PUBLIC UTILITIES,' a designation for a special grouping of industries. These industries should be distinguished from State services or public works, which are administered as public func tions and hence supported by taxation, and from that variety of industrial, commercial and agricultural undertakings which are usually comprehended under the term "private business." Public utilities, properly so-called, need not be privately owned. In 'The writer is indebted to the Macmillan Company for permission to adapt from his recent work, Outlines of Public Utility Economics, certain summaries for substantial portions of this article.
almost every country a varying number of them are owned and operated by the State. But these publicly managed enterprises, instead of looking to the State for financial support, sell their services to the general public. Both publicly and privately owned utilities sell their services at prices which are not fixed in the open market but are governmentally fixed. This is the most important aspect of the process known as public utility regulation. Although economic and technical evolution is continually changing the character of these industries besides creating new ones, public utilities may be classified according to the generalized function which they perform in economic life.
The following have been treated as and classified into groups of public utilities: (I) Services of transportation (common car riers) ; (2) Services incidental to transportation; (3) Services facilitating communication; (4) Facilities providing power, light, heat and refrigeration; (5) Facilities providing water and sanita tion in urban communities; (6) Facilities regulating water-supply for agricultural purposes.
Public utilities are closely associated with our developing civili zation, supplying wants so fundamental for communal living that Government has at all times subjected them to some measure of control. With the growth of trade in ancient empires facilities providing transport and communication were set up. The gov
ernmentally maintained highway system of the Roman empire and its many aqueduct systems are celebrated ancient public works. The need of some system of public communication was so great that even our letter post has its ancient parallel. In the more populous ancient cities systems of sanitation also be came a necessity. Along with this came the recognition that services used collectively should be supplied by the State. Public utilities thus began as State functions. By the middle ages most of the ancient public utilities had declined or virtually disappeared. By slow stages, upon the manors and in the mediaeval cities, these public facilities again appeared. Of great importance in British and American legal history, is the fact that out of the economic and legal relationships of feudalism there arose the concept of a "public calling" upon which is based the present-day policy of public utility regulation.
The modern national State gradually supplanted the elements of the feudal system of social control. The expanding domestic system of manufacture was displacing the gild and manorial system of production; foreign trade was growing. National sys tems of transport involving highways and canals were undertaken and the regulation of utilities became national rather than local.
Effects of the Industrial Revolution.—The greatest impetus in the expansion of public utilities came with the industrial revolu tion. The factory system so stimulated production that the need for ever-expanding markets became the limiting factor in eco nomic evolution. Cities grew as never before, creating a new municipal need for systems of water-supply, sanitation, transport, communication, illumination and finally of power.
But the philosophy of laissez faire was not fertile ground for extending public functions. Hence, although the rapid industrial changes intensified needs, the tendency was to give greater scope to private enterprise.