The Control of Public Utilities

Mr. President and Gentlemen:

Since the formation of the Commission of which I am a member, I have noticed that there are a great many mistaken ideas as to the purport or range of duties of this Commission. You will permit me to draw your attention for a moment to some of the marked modern tendencies in social and economic organization. We have seen the growth of very great cities; we have seen the demand and response to that demand for increased and increasing transportation facilities; but more marked than either of these, we have seen the growth of corporations with vast power, vast capital and vast administrative capacity. Mergers have been formed to an almost appalling extent in the great Commonwealth to the south; in fact your American appears to think that the realization of the motto " E Pluribus Unum" is to have his corporations under one head. Now this has lead us to a very acute stage in regard to the administration and the carrying on of public service.

Corporations have been very fond of getting hold of charters of one kind and another, principally municipal charters, and operating these for corporate benefit. Thai has brought them into contact with city legislators, municipal councillors or municipal fathers-stepfathers many of them ought to be called; in particular in the United States of America, where municipal politics have been demonstrated to the' world, in respect to the very large cities, to be just about as bad as they could be. Now it is essential, I take it, in regard to great public utilities that the field should be just as wide as possible. It is sure to get into the realm of what might be called necessary monopolies. For instance, we do not want to go across about six miles of city territory and have to make about as many changes from one system of transport to another 1 We don't want to have half-a-dozen companies tearing up our streets to lay wires, conduits and so on! We don't want half-a-dozen telephones in order to reach our clientele or business associates! What we want and are entitled to have is a single service to do the work and a single service is capable of doing it. We want the work well done, and want it done at a reasonable price -these are things we are entitled to have.

So when you come. to great public utilities like the supplying of transportation, particularly for the urban population, or the supplying of water-power, light or heat, any of these things, you get into the realm of monopolistic enterprise. Now it has been endeavoured to guard against the tendency to create monopolies by contract, municipal contracts, but this has failed because these franchises, these huge privileges, rights and charters, must extend over a very considerable period of time. You cannot get a municipal railway system, for instance, to invest 50, 25, or even 10 million dollars for a short-term contract franchise-it must have permanency if it is going to invest capital to do the work properly and keep it up properly. So we cannot have short contracts. Now, a contract will not provide for the rapid advancements that are being made in all forms of mechanical development, and otherwise, to cover a space of from 5 to 10 years, much less will it cover 20, 30, 40 or 50 years. So control by contract has largely failed.

Then, municipal ownership has been tried. Now municipal ownership in the light of the history of such vast organizations of people living together as we find in New York, Chicago, Pittsburg, Philadelphia, etc.; in the typical city of the American Continent; has been found to be a ghastly failure. It would be venturesome for any man, I take it, to suggest municipal ownership as a cure for the evils of monopolistic enterprise. So, in order that we might get that essentially valuable thing-a monopoly of service and supply and have it under constant and reliable control-we have devised in these modern days the Public Service Commission. The credit for this has been given to Governor Hughes of New York, but I think that, while to a great extent the organization has come from his suggestion, it is really founded upon a very proper and well-guarded and efficient control possessed by the Board of Trade in England over municipal enterprises there. The Board of Trade of England, as you know, is considered as an arm of the Government, not strictly official, but nevertheless is recognized as an arm of the public service of the country.

Now, these Commissions have been in operation-notably in the States of New York, Massachussetts, Wisconsin and others-for a matter of about four years. They have undergone a certain amount of test. In the Province of Quebec we have only had a public service body, under the name of the Quebec Utilities Commission, for a year or so. In fact, just a year ago, the first of March, it was organized.

In the first place this Commission is not a court-it is not a Court of Justice. It is not rigidly bound by those more or less necessary rules of procedure in the conduct of cases that govern courts, because it is not essentially a place or body to which contending interests must be brought for final adjustment. I know the reproach that has been made to me by one of the leading papers in Montreal, that I have endeavoured to assert the authority of the Commission and the purpose of the Commission as a Superior Court. Nothing of the kind, for I am firmly convinced that the purpose of the Commission could not be fulfilled if it were in any real sense a Court of justice.

