INTRODUCTION AND GENERAL NOTES }
ercised that the margin for a possible profit was large; regula-
tion was more or less perfunctory and, very frequently, due to
the imperfect knowledge of the problem, neither the owner of
the utility nor the rate-payer knew whether the earnings were
deficient, reasonable, or excessive. The recent tendency of the
public to insist upon its right to control and the attempt to
make a close study of what would in each case be reasonable
earnings has stimulated the work of the economist and the
valuation engineer and has led to a consideration of many new
phases of an interesting subject.
Prof. John H. Gray in an address before the Economic Club
of San Francisco on July 28, 1914, in presenting a historical
survey of public utilities said:
“We have very recently entered upon the experiment of
administrative control through central commissions. But we
have failed entirely to grasp the significance of the problem, or
the steps necessary to solve it, if we fail for a moment to re-
member that until the establishment of the Board of Gas Com-
missioners in Massachusetts, in 1885, no industries, save that
of transportation, were classed as utilities, and that the other
states have been very slow to follow the lead of Massachusetts
in this matter. In fact, it is only within the last decade that
the problem may be said to have been taken up seriously by
the country as a whole. That is altogether too short a time to
adjust the law, the theories, or the practices to the economic
needs and conditions of the situation. Much more is it too
brief a period in which to have modified to any considerable
degree the pioneer philosophy that still dominates the private
owners of these industries.
“The scientific theory is that the utilities should render
adequate, safe, and universal service, at just, reasonable, and
fair prices to all, and that the sovereignty shall be the final
judge in every case of these matters. This statement implies,
of course, that the total gains or rewards of the owners shall be
reasonable under all circumstances, including that of virtually
guaranteed monopoly, and that they shall have just compen-
sation in case of expropriation.”
Fundamental Principles Apply to Industrial Establishments.
— The work which has been done in studying the fundamental