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will be found further discussed in Bulletin No. Y on eminent domain and excess condemnation.
Some states have provided in detail by their constitutions for corporation commissions, which not only control the organization of corporations, but also supervise public utilities. This is true of the constitutions of Virginia, Oklahoma, Arizona, New Mexico and Louisiana. Virginia and Oklahoma, however, expressly provided that constitutional provisions with respect to corporation commissions should be subject to legislative amendment after a certain fixed date.
Railroads. A full review of the present constitutional provisions regarding railroads will be found in an article by Mr. Rush C. Butler in the proceedings of the Illinois State Bar Association for 1917. Mr. Butler sums up his conclusions as follows: "Briefly to summarize, it is my conviction that the constitution of the State of Illinois should be entirely silent on the subject of railroad regulation. In the absence of specific constitutional provisions, the legislature of the state will be vested with the full remaining power of the people of a state to regulate intrastate commerce.”
As Mr. Butler says, some of the provisions of the constitution with respect to railroads are obsolete, and some of them are useless. For example, such a provision as Article 11, section 13, providing that "no railroad corporation shall issue any stock or bonds, except for money, labor or property actually received and applied to the purposes for which such corporation was created,” is practically unenforcible, and has necessarily been construed in such a way as to be substantially useless. It may probably be said that all of Article 11, sections 9 to 15 is either obsolete or merely repeats matters which it would be within the power of the General Assembly to accomplish.
In connection with railroads, attention should also be called to the provision of Article 2, section 13 that "the fee of land taken for railroad tracks, without the consent of the owners thereof, shall remain in such owners, subject to the use for which it was taken.” This constitutional provision has been discussed in Bulletin No. 7 on eminent domain and excess condemnation. It has made difficult the carrying out of city plans which require the relocation of railroad tracks.
Warehouses. The provisions of the constitution regarding warehouses (just as the provisions with respect to railroads) were placed in the constitution when the movement for the regulation of railroads and warehouses was in its infancy. The constitutional provisions in Illinois do not add to the power which would otherwise belong to the General Assembly, and have served little purpose. However, here as with respect to other provisions of the constitution, care should be taken to say that omissions of existing provisions, if made,
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are not to be construed as reducing the legislative power. Provisions as to warehouses will be found in the constitutions of North Dakota, Oklahoma and Kentucky. Perhaps attention should also be called to recent constitutional amendments which have extended the state power in South Dakota and North Dakota, so that the states themselves may embark upon the enterprise of operating grain elevators.
Public utilities. Railroads and warehouses of course come within the term “public utilities,” but it is desirable to comment briefly upon the effect of Article 11, section 4 of the constitution, which provides that “no law shall be passed by the General Assembly granting the right to construct and operate a street railroad within any city, town or incorporated village without requiring the consent of the local authorities having the control of the street or highway proposed to be occupied by such street railroad.” The Supreme Court has said that this section "merely means that the constitution has conferred upon the city, power to determine whether street railway's shall be operated upon its streets, and if so, upon what streets. To this extent, and no further, the constitution has committed to the city the control of the operation of street railways in its streets."!
This section of the constitution, therefore, means nothing more than that the city determines in the first instance whether a street railway shall operate upon its streets. After the city has made this determination, the state power over the operation of the street railroad is complete.
Municipal home rule as to public utilities, and municipal ownership and operation of public utilities present two of the most serious problems which will come before the constitutional convention. The power of the General Assembly to grant municipal home rule with respect to public utilities and to authorize cities to own and operate their public utilities is probably now unquestioned, and the General Assembly has authorized municipal ownership and operation to a very large extent. The supervision over public utilities is in substantially complete form in the hands of state authorities under present legislation. Efforts have been made for some years to obtain legislation which might enlarge supervision of cities over their local public utilities.
With respect to municipal ownership of public utilities, the primary constitutional question is that of debt limits. Under existing municipal debt limits, it is impossible for the city of Chicago, and for many other cities, to acquire the ownership of their local public utilities. This matter will be found fully discussed in the chapter dealing with debt limits, which appears in Bulletin No. 4, on state and local finance, and in Bulletin No. 6, dealing with municipal home rule.
City of Chicago v. C'Connell, 217 III. 561 (1917), recently aftrmed by the United States Supreme Court.
Banks. With respect to banks, several issues will present themselves to the constitutional convention. Perhaps the most important issue likely to present itself is that of farm loans. Under the terms of the present constitution, it is impossible for the state to embark in any way upon farm loan enterprises, and an effort will be made to obtain authority for such enterprises. The subject of farm loans will be found fully discussed in Bulletin No. 13, on farm tenancy and rural credit.
Another question will present itself with respect to Article 11, section 5 of the constitution as to whether the provision for a popular referendum shall remain with respect to banking legislation. The present provision has come to be a formality, and banking laws are approved by the people almost as a matter of course. The requirements for a referendum upon bank legislation came into constitutions in the main before the Civil War, largely as the result of unfortunate state experiences with banking, and it may be urged that such provisions are no longer needed. Michigan, Minnesota, and Wisconsin now provide for the enactment of banking legislation by a two-thirds vote in each of the two houses.
Article 11, section 6 prescribes a double liability for stockholders in banks, and some discussion may present itself with respect to this liability. It should be noted, however, that the double liability of bank stock with respect to state banks, is the same as the liability by federal legislation for federal national banks, and that there has, as yet, been no tendency to remove such liability from the constitutions which contain provisions of this character.