To just illustrate what I mean, there was an insignificant place in the State of New York; it was called Smithville or Brownville, I do not care which, but it was a very insignificant little place. It was in the dead of winter and they were hard up for coal. Representations were made to the great railway that ran through the place, that they wanted coal. I suppose the representation was made the subject of those vastly accumulating files for which the railroad corporations are notorious, and nothing more was done. The coal went west through this place, but none was put off there. Now one of the clergymen of the place, happening to run across in -the flotsam and jetsam of newspaper material an account of the working of the State Commission, formed the idea that he would write to this Commission about the grievance of this little place. He wrote and, the next day but one, got his reply in a carload of coal, as bur English friends would say, which was set down at Smithville; the very next day but one. Now, if he had gone to a Court of justice (and I have the very greatest respect, for Courts of justice, so much so that I always advise my clients to keep as far away from them as possible); if he had gone to a Court of justice, what would have been the result? Well, Smithville would have frozen through the rest of the winter, and would have sweltered through the summer following, right up to the fall, before it had heard from its Attorney that its request had been granted, and at the same time, probably by the same mail, a notice would be received that an appeal had been made, and more funds were required.

The appeal to the Commission brought the coal that is the essence of it. And, to give you an instance occurring in my own experience, word came one day from a city not far from Montreal where a great power canal was being enlarged, that a bridge had been removed and that some persons, men of business at one end of the main strut of that place, had been practically cut off from the tide of population do the place, and that this had been going on for two months. A member of our Commission went down to this place the next day, met the aggrieved parties, and found that they had been labouring under this grievance for two months. He met the Company enlarging the power canal and they discussed the matter for an hour or so, and when he took his train to come back to Montreal he had the satisfaction of knowing that a temporary, serviceable and acceptable bridge was already under construction.

Now that is what the Commission is for. It is there to do work of this necessary kind-to stand like a pillar of steel between the public and those whom the public serve. It is there to intervene and act with resource, with promptitude and with energy whenever the occasion calls for it. It is called upon to go between the public service corporations and the public-2o do it at once, to do it thoroughly, and to do it with the minimum of law and the maximum of common sense. So, if I define to you today the Public Service Commission or the Ontario Railway and Municipal Board, or the Quebec Public Utilities Commission, as a sort of supervising permanent body of arbitrators, to come, just as occasion demands, quickly, efficiently and promptly, between those persons who carry on a great necessary service that the public require and the public itself; and do it in a way that necessarily means a benefit to the public utility as well as to the public at large. I am, I think, in a rough, perhaps very incomplete, but I think fair, fashion defining to you what a Public Service Commission is.

Now it inevitably follows that you must give a Commission of this kind a great deal of power. It is worse than useless if it has not got the power apt its back to do what may be required. Now, so far as its legal limitations are concerned-I mean so far as it interprets the law which shows how far it may go and how far it may not go, and what it can do and what it can not do--I am quite free to admit that the law should be most carefully scrutinized and the Commission kept rigidly within the limits of its power. Thus, the same provision prevails in your law, I mean the law governing the Ontario Railway and Municipal Board, as governs my own Commission or the Railway Board at Ottawa. When they have given a decision concerning a question of law there is an appeal to your Court of Appeal in Ontario and our Court of Appeal in Quebec, or the Supreme Court at Ottawa in the case of the Railway Board. That appeal is undoubtedly very necessary and a very proper safeguard. But of late I saw a delegation representing public utilities going down to Quebec, and asking that the right of appeal might be given from a decision of the Commission of which I am a member upon a question of fact. Now I want to say that I consider that the moment that you give an appeal of that nature you have converted your Commission from the body which I have endeavoured to define, and which I think it necessarily must be, into a mere Court of Justice. I say a mere Court of Justice, because the powers of procedure in a Court of justice must be limited, and, having converted your Commissions into Courts of justice, why, 75 percent of their very raison d'etre will have disappeared, because then they must proceed to gather 'the materialI mean matter upon which they have to base their findings and decision-in a precise, accurate and legal form which can be submitted to a Court of Appeal.

