fore to be within their authority if not their duty, now that the railway has become the chief convenience of travel and transportation, to provide that also. The use of coal gas has become common for illuminating purposes, and the proper police of all urban communities requires that the authorities should provide it, or something equivalent or better, for public streets and places. The telegraph and the telephone are to some extent superseding the post-office, and are quite as much a public necessity. The advance in sanitary science makes us acquainted with the dangers of imperfect city sewerage, and of impure water, and we are compelled to abandon the town pump, and to bring from a distance an abundant supply of pure water for domestic and public use. We also see the necessity of giving to the city population the opportunity of breathing pure air in parks which are shaded with trees and refreshed with fountains. Here are important public wants, every one of which is expensive, and must be provided for, if at all, at a cost of taxation which to our frugal ancestors would have seemed almost like confiscation.

When a public need is thus discovered or felt, the first question often is, whether it shall be met by the Government directly, and at its own expense, or whether the franchise of providing for it shall be conferred upon individuals, with the privilege of making it a source of profit. The former is the method which apparently is most consistent with republican institutions, for it grants no favors, and does not complicate individual with governmental affairs. But in practice it is found subject to very serious objections. We know what some of these are, for they have been confronting us for many years, and subjecting us sometimes to disaster and disgrace. The cost leads to great debts, and these are commonly great calamities. The management of railways, lighting works, the telegraph, or the telephone is a business, requiring in those who take it up not only a scientific preparation and training, but also the same attention, care, prudence, economy, and circumspection which in any private business are the requisites of success. Whether in the hands of a municipality such a business will be subjected to the proper management must depend, directly or remotely, upon the annual elections. These, when honestly conducted, with exclusive regard to the proper municipal issues, are by no means certain to bring to the front men of business energy and capacity, and when they do, are not sure to put them in the places most suited

to their abilities. But when municipal elections are, as now, conducted upon national issues, with which they have no concern whatever, we may take it for granted that the majority of those who seek and obtain the offices will not be men distinguished for their business qualities, or who have been found successful in the management of their own affairs. The public works of states and cities are, therefore, likely to fall into the hands of those who will not manage them with skill or with high business capacity. But what is worse is, that so long as the practice continues of making municipal offices and places the spoils of party warfare, it must be expected, and will certainly happen, that the dominant party or its local leaders will manage from the control of public works to derive profits for themselves at the expense of the community. There seems, therefore, to be strong if not controlling reasons, whenever the supply of a public convenience can assume the form of a private and continuous business, for permitting it to take that form, and for granting to individuals the necessary franchise for the purpose.

But to grant such a franchise is to give a special privilege which presumably has pecuniary value. It is therefore to prefer some citizens, who are made the recipients of the grant, over citizens in general; and though this is unavoidable, it is in a sense invidious. In many cases also, the privilege from its nature must be exclusive; and we are to have persons carrying on a business as a public agency, with the public as a customer, but without the competition which, in the case of ordinary business, is supposed to be the sole protection against extortionate demands. We thus have the odious features of monopoly, as the result of a grant of a public privilege; and this will be obnoxious in proportion to the opportunity it gives for unjust exactions, and to the neglect on the part of the State to provide against them.

But suppose the State, when granting the privilege, makes no provision against an extortionate use of it for the purposes of private gain, is it powerless to do so afterward? No question more important than this has hitherto demanded the attention of the country. If the State may grant irrepealable and unchangeable franchises of all sorts, we may find, after a few years of foolish or corrupt rule, that it has bartered away a large part of its ability to be useful to the people, and that, instead of existing for the equal and common good of all, it has built up privileged classes to whom the functions of government have

been granted or pledged. It would be easy to imagine a state of things that might become intolerable.

When the force, effect, or binding nature of a public grant, and especially of a corporate grant, is in question, we turn spontaneously to the Dartmouth College case for the light and the law that must guide and govern us. That case has tended to fix in the public mind the impression that whatever can be obtained in the form of a legislative grant has a property character affixed to it, which entitles it to common protection with the earnings of industry and the legitimate accumulations of capital, and that it also has something of the sacredness supposed to inhere in public compacts and treaties, and must be specially guarded for that reason. The decision has been extolled beyond measure for its preeminent wisdom and beneficence; and it has been assumed that without it the protection of contracts would have been impossible, and especially that the prodigious results of corporate organization, which has done so much to enrich and improve the country, could never have been attained. But if the Dartmouth College case brought blessings, it also created alarm; the corporations protected by it acquired a greatness, wealth, and power which the political instincts of the people made them distrust and fear; and in recent constitution making they have given distinct expression to the belief that a legislature with authority to tamper with corporate powers is less to be feared than a legislature with authority to grant irrepealable franchises and privileges. The revised State constitutions of recent date have therefore taken from the legislative department the power to grant corporate charters, except subject to the unalterable condition, as a part of the contract, that the charter may be altered or repealed in the legislative discretion; and that condition, in the case of nearly all recent corporations, is a part of the law of their being. It has been imposed under the influence of a fear that without it not only were corporations likely to become too powerful for effectual control, but also that the State was in danger of stripping itself for their benefit of essential powers.