Attention may be called to the fact that the banking provisions of the constitution contains details regarding banks of issue. There have been no banks of issue in the state since the Civil War, and this provision was inserted in the constitution of 1870 in order to provide for the contingency that Congress might remove the federal tax upon state bank note issues. This contingency is not likely to arise, and for this reason the removal of these provisions may be suggested.
Insurance. The constitution of Illinois contains no provisions regarding insurance. Within recent years, provisions have come into some state constitutions with respect to insurance, although such provisions have added nothing to the general legislative power for the regulation of this industry. It is possible, however, that the proposal may be made to embody into the constitution provisions regarding the regulation of insurance.
VIII. CANALS AND INTERNAL IMPROVEMENTS.
There are a number of provisions in the present constitution of Illinois which prevent the state's engaging either directly or indirectly in various projects of internal improvement. Some of these provisions were first introduced in 1848, because of the disastrous experience which the state had had with internal improvement projects previous to that date. Constitutional provisions introduced in 1848 were primarily directed against state activities in fields of internal improvements. To these provisions were added in 1870 provisions intended to prevent municipalities of the state from loaning their credit or becoming interested in railroads and other projects. Constitutional debt limits upon municipal corporations were also imposed for the same purpose, and a limitation upon the taxing power of counties.
Article IV, Section 18, of the constitution forbids the incurring of a debt by the state in excess of $250,000, without a vote of the people, and for the approval of the proposal to incur such a debt the measure must receive "a majority of the votes cast for members of the general assembly".
Article IV, Section 20, provides that "the state shall never pay, assume or become responsible for the debts or liabilities of or in any manner give, loan or extend its credit to, or in aid of, any public or other corporation, association or individual".
Section 12 of Article IX forbids the incurring of indebtedness in the aggregate exceeding five per cent of the value of the taxable property of any county, city, township, school district or other municipal corporation, and requires that at the time of incurring any indebtedness provision shall be made for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due and to discharge the principal within twenty years.
Article IX, Section 8 limits the aggregate taxes of counties to seventy-five cents on the one hundred dollars valuation, unless authorized by a vote of the people of the county.
The constitutional convention of 1869-70 submitted to the people a separate section which provided that "no county, city, town, township or other municipality shall ever become subscriber to the capital stock of any railroad or private corporation, or make donation to or loan its credit in aid of such corporation:" This separate section was adopted by the people.
A separate section was also submitted to and adopted by the people of Illinois in 1870 providing that "the Illinois and Michigan canal, or other canal or waterway owned by the state shall never be sold or leased until the specific proposition for the sale or lease thereof shall first have been submitted to a vote of the people of the state at a general election, and have been approved by a majority of all the votes polled at such election. The General Assembly shall never loan the credit of the state or make appropriations from the treasury thereof, in aid of railroads or canals; Provided, that any surplus earnings of any canal, waterway or water power, may be appropriated or pledged
for its enlargement or extension.” The project for a canal connecting the waters of Lake Michigan and those of the Illinois River took form almost as soon as Illinois was admitted as a state. In 1822 the United States government made the first grant of land to the state for canal purposes. In 1848 the Illinois and Michigan canal was opened to navigation. The total cost of the canal was approximately $6,500,000. From the time the canal was open until 1871 the title to the canal was vested in a board of trustees who managed the waterway for the benefit of its creditors. The canal had a prosperous career during this period, and in 1871 all the creditors were paid, the trust was dissolved and a balance of approximately $96,000, was paid over to the state.?
The provision against leasing or selling the canal was inserted in the constitution of 1870 primarily for the purpose of preventing railroads from securing the canal and reducing competition. The provision forbidding appropriation of money by the general assembly in aid of canals was inserted to prevent the canal from becoming a burden upon the state in case its expenses should exceed its revenues. The canal soon ceased to be prosperous and the general assembly fell into the practice of making appropriations from the state treasury to cover deficits. In 1904 the constitutionality of such appropriations came before the supreme court in the case of Burke v. Snively2 and the court said: "We are of the opinion that the true meaning of the constitutional provision with reference to the canal is that the legislature should have power to operate it to the extent, and to the extent only, that the income of the canal would defray the expenses of operation, maintenance and preservation, and that no moneys shall be appropriated from the treasury of the state in aid of the operation, maintenance or preservation thereof, and that if the earnings of the canal produced a surplus appropriations of such surplus might be made to aid in the enlargement or extension of the canal should the legislature deem it wise to so appropriate such surplus”. A review of the cases involving the separate section on canals will be found in the Annotated Constitution.
In 1908 the separate canal section was amended by inserting the word "maintenance" in the last clause of the original section after the word “enlargement”, and by making express provision for the construction of a deep waterway or canal from the present water power plant of the sanitary district of Chicago at or near Lockport, to a point in the Illinois River at or near Utica, and bonds to an amount not to exceed $20,000,000, were authorized for this purpose. Legislation of 1915 authorized the construction of the canal, but no action was taken under this legislation, and the work of construction is being undertaken under legislation of 1919.
Under the terms of Article IV, Section 18, of the constitution the general assembly enacted legislation in 1917 for a $60,000,000 bond issue for a system of hard roads and the people approved the bond issue at the election of 1918. Legislation of 1919 also made further provisions regarding the use of money for the system of hard roads.
1 Putnam, J. W., Illinois and Michigan Canal, A Study in Economic History. Chicago Historical Society's collections, Volume 10. 1918.
* 208 Ill. 328.