Shall the Interstate Commerce Commission and the State Public Utility Commissions Fix Wages on the Railroads and on Local Public Utilities?

Abstract

It would be hard to over-estimate the theoretical importance of the suggestion that the to be paid by railroads and public service corporations shall be fixed by public authority. A number of fundamental questions of political and social economy are involved. Back of the proposition lies the assumption that a railroad or a public utility is essentially a monopoly and therefore has been taken out of the category of undertakings whose operations in so far as they affect the public can be regulated by free competition. The proposition assumes as an established fact the existence of public regulation of the rates and service of railroads and public utilities and also assumes that such regulation is theoretically appropriate. But the proposition goes much further. It assumes the theoretical correctness of Ricardo's iron law of wages and the practical necessity of collective bargaining in competitive industries in order to enable the workmen to escape from the unlimited competition of labor postulated by Ricardo, and thereby to secure for themselves a standard of living high enough to make them fit for citizenship in a democracy. The proposition makes still another assumption, namely, that the public interest in the continuity, safety and efficiency of railroad and public utility service is paramount to the interests both of the owners and of the employes. In fact, it is the preexistence of these assumptions that creates the problem for the solution of which the public regulation of is proposed. Therefore, in the discussion of this proposition we must first examine the several assumptions upon which it is based to see whether or not they should stand as they are, be subjected to certain modifications or be rejected entirely. First, as to the assumption of monopoly. President Wilson has been severely criticized for saying that the eight-hour day has 237