There are still some charters, however, that, having been granted without the condition, are not subject to repeal or amendment at the legislative will; there are also important franchises in the hands of unincorporated persons. And in examining the State power to regulate charges, it seems necessary to consider it, first, as it would exist at the common law; second,

under charters not repealable or amendable; and, third, under charters which are subject to legislative control.

First. Of the corporations serving public ends, the most important are railways. These are chartered that they may establish the business of carrying for hire the property and the persons of those who may desire that service. This is a business well known to the common law, and has long been recognized as having a semi-public character which made it an exception to private business in general. The law permitted persons to assume the character of common carriers only upon certain conditions; one of which was that they should carry impartially for all persons. Another condition was that they should carry property at reasonable rates; and, in the absence of special bargain, the law, when necessary, undertook to determine what might be reasonable rates under the circumstances. But, subject to these and a few other conditions, any one might offer his services as a public carrier; he needed no State permission for the purpose. And no doubt he might build a railroad and operate it in his business, if he could purchase for his track a right of way; but he would operate it under the same common law conditions which other public carriers must observe. He would therefore be under the restriction that his charges should be reasonable.

*

But legislative permission to build and operate a railroad is commonly a necessary requisite. Highways must be crossed and public places intersected or occupied; and a railroad upon any of these, without permission of the State, would be a public nuisance, and subject as such to indictment and removal. It becomes necessary also to resort to the eminent domain to force sales of lands for a right of way by persons who will not voluntarily part with them or who take advantage of the circumstances to demand exorbitant prices. But, in addition to other impediments to individual construction, the capital required for the purpose is so great that only the coöperation of many persons can secure it; and the safe and convenient method of coöperation is under corporate forms. We therefore, of necessity, have charters for railway companies.

* Harris v. Packwood, 3 Taunton, 264; Oppenheim v. Russell, 3 Bos. and Pul. 42; Ashmole v. Wainwright, 2 Q. B. 837; Fitchburg R. Co. v. Gage, 12 Gray, 395; McDuffee v. Railroad Co. 52 N. H. 430; Johnston v. Railroad Co. 16 Fla. 623; Holford v. Adams, 2 Duer, 471; Streeter v. Railroad Co. 45 Wis. 383.

If these companies received from the State nothing beyond the franchise to be a corporation for operating a railway, they would, when formed, become merely carriers of goods and persons under common law rules; and we need look no further to ascertain their duties and obligations. But they receive from the State many other franchises and privileges. They are permitted, as has been said, to have the aid of the eminent domain, and to occupy public streets and places. Sometimes they are favored in the matter of taxation; sometimes the power to tax is employed to aid them; and always there are exceptional rules of police for their convenience and protection. All these are special favors which they receive from the State to enable them to set up and carry on with profit their business as common carriers; and the inducement-if not the right-to grant them must be found in the fact that they are created to subserve public ends. It is quite certain that they could be given power to interfere with private property on no other ground whatever.

We have, then, railway companies existing as common carriers, and subject to the common law obligation to make only reasonable charges. But what are reasonable charges? Reasonable prices in general are such prices as are determined by demand and competition; and they do not necessarily lose their character as reasonable, because, under the pressure of demand and in the absence of competition, they become very profitable. If, therefore, a railway corporation is to be regarded as occupying in all respects the position of a common law carrier, large profits will not necessarily determine its charges to be unreasonable. But when the company receives from the State special privileges and grants of power, on the understanding that these are conferred in the public interest and to subserve public ends, it is not by any means certain that its profits may not justly be used as a test of the reasonableness of its charges. The charter is granted for the mutual benefit of the State and the corporators; and, while it contemplates reasonable returns to the latter on their investment, it cannot fairly be understood to contemplate anything more. In determining what are such returns, all the risks to which the investment is subject are to be taken into the account; and it is obvious that these are much greater than the risks which attend the loaning of money on security. But charges can only be regulated for the future; and this must necessarily be done, either by the company itself or by the State,