Sec. 8. #Franchises favoring monopoly#.  A fourth feature favoring monopoly in these enterprises is the necessity of making permanent and exceptional use of the public streets and alleys.  If this right were granted by a general law to every citizen, this feature would be sufficiently implied in the foregoing discussion.  As it would be intolerable to allow private interests to use public property in whatever way they wished, the legislative body makes special grants in such cases in view of the circumstances.  Not only is the legislature (or council, or county board of commissioners, etc.) led by the economic difficulties to withhold a charter from a second company, but it may be corruptly influenced by the company already established.  The knowledge of the opposition to be encountered in getting a franchise must keep competitors out, even tho monopoly prices are maintained.

In view of these several features, which are so closely related that they form a common character, more or less fully shared by various industries, and especially in view of the necessity for the formal granting to them of peculiar privileges in the form of a public franchise, the public, in order to protect the general interest, is forced to undertake an exceptional control of these industries.

Sec. 9. #Various policies toward local public service industries#.  Several courses are open to the public, acting in its political capacity, to retain those monopolistic advantages for the general welfare. (a) It may do nothing, trusting vainly to competition to regulate the rate, or consciously leaving the result to be worked out by the monopoly principle; this is what in most cases has been done in the past in America. (b) It may attempt, in granting the franchise, to fix near cost the charge for the service or product, so that the franchise will be worth little as private property. (c) It may leave the rate to be fixed by the monopoly principle, but charge for the franchise so much that the value of the monopoly is appropriated into the public treasury. (d) It may have public officials carry on the business, either selling the product at cost or making monopoly profits that go into the public treasury.  Various combinations of these plans are followed in practice, the most common plan being the fixing of maximum rates which, with improved methods, generally become ineffective.  It is difficult to fix a uniform rate that is equitable, because conditions change, and, further, because a uniform rate must be applied to all parts of the town, altho the cost of service varies greatly.  It is difficult because of the limited number of competent bidders, to sell the franchise for what it is worth.  There remains the policy of public ownership to secure the profits of monopoly to the public, either directly or in a diffused manner.  There is no doubt that the general trend of municipal policy everywhere is toward public ownership of this type of local public service industries.