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The Commoner.
MARCH 21, 1913
cutting off their county right. This precipitated
a series of meetings culminating in a meeting
of the Seward Commercial club at which I pre
sented my views in shape of a proposed bill for
county ownership of telephones. This club is
composed of the most conservative citizens of
one of the most conservative towns in Nebraska,
yet one and all, domocrat, republican, stand
pat or progressive, unanimously approved my
bill. It seemed that regulation was about to
fail. We must either submit to be ruled, or
provide some remedy whereby if necessary we
could take matters into our own hands. This
remedy is afforded by my bill and its companion
bill for physical connection between telephone
exchanges.
This is the simple logic of the whole ques
tion of natural .monopolies. Regulation of pri
vate ownership, if it works, if not, then public
ownership. This principle we are attempting
to apply to the telephone problem.
The objection is made to the bill that it pro
vides for fixing of rates by the county board and
that this Is in conflict with the constitutional
provision granting control and regulation of
common carriers to the state railway commis
sion. We must first consider what our con
stitution is. There is an important distinction
between the federal constitution and the con
stitution of our state. The federal constitution
is a pact or agreement between the sovereign
states, by which each state has surrendered to
the federal government certain of its inherent
powers. The federal government is a creature
of the separate states and can exercise only such
powers as are expressly or impliedly granted
to it by the constitution.
Our state constitution is not, however, an
instrument granting powers of government. It
is, instead, an instrument of inhibitions or limi
tations. Without it the state could form such
a government as it pleased and could do what
it pleased. It is an agreement made so to speak
by the people with themselves. After its adop
tion the people of the state are still free to do
as they please, except where the stato con
stitution has placed a limitation. Where such
limitation has been placed they must act within
it. Otherwise they are free. Thus they may
pass any law on any subject except where for
bidden by the state constitution. Unlike the
federal government they need not look to the
constitution for authority to act. Instead, they
look to the constitution to see if a1 contemplated
act is forbidden, and if it is not forbidden they
may act.
The right to regulate common carriers as to
rates and tolls and the like is a well recognized
power of government. It needs no constitu
tional provision to bestow that power on the
legislature, nor for the legislature to provide for
the exercise of regulatory power by proper
boards or tribunals. This right is similar to
tho inherent right to regulate matters of fire
protection, pure food . and the like and arises
from the duty of the state to subserve the best
interests of its citizens. Why, then, was it
necessary to amend the constitution to estab
lish a railroad commission? It was not, so far
as bestowing the power of regulation was con
cerned. That might have been devolved upon
any existing officer or board of officers just as
many of the powers of government are now
exercised. Witness the food commission, the
fire commission, all exercising powers of gov
ernment bestowed on them by statute without
express or implied constitutional authority.
We have, however, a constitutional provision
that no new executive state office may be cre
ated. And in order to provide for new execu
tive officers to constitute the railroad commis
sion it was necessary to amend the constitution,
which was d9ne. The constitutional amend
ment does not assume to bestow any powers or
duties upon the railroad commission except "in
the absence of specific legislation." It express
ly provides for the legislature to define the
powers and duties of the commission, over the
general field of "regulation of rates services
and general control of common carriers." This
the legislature has done and has Included tele
phone corporations within the purview of their
enactments. This is done only on the theory,
however, that telephone companies are common
carriers.
Now it is not to be thought of under the broad
scope of the constitutional amendment which
really does not and could not confer any powers
on the legislature but those which it already
had, but that the legislature had an absolute
right to provide for the regulation of rates as
to common carriers in any way it saw fit. The
Nebraska legislature might provide that the
rates established and placed in effect by the
companies should bo subject to revision at
order of the commission, or it might require tho
submission of data to tho commission in
tho fixing of rates by the commission in
the first instance. Assuming for the present
that county telephone systems fall within
the class of utilities subject to regulation,
simply 'because tho counties are given
tho right in tho first instance to fix their
own rates, does not contravene any right of
regulation on the part of the railroad commis
sion. If the statuto does not specifically give
that right it exists by virtue of tho amendmeut.
That is, if the railroad commission is to regu
late county telephone systems it can do so,
whether or not tho statute permits, under the
broad powers bestowed In default of specific
legislation by the amendment. The fact that
the regulation might be performed In a manner
differing from tho manner of regulating private
corporations would bo Immaterial.
There Is nothing In tho law as proposed re
fusing to tho railroad commission a power regu
latory of these rates. If it has it, it has it.
That the regulation might be revisory instead
of being exercised in the first Instance could not
be a valid objection under the terms of tho
amendment, for It Is not specified In what par
ticular manner it is to bo exercised. However,
I can see no reason why county telephone
systems should be construed to bo common car
riers and within tho purview of any of these
enactments. A common carrier Is ordinarily
a private corporation doing business which
affects the public. They are sometimes called
quasi-public corporations and aro held to cer
tain rules of law str'cter than a private carrier
with respect to their dealings with tho public.
Here the state grants, to Its own subdivision the
right to do certain things. Were this state
ownership instead of county, tho principle would
be tho same. Should the state, which has
granted rate regulation to its own board as to
private corporations, submit to a regulation of
any enterprise carried on by itself? It is not
a quasi-public undertaking which requires
regulation for the protection of the public. It
is a public undertaking. The people thom
selves aro acting. ,
The state can not be sued without its con
sent. Should it be required to submit to regula
tion by its own tribunals without its consent?
If the common carrier robs tho people It en
riches itself. If the stato charges extortionate
Tates it simply takes from one pocket and puts
into the other. And it can not conceal tho
goods. They will show up on the balance sheet.
