen, would justify the state of Pennsylvania and the sister states in which sympathetic strikes are being inaugurated, in settling the controversies by legislative action. In other words, when the contestants are not able to settle their controversies between themselves, and the public peace and welfare are being jeopardized, in stepping in and prescribing the rules and regulations under which the industries shall be conducted. They sanction not, it is true, a compulsory arbitration, but the prescribing by the state legislatures the rules which shall control in the conduct of the businesses. The matters which were in dispute in the coal fields of West Virginia and Tennessee were, to all intents and purposes, the same matters as those which were in dispute in the recent coal strike in Pennsylvania, and in the strike which is now threatened. They were disputes over the method of weighing coal, the method of paying wages and the paying of such wages in orders on the company's stores or truck-shops. In the opinions the courts take the broad position that every business man and every man who seeks the protection of society in order that he may live and do business, and who calls upon that society for protection from physical harm and upon its courts for the enforcement of his contracts, must be willing to yield to that society some measure of regulation and control when that control is necessary for the preservation of the public peace and the public welfare. This is socialism no doubt or looks like it, but "it is the way they have in West Virginia and Tennessee" and in the supreme court of the United States itself. It was Professor Dicey, was it not, who recently said: "We all of us in England still fancy at least that we believe in the blessing of freedom, yet, to quote an expression which has become proverbial, 'To-day we are all of us socialists."" 1

1 "The Combination Laws as Illustrating the Relations Between Law and Opinion in England during the Nineteenth Century," 17 Harv. L. Rev. 552.

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

existing, needs of the city were given to private coporations with little thought of immediate restriction or of reservation of power for future regulation. The public service franchise was looked upon as a private contract between the state and the grantee corporation, instead of as a permit by the sovereign for the performance by private individuals or corporations of functions largely public in their

nature.

The regulation of public utilities may be said to have passed through three stages, not always entirely distinct, from which emerge three different methods of public control. First, there was regulation through the provisions of the franchise. During the second part of the nineteenth century greater care began to be exercised in the drawing up and the granting of franchises. Exclusive grants were often prohibited by constitutional provision and statutory enactment. The unconditional long-term grant began to give way to the short-term franchise with restrictive provisions. Instead of grants in perpetuity or for ninety-nine, or even fifty, years, the life of the franchise came more generally to be twenty-five to forty years. Moreover, the grantee was subjected to restrictions incorporated in the franchise. Maximum rates were often prescribed, particularly in the case of street railway service, above which the grantee corporations could not go in fixing their rates and fares. There was often some provision, too, as to the character of the service to which the public would be entitled under the terms of the franchise. This form of regulation had two fundamental drawbacks: in view of the rapid growth of American cities, the restrictions contained in the grant did not provide adequate regulation even for the short period of twenty to thirty years; and there was no administrative machinery for the execution, on behalf of the public, of the limited restrictions of the franchise

contract.

The second form in which the movement for adequate regulation manifested itself was the reservation to the state of the general power of control. This reserved power of regulation, which was gradually extended by the courts as a power inherent in the state even in the absence of express reservation, was exercised by state legislatures through the enactment of statutes and by city councils through the promulgation of municipal ordinances. While this method gave a fuller recognition to the permanence of the problems raised by the unregulated operation of the public service industries and afforded a means for regular instead of periodic adjustment of the relations between the public and the public service corporations, the lack of expert knowledge on the part of legislators and councilmen together with the great diversity of their interests, and the absence of administrative machinery for carrying into effect the public policy embodied in the legislation aiming to regulate public utilities, resulted in a control