All these things involved the use of the powers of government.Although a few clung to the ancient doctrine that the government should not interfere with private business at all,the American people at large rejected that theory as vigorously as they rejected the doctrines of an extreme socialism which exalts the state above the individual.Leaders representing every shade of opinion proclaimed the government an instrument of common welfare to be used in the public interest."We must abandon definitely,"said Roosevelt,"the laissez-faire theory of political economy and fearlessly champion a system of increased governmental control,paying no attention to the cries of worthy people who denounce this as socialistic."This view was shared by Mr.Taft,who observed:"Undoubtedly the government can wisely do much more ...to relieve the oppressed,to create greater equality of opportunity,to make reasonable terms for labor in employment,and to furnish vocational education."He was quick to add his caution that "there is a line beyond which the government cannot go with any good practical results in seeking to make men and society better."
The Regulation of Railways.-The first attempts to use the government in a large way to control private enterprise in the public interest were made by the Northwestern states in the decade between 1870and 1880.Charges were advanced by the farmers,particularly those organized into Granges,that the rail-ways extorted the highest possible rates for freight and passengers,that favorit-ism was shown to large shippers,that fraudulent stocks and bonds were sold to the innocent public.It was claimed that railways were not like other enterprises,but were "quasi-public"concerns,like the roads and ferries,and thus subject to government control.Accordingly laws were enacted bringing the railroads under state supervision.In some cases the state legislature fixed the maximum rates to be charged by common carriers,and in other cases commissions were created with the power to establish the rates after an investigation.This legislation was at first denounced in the East as nothing less than the "confiscation"of the railways in the interest of the farmers.Attempts to have the Supreme Court of the United States declare it unconstitutional were made without avail;still a principle was fi-nally laid down to the effect that in fixing rates state legislatures and commissionsmust permit railway companies to earn a "fair"return on the capital invested.
In a few years the Granger spirit appeared in Congress.An investigation revealed a long list of abuses committed by the railways against shippers and travelers.The result was the interstate commerce act of 1887,which created the Interstate Commerce Commission,forbade discriminations in rates,and prohibited other objectionable practices on the part of railways.This measure was loosely enforced and the abuses against which it was directed continued almost unabated.A demand for stricter control grew louder and louder.Congress was forced to heed.In 1903it enacted the Elkins law,forbidding railways to charge rates other than those published,and laid penalties upon the officers and agents of companies,who granted secret favors to shippers,and upon shippers who accepted them.Three years later a still more drastic step was taken by the passage of the Hepburn act.The Interstate Commerce Commission was authorized,upon complaint of some party aggrieved,and after a public hearing,to determine whether just and reasonable rates had been charged by the companies.In effect,the right to fix freight and passenger rates was taken out of the hands of the owners of the railways engaged in interstate commerce and vested in the hands of the Interstate Commerce Commission.Thus private property to the value of$20,000,000,000or more was declared to be a matter of public concern and subject to government regulation in the common interest.
Municipal Utilities.-Similar problems arose in connection with the street railways,electric light plants,and other utilities in the great cities.In the beginning the right to construct such undertakings was freely,and often corruptly,granted to private companies by city councils.Distressing abuses arose in connection with such practices.Many grants or franchises were made perpetual,or perhaps for a term of 999years.The rates charged and services rendered were left largely to the will of the companies holding the franchises.Mergers or unions of companies were common and the public was deluged with stocks and bonds of doubtful value;bankruptcies were frequent.The connection between the utility companies and the politicians was,to say the least,not always in the public interest.
American ingenuity was quick to devise methods for eliminating such evils.Three lines of progress were laid out by the reformers.One group proposed that such utilities should be subject to municipal or state regulation,that the formation of utility companies should be under public control,and that the issue of stocks and bonds must be approved by public authority.In some cases state,and in other cases municipal,commissions were created to exercise this great power over "quasi-public corporations."Wisconsin,by laws enacted in 1907,put all heat,light,water works,telephone,and street railway companies under the supervision of a single railway commission.Other states followed thisexample rapidly.By 1920the principle of public control over municipal utilities was accepted in nearly every section of the union.