Michigan

The idea that government and public agencies should own or closely regulate essential utilities is as old as the industrial revolution. American social reformers of the nineteenth century were particularly alarmed by the economic power of railroads and they fought for decades to bring them under public regulation.

In the cities, key services such as water, gas, public transportation, electricity, and even telephone service were viewed as "natural monopolies," which is to say, as industries in which effective competition was nearly impossible. Believing that one company or cartel would ultimately dominate delivery of such vital services in any city, reformers argued that the public should take over the job or, minimally, license and control the private providers. This was the theory behind the municipal ownership movement of the late nineteenth and twentieth centuries.

The younger cities in the West faced a situation different from older metropolises of the East and Midwest. Western leaders were desperate for private capital to build essential urban infrastructure -- especially railroads -- and they knew that talk of public ownership would frighten away investors. Many cities pursued the alternative of granting lucrative franchises to private companies to build and operate utility and transportation systems. These were often laxly regulated and amounted to virtual gifts of public lands and rights-of-way. Corporate abuses of franchises and land grants fueled public anger, reflected in the Washington State Constitution's ban on such public generosity to private interests.