Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1913-03-06
PUBLIC UTILITIES BILL.
The lndeterninate Franchise VS.. the
Perpetual Franchise.

TTJTIIIIgS blII
the Maine Legislature. AS is often the
case. the more important provision of
the bill is the one left out. Now Is the
time. while the bill is being formulated.
for the people of Maine to demand that
the Legislature give them not only the
form of a public utilities bill but the
substance as well.
The public service corporations know +,
what they want and are not backward
about making their wants known. their
influence is continually exerted to secure
force that can Offset this eyer present
aroused organized and aggressive,
Any acceptable public utilities law
adequate public supervision; second, full
publicity; and third, an equitable fran
chise policy. Since public utilities, in
almost every case are essentially mono
poles and competition Is no longer II
regulating factor, public supervision is
necessary to protect the community
quate service, Full publicity OF accounts
Is of the utmost Importance not only Tor
the protection of the public but for the
best interests of the corporation. Since
there are no rivals to take advantage of
publicity there should be no business
secrets in the operation of public utili-
ties. AS j. II. Roemer. of the wiseon-
sin Railway Commission points out "eN-
travagant salaries and excessive ex-
pehSes for promoting new business are
not willingly included in the type of ue-
tailed operating expense exhibits de-
manded by the commission where there
is q probability that such an exhibit Will
be reviewed by the banker, the stock
holder and the customer Moreoveri
the public service corporations SHOULD
be the servants of the people, not their
masters, and the master is entitled TO
I'm account of the servants stewardship.
The Wheeler Bill blouse Bill Ne. ID
Joint committee of the Maine Legisla-
tufe is In many ways an admirable Dill
In most respects it is exceptionally com
plete. As regards adequate supervision
and full publicity it leaves little to be
desired. But It contains not a word CON
corning equitable franchise policy
public utilities bill without an equitable
franchise policy is like "the play Ham
let. with Hamlet left out"
The proposed bill leaves untouched
Names policy of perpetual franchises.
Franchise privileges in Maine. are. grant
ed subject to revocation only by the
Legislature. This in practice makes
them virtually perpetual, perpetual
private interests should be given I'M
limited opportunity to exploit public ser,
vice for profit. It permits capitalized
hope to mortgage the future
The more advanced states and the
students of the franchise problem recog-
nize that the fundamental characteristic
of an equitable franchise is the ter
are turning to the indeterminate fran
chise for relief from the uncertain
tenure and economic disadvantage OF
the short term franchise on the one
hand and from the bondage of the per-
the short term franchise on the other.
Massachusetts is the mother of the in
determinate franchise policy. tier pollcy
has been copied by Congress in legislat-
ing for the District of Columbia, Porto
Rico and the Philippines, Wisconsin
and Michigan as well as the cities OF
Chicago and Cleveland have adopted the
principle as the basis of their franchise
legislation The Massachusetts fran
chise is in reality a tenure during good
behavior. For instance, grant of To-
cation to a street railway may be re-
Voked, after the expiration of one year,
by the local authorities subject to. the
approval of the state Board of Railway
Commissioners. \ criticism of the Mas
sachusetts system is that no provision
is made for the purchase OF the physical
plant in case of revocation. Hence. le
vocations unless the service has. become
absolutely unbearable. for neither the
people nor any public board will permit
the destruction by revocation without
compensation of a large body of capital
invested i'm a necessary public service.
Notwithstanding this defect the termln-
able nature of the grants IN Massaehu-
sets has placed the corporations on
their good behavior and caused them to
respond more readily to demands foR
better service and needed extensions
that is common under either the perpet-
ual or the limited term franchise.
This defect Wisconsin eliminated IN
her public utilities law of 1907. she
adopted the Massachusetts indeterminate
franchise principle as the foundation
for her constructive FRANCHISE poilcS.a
She modified 1t, however. in one essen
tial feature, For the reVocauon wlttout
compensation feature in the Massacnu-
sets policy there was substituted
provision that a public utilities corpora
tion can never be deprived OF us prop
erty except when the municipality ue-
termines to acquire it, in which case lust
compensation determined by the state
public utilities commission. must be pa1u
Such a provision is tundamen,tt al. ie ca,
on the one hand it protects the company
against revocation without compeIlsa
ton. and on the other hand, what y
equally as important. 1t makes possiDle
the municipalization of any public uulty
should the service demand 1t and the
municipality desire it. The deslrabillty
of municipal ownership is mooted
question but we have no right to bind
the hands of the future with chains oil
perpetual franchises.
In case of the purchase of pubic
utility by the municipality, the compeh-
sation determined upon by the conmls-
sion is based on a reasonable Naiua
ton" which includes not only the
net value of the physical plant, but IN
incurred by the investors in. establish
ing the plant on n profitable basis
amounts expended in getting business
loss in operating expenses during the
capital during the period of construction;
These 'intangibles' have been termed
going values, they represent costs as
against good VIII or franchise value
which is an ''intansible, value based on
earnings The Wisconsin law expressly
states that franchise values shall not be
in the valuation made by the
in case of purchase made by
the municipality. Great care is taken in
the utility going concern
not to include franchise value Gong
concern is "a dubious phase and often
used to cover up the fact that franchise
values are being included in the Valha-
ton This is especially true where the
is valued according to the net
profits earned while operating under the
franchise.
IT is considered particularly essential
to make allowance for legitimate intah-
gibes should the city take over the
utility at an early date before a fair re-
turn is made on the investment, other
wise investors will be slow to put their
ir.tR a