The need does not exist for tho regulation of
rates of a purely public enterprise. It does,
unhappily exist in tho matter of private and
quasi-public enterprises. I am clearly of opin
ion that our courts would not permit tho rail
way commission to exercise even a revisory
supervision over rates established by county
boards.
A few words by way of illustration will make
it very apparent that a publicly owned telephone
system could not be construed to be a common
carrier. Telegraph companies, like telephone
companies, when privately owned, are construed
to be common carriers and aro held to all the
liabilities of law in that behalf. Among these
they are held responsible for the non-delivery
of messages. You send your message by wire
and it is not delivered and you can hold the
company for damages. However, you take the
same message and place it in the United States
mails and it is lost. Can you hold the govern
ment for damages? Decidedly not. It was de
cided thus in England long ago, and so far as
I know no one has ever been foolish enough to
raise that question in this country. And this
exemption extends to the railroad company
while carrying the United States mails, so that
the courts have held that railroad companies
while carrying the mails are not common car
riers but agents of the government, that is,
public agents carrying on an act of government.
(See 52 Am. Rep. 334, 92 N. W. R. 88, 65 L.
R. A7 397.) So even a corporation that ordi
narily is a common carrier ceases to be one
when employed on public business.
Even the most unlearned man could easily
see that this would be as true of a business run
by tho government itself as where run by
subordinates. If tho government owned tho
railroads it would not change the rule.
The business is changed from a private enter
prise into a matter of government, by reason of
public ownership. And the character of the
business, tho duties of the parties carrying it
on, their liabilities, and their relation to law,
are all entirely changed. The railroad commis
sion would have no more to do with publicly
owned tolophoner, than with rotten eggs.
However, lest In some communities county
boards might fix rates too high and pllo up a
BitrpjiiB for looting purposes It is provided in
this bill that tolephono rates aro to bo fixed
on basin of coot, loss expenso of extension and
maintenance, tho purposo bolng to mako tho
system once established self-malntalnlng and
self-perpetuating. This Is a substantive duty
cast upon the board and nny Infringement there
of by them could bo speedily checked by in
junction or sultablo court action.
A further objection to tho working of tho
bill Is that county ownership only la con
templated. Tho bill an nt first drawn contem
plated state ownership of trunk lines. This
however, would neceHBltato a stato board of new
officials or a commission of already overworked
officers and the authorization of a lovy for tho
purpose of establishing trunk lines. It was not
(teemed wise to make tho experiment on so ex
trnslvo a scale, or to add to tho burden of tho
tax-payers for further state taxes at this time.
Besides tho mattor of accounting In Inter
county communication Is largely a matter be
tween tho various counties. If my companion
bill for physical connection Is passed, then
county exchanges can connect at county lines
and provldo between thomsclves for Inter
county service, and can mako uso by compulsion,
If necessary, of tho already existing trunk lines
of private companies, paying them a, fair profit
therefor. Should public systems bo established
In sufficient number In tho next two years to
warrant the establishment of state trunk lines,
or of a stato commission to act as a cloarlng
houso for Inter-county business tho next legis
lature will be In a better position to figure out
tho details necessary for such a system than
wo are, and I assure you that after giving this
matter some thorght it will bo necessary to
work very carefully on such a bill as would
have to be passed to effect tho desired result.
However, for tho present tho instant bill and my
companion bill will certainly afford relief to
those communities whore it seems Impossible to
get a solution of tho telephone problem.
A proposition urged most seriously is that
this bill would Injure numerous small in
dependent companies. Such is not tho inten
tion. Special provision is made in the bill for
purchase df already existing systems or parts
of systems. And unless tho small, Independent
company should want, to hold up tho people for
an extortlonato price they would undoubtedly
receive full value for their property In case of
the establishment of public systems.
The matter of purchasing as well as tho mat
ter of establishing the systems Is left to a voto
of tho people. It must receive tho approval of
a majority. Believing, as every good citizen
should, In the rule of tho people I believe that
this provision is a sufficient safeguard against
snap judgment, or confiscation of property. It
is hard enough to get a majority voto in any
proposition and unless tho proposition is fair it
will not In tho vast majority of cases prevail.
TWENTY-FIVE STATES VOTE YES
The Kansas City Star says: The resolution
proposing tho constitutional amendment for tho
direct election of senators was fifty years In
getting through congress. In less than a year
since It was submitted it has been ratified by
tho legislatures of twenty-five states. It ha3
been rejected in only one state Georgia.
Tho twenty-fivo ratifying states are: Ari
zona, Arkansas, California, Colorado, Idaho,
Illinois, Iowa, Kansas, Massachusetts, Michigan,
Minnesota, Montana, Nevada, New Hampshire,
New York, North Carolina, North Dakota, Ore
gon, South Dakota, Texas, Vermont, Washing
ton, West Virginia, Wisconsin, Wyoming.
Tho amendment is being blocked by special
interests in New Mexico, Pennsylvania, Dela
ware and Rhode Island. New Jersey and Ten
nessee are expected to ratify soon. Action by
Kentucky, Maryland, Mississippi and Maine n
expected next year. Tho legislatures of Ala
bama, Florida, Kentucky, Louisiana, Mary
land, Mississippi and Virginia are not now in
session.
Prompt act'ion by some of tho states now
hesitating would make possible tho adoption of
the amendment this year so that it could bo
effective In the election of senators in the gen
eral elections of 1914. Eleven more ratifica
tions aro needed.
Col. A. E. Brackett, Ohio. Enclosed with
this letter I hand you on this inauguration day,
a New York draft for $5.00 in payment for tho
five annual subscriptions herewith. Please
send, me extra numbers of . The Commoner,
which I can make good use of. h
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