ThK PU BLIC S^nVICR C0^- : lb;,qO:M OF M.».FtYI,ttNl)
NERD OP A COMMISSION
Before taking \jp the Public Service Commission of
Maryland in particular, it v^uld be well to consider the
origin of the public service commi ssior. Why is such a body
necessary? This question was partially answered as far back
as the middle ages. At that time there was usually only one
man to eac^ trade. Without competition these men were able
to charge what they pleased nnd could vary the charges for
different people without interference. In order to protect
the public against any exploitations such as this the ■ courts
assumed the power to regulate and control the prices of the
di fferent trades.
The same conditions do not prevail in n-odern times.
Practically all trades are well filled and well regulated by
competition. Competition sometimes, however, does more harm
than good. Such was the case, first with the railroads, and
then with other public utilities.
With the introduction of railroads the states were
very liberal and gave thert all encouragement possible, even
to the extent of making land grants. The public believed
that competition coulc 1 regulate this industry as efficiently
as before, but here competlt'or fulled. fhe project was too
big to be taken up by several small companies and a merger
was necessary. With this success was rapid, In fact it was
too pood. With the free hand given by the states the rail-
roads made charges to suit themselves and discriminated
between different parties.
These conditions brought public resentment and,
incidentally, a demand for government control of railroads.
This resulted in the formation of a commission 'Pith power to
regulate and control rates and service of the corporations.
Such was the beginning of government control of
public services through a special body for t^at purpose.
With the advent of other public utilities such as street
railways, telephone and telegraph, and gas and electric
companies; and with the incidental failure of competition,
its scope was widened and It changed from a railroad com-
mission to a 'public service commission.
The question may be asked, what is a public service
commission; is it a court or does it have the aspects o + ' a
legislature? It is neither an" yet it has some powers of
both. It is an intermediate body between the legislature
and the court. ''''here it cannot make laws it can recommend
legislation and where it is not reall^ a court, its inves-
tigations enable it to furnish necessary data to the courts,
and it can impose fines in certain cases.
ORIGIN OF THK MARYLAND COMMISSION
The Public Service Commission of Maryland was
created by an apt of the Maryland. State Legislature A.pri.1 5,
1910. Its purpose is well shown in the preamble of this
act, which reads--" An act to create and establish a Public
Service Commission, and prescribing its power? and duties;
and to provide for the regulation and control of public
service corporations and public utilities: and to make
This act was modeled almost exactly after that
creating the New York Public Service Commission, which was
the second of its kind to b^ formed.
The body of the act follows explaining in detail
the personnel, jurisdiction, powers, and duties of the com-
The commission consists of three commissioners
appointed by the governor, who also designates one as chair-
man. The term of the first three commissioners were all
different in order that only one would vacate office at a
tim^e. One commissioner was in for two years only, and a
second was in for four years. The third and all succeeding
commissioners were to have terms of six years. In this way
there are always two experienced men on the commission.
Besides the commissioners there is a general counsel and an
assistant counsel, also appointees of the governor for six
years. k stenographer and secretary are also mentioned as
assistants to the commissioners. Besides these the commis-
sioners are empowered to employ any other assistants they
deem necessary, provided that written permission 1s received
from the governor.
The Salaries of the main members of the body are
to be divided between the State of Maryland and the Ci fcy
of Baltimore. In the case of the three commissioners the
state provides for three thousand dollars such annually and
Baltimore contributes two thousand dollars. The chairman
receives an , additional compensation from the state, of three
The general counsel and secretary receive three
thousand dollars from the state and eighteen hundred dollars
from Baltimore. The salary of the stenographer is set at
fifteen hundred dollars annually.
These ssl^rMes fire among the highest paid in the
country, being second (along with several other states) to
th'-'se of New York which are ten thousand dollars annually.
QUALIFICATIONS OF COMMISSIONERS
No one who is officially connected with any of the
corporations affected by this act Is eligible to the position
of uubll c service commissioner . In order to be eligible for
this appointment the candidate must have been a qualified
voter and a resident of the State of Maryland for a period
of at least five years. The minimum age limit is set by the
act as twenty-five years.
The power of thf 1 commission extends over all rail-
roads and street railways operating in the state, to com i < ^n
carriers, to gas and electric corporations which manufacture
nr distribute their product in the state, to telephone and
telegraph companies, to wate^ companies, and other companies
engaged in the business of transporting property and freight.
These companies it will be noticed are practically
al ] without sufficient competition tn regulate their rates
and service. They are businesses which in oroer to operate
successfully and economically must operate alone; and which
in order to do this fairly, must have the controlling in-
fluence of the government.
EXTENT 01- POWEB
Following the juris' - "' icti on of the commission its
power is outlined completely. In substance, it has control
of the rates, services, time schedules, franchises, and
issues of stocks and bonds of these companies. The commis-
sioners also have power to inspect, the records and accounts
of any of these corporations. The results of these inspect-
ions, however, were to be held confidential, unless they
were necessary for public hearings or court information.
These inspections are usually made in order that
the commission *nay arrive at a valuation of the business.
It is on this result that the rates and taxes are based, and
it is this item which causes most of the court litigation
tween the commission and the public service corporation.
In order that the inspections may be marie effi-
ciently and accurately, a uniform system of accounts is
prescribed by the commission for the use of these companies.
This system must be followed by the companies.
In th* 3 event that any rulings or orders of the
commissi on meet with refusal of compliance by the corpora-
tion effected, the commission is empowered to take the case
to court where the matter will be settled. In refusals to
comply w1 th the rules of the commission, the commissioners
are empowered to make a fine of five thousand dollars or
less, provided the court decision 1s in their favor.
