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ThK PU BLIC S^nVICR C0^- : lb;,qO:M OF M.».FtYI,ttNl) 

2 /2.8 

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. 


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 
appropriations therefor." 

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 
thousand dollars. 

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. 

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. 


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. 


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. 


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 investigation. 

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 
the commission. 


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 
utilities situation. 

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