public might be charged exorbitant prices and the use of the streets by the citizens unnecessarily interfered with. Before engaging in a service of this kind, therefore, the street railway company must secure permission from the city to lay tracks on the streets and to operate cars thereon. Likewise a telephone or electric light company must have permission to erect its poles on the streets or alleys, and a gas or water company must have authority to tear up pavements and put its pipes and mains under the streets.
Franchises.– The permit thus granted is called a "franchise," and is in the nature of a contract between the city and the company. Public service franchises are often of great value to the companies which receive them, for the business of these companies in a large city is apt to be very profitable. Sometimes the dividends which they pay their stockholders are very large, and not infrequently, to deceive the public as to the real amount, the profits are concealed by "watering" the stock, that is, by increasing it beyond the amount of the capital actually invested. Experience has shown that in granting franchises certain restrictions or conditions should be placed on the companies to whom they are granted.
First of all, the duration of the franchise should be limited. Formerly, it was not uncommon to grant franchises for fifty or one hundred years, and indeed sometimes for an indefinite period. The objection to this practice is that with the growth of the city, the increased value of the franchise resulting from such growth goes entirely to the company, while the city is deprived of the opportunity of making a better bargain with the company. A franchise ought, however, to be for a period sufficiently long to enable the company to derive a reasonable return on its investment. Obviously, no company could afford to establish an electric light plant or gas plant if its franchise were limited to a period as short as five years. The better opinion now is that twenty or twenty-five years is a reasonable period, and the constitution or statutes of a number of states forbid the granting of franchises for a longer period.
Frequently the franchise contains provisions in regard to the rates to be charged and the quality of service to be performed. In many states there are state commissions which have power to supervise the operations of all public service corporations and in some cases even to fix the rates which they shall be allowed to charge. As long as such rates are reasonable, that is, high enough to allow the corporation a reasonable return on its investment, the courts will not interfere.
It is now the practice to require public service companies to pay a reasonable compensation for the franchises which they receive. This is usually a certain percentage of the gross receipts, or sometimes, in the case of street railway companies, a certain sum for each car operated. When the compensation is a certain percentage of the receipts, provision ought to be made for examination of the books of the company in order to prevent the public from being defrauded of its share of the earnings.
Municipal Ownership.– Sometimes, instead of relying upon private corporations to supply the people with water, gas, and electric light, the city itself undertakes to do this. Very many cities own their waterworks,8 while some own their electric light plants, and a few own their gas plants. In Europe, municipal ownership and operation of such public utilities is very common, and even the telephone and street railway services are often supplied by the city.
The advantages claimed for municipal ownership are that better service will be furnished when the business is conducted by the city, because in that case it will be operated solely with the interest of the public in view; and, secondly, the cost of the service to the community will be less because the earning of large dividends will not be the main end in view. The principal objection urged against municipal ownership in the United States is that "spoils" politics still play such an important part in our city government that the management of such enterprises is likely to fall into the hands of incompetent politicians and party workers. Experience with municipal ownership has been satisfactory in a great many cases where it has been tried, although the principle upon which it rests is contrary to the notions of many people in regard to the proper functions of government.
Municipal Courts.– In every city there are certain inferior courts called by various names, police courts, magistrates' courts, or municipal courts, which have jurisdiction over offenses against the ordinances of the city. These courts constitute a very important part of our governmental machinery, and they have rarely received the consideration which their importance requires. They are practically courts of last resort for a large number of persons charged with minor offenses, and from them many ignorant persons in the large cities gain their impression of American institutions. In the city of New York, for example, more than 100,000 persons are brought before these courts every year.
The magistrates who hold municipal courts are often men of little or no legal training, and the experience of some cities has been that many of them are without integrity. Recently there has been much discussion of how to improve the character and usefulness of these courts, and in several cities notable reforms have already been introduced. The Chicago municipal court recently established is an excellent example of what can be accomplished in this direction. It consists of thirty-one judges, and the salary paid them is sufficiently large to attract well-trained lawyers of respectability. The procedure of the court is simple and it is so organized as to dispatch rapidly the cases brought before it, so that justice is administered more swiftly, perhaps, in this city than in any other in America.
The Commission Plan of Government.– The increasing dissatisfaction with the government of our cities by mayor and councils has recently led a number of cities to abandon the system for a new method known as the commission plan. The principal feature of this method is that all the powers of government heretofore exercised by the mayor and council are intrusted to a small commission usually chosen from the city at large. The plan was first put into operation in the city of Galveston after the great storm of 1900 which destroyed the lives of some 6,000 of its citizens and left the city in a condition of bankruptcy.
Under the new charter which was adopted, practically all the powers of government were vested in a mayor and four commissioners, each of these men being put in charge of one of the five departments into which the administrative service was divided.
Merits.– Several advantages are claimed for this plan of municipal government. In the first place, it does away with the evils of the ward system by providing that the commissioners shall be chosen from the city at large, and this tends to secure the election of men of larger ability. Again, it is argued that a small body of men is better fitted to govern a city than a large council composed of members who consider themselves the special representatives of the petty districts from which they are chosen. The affairs of a city are necessarily complex and often technical in nature and require for their special management skill and efficiency. City government is often compared to the management of a business enterprise like a bank or a manufacturing concern, which, as experience has shown, can be better conducted by a small board of directors than by the whole body of stockholders. Finally, the concentration of the powers of the city in a small body of men tends to secure a more effective responsibility than can be secured under a system in which the responsibility is divided between the mayor and council.
Objections.– The chief objections that have been urged against the commission plan are that, by intrusting both the legislative and the executive power to the same hands, it sacrifices the principle of the separation of powers – a principle long cherished in America. In the second place, by doing away with the council, it sacrifices to a certain extent the representative principle and places all the vast powers of the city in the hands of a few men.
Nevertheless, the system has much to commend it, and it has been adopted in about four hundred towns and cities.
The City Manager Plan.– A still more recent form of municipal government vests the management of the affairs of the city in a single person, called the city manager. He is paid a reasonably high salary and is chosen by the commission because of his expert knowledge. This plan has been introduced in Dayton, Springfield,
The Census Bureau reported in 1916 that 155 of the 204 cities having populations in excess of 30,000 owned their water supply systems.