PROCEDURE AND RULES
The Commissioners and other members of the com-
mission first assumed office on the first Mondav of May,
1910. Offices were thereafter changed on this day.
The location of the commission v ,c s fixed as Balti-
more City. Meetings are to be held at least once a week at
announced times, and office h^urs are set between eight
o'clock in the morning to nine o'clock at night. At the
meetings where, by the way, two commissioners are suffi-
cient to make a quorum: the commission holds hearings on
complaints received from the public, on appeals ov requests
from the public service corporations, rind on changes or
order- s of its own against these corporations. In this way
the commission brings the public and the corporation togeth.
er in order that an understanding between the two m^y be
All records and information received in these
hearings and all other information, except that which i- s
considered confidential, are to be m«de public. Where it
is considered advisable by the commission, however, these
work of thr; commission
The fact that the comml ssion tackled a large and
difficult job with great efficiency is shown by its reports.
In the 1910 report the commission showed three hundred and
ninety cases handled fro^ the tirre offices were assumed up
to December 31, 1910. Of these two hundred and eighty-three
were completed, either by a final decision or by default of
the plaintiff. The rest of the cases were either awaiting
decisions or further Investigations.
In the first few years the work of the commission
was almost entirely put on the telephone and telegraph, and
gas und electric conditions. The report for 1913 states
that the work was hampered by investigations of the gas and
electric, and telephone rates in Baltimore. Scattered
throughout this report are reports of investigations consum-
ing many pages. Among these reports are some from engineers
from other states, showing that the commission would not
hesitate to hire outside engineers and experts where it was
necessary to straighten out the complicated situations that
confronted the commissioners.
One difficult problem that was put to the commis-
sioners for .solution rose from the telephone question and
required the assistance of an outside traffic engineer. In
the business section of Baltimore the telephone rates were
originally on a set rate and unlimited service system. The
company desired to make all new connections on a set rate
with additional charges for calls abov^ a certain number.
If this plan was followed those already having service would
have to change over, or one of the principles In the founda-
tion of the commission would break down. There would exist
a discrimination between the old and new subscribers. If,
on the other hand, the rates of the old subscribers were
changed, they would complain fervently against the change.
It was necessary in this case for a complete and
accurate investigation, so an outside expert was, according-
ly, ask^d to investigate the situation anr> make recommenda-
tions for clearing it up. His Investigation and report is a
long one, and the decision of the commissioners was based on
it. The decision was a compromise between the old system of
rates and the proposed one. The company was given the
limited service, but the number of calls were increased, and
the rates for additional calls decreased.
Such problems as this constantly faced the commis-
sion in Its early years and continue to do so, though in a
lesser degree. Besides there large problems there are a
great number of small cas^s. The reports on these cases,
sometimes fill less than half a page, and deal with cases of
great variety. One sees a complaint against the Baltimore
and Ohio Railroad, by a farmer whose cow was killed on the
tracks. Immediately following this may be a request by "the
railroad for a change in schedule or rates. Then there are
complaints by the public regarding high rates, poor service,
discourteous treatment, and many other items. Some of these
reports have touches of humour in them, mainly because the
complaint can be called nothing else but ridiculous.
Prom these facts 1t c?n be seen that the work of
the commissioners requires a great deql of patience and
diplomacy on their part and they obviously receive many
complaints and many boosts.
RESULTS OF COMMISSION'S WOhK
Whatever may be said about the work of the commis-
sion, it must be admitted that the conditions of the public
utilities of Maryland are much Improved over 1 what they were
in 1910. They are better, both for the public service
companies =-ind for the public.
For the companies their earnings have been in-
creased because of increased patronage. If the rates were
higher than the profit of the companies would justify, the
public would refrain from patronizing the corporations,*
either because it was unable to afford high rates, or because
it did not care to increase the profits of an unscrupulous
The companies have also gained from the systematic
methods of accounting imposed upon them by the commission.
Where they previously had little knowledge of what their
expenses were for and where they went, they wei-e forced by
the commission to know these facts and have them available
For the public the benefits are great. Their
confidence in public service corporation has been restored
until they now fear only slightly that the corporations are
endeavoring to "bleed" them.
The service to the public is considerably more
efficient and convenient than it was In the days when the
companies were free to do as they pleased. The carriers
now provide the most comfortable riding- possible within the
limits of tbe fore and the number of passengers. The tele-
phone companies supply more efficient and faster service,
«nd other public services ar'e improved and serving the public
consistently and efficiently. Where they are not, the public
has the right of complaint to the commission.
The rates have b^-en lowered until the companies '-ire
making only what is considered a fair earning on tbe valua-
tion made by the commission. This has made it possible for
9 greater majority of people to have these facilities at
hand than ever before.
The best thing that th^ commission has done for the
public is the prevention of discrimination. Before the corn-
mi ss ion's innovation the corporations gave certain persons or
companies free service because they deemed it profitable in
other ways for them, to fin this. The companies sometimes
discriminated between certain sections and charged different
rates to the different parts. It might evpn he said that the
companies sometimes refused to serve certain Individuals or
companies at all. These evils of discrimination by public
service companies of Maryland have been mostly eliminated by
For the State of Maryland, it -night be said the
cn^lssinn has served a good purpose. It has taken the
burden of public utilities regulation off the shoulders of
the eourts and the legislature, and by devoting Its time
wholly to public service companies has succeeded in making
for a more systematically and efficiently handled public
To quote, in conclusion, from the p- per by Arthur
Stedman Hi Us --the commission has followed the three common
lav principles upon which it was founded, by forcing the
public service companies to "serve all who applied, at fair
rates, ano without discrimination. M