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crime engendered. These impositions might be removed and the public benefited instead of injured through intelligent, comprehensive supervision in the interest of all parties concerned.

Of equal importance to the laboring classes is the second function of the bureau of labor; namely, the inspection of factories, work-shops, and stores and the regular supervision of all places where women and children are employed.

The evils of insurance administration on the side of high finance have been liberally revealed in the past two years. Equal attention might advantageously be given to the economic features of insurance in their effects upon the laboring classes. I refer particularly to industrial insurance companies, and benefit societies. The disproportionate expense of the weekly collections of the industrial insurance companies, the frequent misuse of the policies on the death of the insured, the frauds practiced by undertakers, the unscientific, actuarial basis of many benefit societies all merit careful and constant attention. For the legitimate welfare of the industrial classes all these features of insurance should be brought under the regulative attention of the bureau of insurance.

Bureau of Insurance

For the protection of our industrial class and for the welfare of society as a whole, these interests and concerns of the poor should be adequately safeguarded and their efficiency and proper service promoted.

The Wisconsin Public Utilities Law


Chairman, Railroad Commission of Madison, Wisconsin

The public utilities law of Wisconsin was enacted July 9, 1907. It confers jurisdiction upon the commission over companies producing or transmitting light, heat, water, power, and over telephone companies. The railroad commission law of 1905 conferred similar jurisdiction over steam and electric railroads and all instrumentalities of transportation connected therewith as well as over telegraph and express companies. Both the railroad commission law and the public utilities law, together with some thirty-five additional statutes, are administered by the railroad commission of Wisconsin. When the duties and powers of the commission were very greatly extended in 1907, through the enactment of the utilities law and other statutes, the name of the commission was not changed. While, therefore, the railroad commission is in effect a public utilities commission, performing all the duties and functions which such a commission may well be imagined as performing, it is still legally the railroad commission.

The general legal and administrative principles which underlie the railroad commission law also underlie the public utilities law. Like the railroad commission law, the public utilities law imposes upon the respective managements of private and municipal plants the duty of establishing reasonable rates and regulating reasonably adequate service in the first instance. The initial responsibility lies with the managements, who must select the agencies, materials and methods through which the service is provided. All rates, rules, regulations and service may be challenged at any time, and revised or modified by the commission. The theory of the law and of its administration


is to place the respective managements on the defensive, throwing the burden upon them to justify their rates and service whenever the issue is raised before the commission. The commission may act both upon complaint and upon its own initiative with respect to all matters relating to public utilities.

The most important provisions of the public utilities law may be grouped about for leading heads, namely, valuation, accounting, rates and service.


The law imposes upon the commission the duty of valuing all the public utility plants in the State of Wisconsin. Up to the present time by far the greater number of plants which have been valued were valued in connection with proceedings in which they were involved. Naturally this order of valuation will soon have to be broken when the number of complaints involving rates will probably decrease and the commission can then take a survey of the whole field and systematically complete the valuation of all the plants as contemplated in the law. Such valuations must be published within five days after the same have been determined by the commission.

The first, and perhaps most important, step in the valuation of these plants is the valuation of the physical property. The law requires a valuation to be made of all the property used and useful for the convenience of the public. Perhaps in all cases the great bulk of such property is the physical property. At the outset, the engineers of the commission solicit the aid of the engineers of the various companies and preliminary conferences are held, at which all the parties in interest are represented for the discussion of ways and means of making the valuation at the least possible expense to the state and to the companies and with the least possible interruption of the routine work of the utilities. In part jointly with the State Tax Commission, the railroad commission maintains a considerable engineering staff, which is subdivided into teams, each team devoting itself to a particular branch of the work of valuation. In addition to these there are, of course, inspectors, to whom reference will be made in another connection. Where the companies have made a careful inventory of their property,

the engineers of the commission take this and check it up and test it in the field and in the office item by item. This has been the general rule, and it is a matter of satisfaction to be able to state that in several instances of the valuation of important plants the differences between the company's staff and the commission's staff were so slight that little time was devoted in formal proceedings before the commission to the inventory or physical valuation. In other cases again, many apparently irreconcilable differences developed and much time of the commission had to be devoted to the taking of testimony with respect to the items in dispute.

Thus far only one valuation has been made for the purpose of acquisition of a private plant by the municipality under the indeterminate franchise provisions of the law. In connection with this work the engineering staff of the commission has collected and compiled elaborate data relating to prices and lives of all the constituent parts of the physical plants of all the different classes of utilities. These data constitute one of the most valuable resources within the reach of the commission upon all questions of physical value.

In addition to the physical value, there naturally arise the questions of the value of the franchise, good will, and going value. Thus far, practically no utility managements have claimed franchise value to be used by the Commission in the establishment of rates. The element of good will has scarcely been mentioned as an element separate and apart from going value. Incidentally, it may be remarked that the statutes of Wisconsin treat all utilities, except telephones, as monopolies, as shown by the provisions of the utilities law relating to indeterminate franchises and the granting of the certificate of convenience and necessity. The telephone business is, however, still subject to the inroads of competition, and so far as the statutes are concerned, it is technically a competitive business. It is, therefore, not impossible that in the valuation of telephone plants, an element of good will, using this term technically, as something different than "going value," may have to be included, which will probably have to be excluded in the case of all other classes

The Valuation of Franchises

of utilities. In fact several companies have explicitly stated in their testimony that they made no claim of franchise values and good will. Under the head of going value, representations have been made to the effect that all the way from 5 to 100 per cent of the physical value should be added in order to arrive at the true and lawful value to be used in the establishment of just and reasonable rates. The widest range of reasoning is embraced in this class of testimony now before the commission.

If any one tendency in this testimony may be characterized as typical as compared with other tendencies represented in the same testimony, it is the tendency to make a going value stand for expense which has been incurred for outlays and services in connection with the upbuilding of the business of the utilities, and in return for which no adequate remuneration has hitherto been made. In other instances, going value has been represented as something very real, existing in connection with every plant, entirely independent of expense, past losses or profits and capable of fairly definite quantitative determination. Since the Wisconsin commission has not yet formally declared an official opinion with respect to these intangible items of value, it will not be possible to discuss these topics in greater detail or at greater length at this time. The commission has not yet made up its mind.

The law gives the commission the power, and it makes it its duty, to prescribe uniform forms of accounts for all the public utilities operating within the state. Soon after the enactment of the law, the various utilities submitted financial statements to the commission, which in a measure, gave some indication of the extent and character of the accounts kept by them. Since that time a number of conferences have been held and a great deal of detailed work has been done under the direction of the Commission, but the final accounts have not yet been officially promulgated. The titles of the leading accounts were sent out to the different companies some months ago in order that the respective managements might begin to shape their books with reference to the same, and it is hoped that in the not distant future the final forms may be submitted. The theory of this


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