Now, take an example, for your Chairman has mentioned that I was to speak somewhat on the work of the Quebec Commission. That Commission was confronted with an appalling state of fatal accidents occurring in the operation of the Montreal Street Railway. We had 26 or 27 deaths occurring in a single year, and we thought it was our duty to investigate this state of affairs, and remove it so far as we could. We made that investigation, not by calling witnesses and swearing them and having them examined and cross-examined, and having objections made to this question and over-ruled or upheld, and all that sort of thing. We went into the work of other Commissions, examined all their tests, findings and their reports. We received whatever information the people chose to put before us in the way of correspondence and otherwise. We called officials into consultation and, more particularly, went about and looked up things ourselves, witnessed the tests ourselves and arrived at a conclusion, which was then framed in a series of orders. The sum total of these series of orders was that what we had done would cost the Railway Company some $440,000. Well now, there was no appeal from that decision, no appeal whatever, but it was found upon putting it into practice that it would operate harshly upon the Railroad Company in two or three minor instances. The Company came to us and asked that the order be modified in these respects and we at once modified the order accordingly, so that the point to make with your Commission is that it is not a court, but a body which gives decisions capable of being modified, altered or rescinded

We are bound to make our mistakes, we will make our mistakes, but any Commission of that kind having made a mistake it is inconceivable that it will perpetuate that mistake. So we propose to have these orders like the orders of any other supervising or controlling body, to remain within our control and to remain elastic. But suppose that order of ours had been appealed and had gone to the Court of Appeal, and the Court of Appeal had sustained it in its entirety, then I submit no matter how unjust the decision was in some detail it would have to remain with all the sanction and sanctity of the judgment of the Court of Appeal stamped upon it, and nobody could have interfered with it. So I say keep your Commissions within the letter of the law and leave them to do the work they are called upon to do in an untrammelled fashion.

Now, this involves great power and responsibility. This is perfectly true. Therefore, your Commissioners must be chosen with a great degree of care. What you have got to have is a man of common sense, a man of conscience and a man of backbone, in each of your Commissioners, and then I think you will be perfectly free to leave them to do their work. Now, gentlemen, I have endeavoured to define to you what I think a Commission is and what powers in general it should have. This is not intended for a moment as a law lecture. There is, however, one matter that strikes me in regard to your own Ontario Railway Municipal Board-which is not like any other Commission I know of. It sustains a certain amount of supervision and control over municipal bodies. How far that may work out to advantage in practice of course remains largely to be seen, at any rate it will be a useful experiment in the field of Public Service Commissions; but I want to emphatically point out the limitations of these Commissions.

So many suggestions have been made to me, for instance, that the Quebec Commission should take up this, that, or the other thing, that it should investigate some merger for one thing, that it should investigate another merger for something else, and should have a sort of final voice to say what might be done in regard to one or other things of that character. Now, the field of the Public Service Commission is strictly limited by one emphatic fact, that is it should only interfere, that it should only have authority to interfere and control, where there is a necessary monopoly, or where there is usurption of public property or public rights. Where public property or rights are not concerned you must not interfere with the freedom of contract, or the acts of the Federal Parliament, Provincial Legislatures and Municipal Councils. Therefore, Commissions, such as 1 belong to; are not called upon to interfere with private contracts or in the domain of the representative and governing institutions of the country.

I thank you for listening to me patiently upon this matter. The limit of time to which I have set myself is drawing to a close. There is perhaps a good deal that might have been interesting to discuss in the probable working out of Commissions of this kind, but I think that the general field over which I have gone imperfectly, cursorally, will perhaps indicate in a more or less inefficient way what these Commissions are and what they may be safely counted upon to do. There is one notable Commission in this country, that is the Railway Board at Ottawa, which has now been arbitrating between the public and the great railway corporations of this country for some years, and I must say that the universal testimony throughout this country has been that the institution of that body, the meaning of that body, and the way it has discharged its tasks, are such as to commend themselves to the business judgment and common sense of the people of this country at large.

The Commission of which I am a member will endeavour to carry through its work as far as it may be upon the same lines. That work is growing fast. Our intervention has been called in from all parts of the Province, and in matters of very great variety of local and general interest. We are coping with that work to the best of our ability, and I must say that I have nothing but a tribute of praise to give to the manner in which the Attorney-General of Quebec has upheld us and I must, particularly, I think, thank him for having given to me such excellent and able colleagues as I have in Sir George Garneau and Mr. F. C. Laberge. I am glad if anything I have said to you may be of interest to an Ontario and a Toronto audience. We read your papers, we read the news that comes from Toronto in our own papers in Montreal; we may, or may not, as the case happens, agree with the avowed sentiments that come from representative bodies here in Toronto; but we always feel this, that if there is a community that is alive, keenly alive, to whatever affects or interests the standing of the Province, the standing of the nation, the standing of the Empire at large, that such influence will be found directed upon the subject with a force and energy and keenness in Toronto that will not be excelled in any other part of the Dominion of Canada.