Franchise
in social science, a permit or grant authorizing an individual or a corporation to undertake a public service. A franchise may be granted by a city, state, or nation. The term is used most frequently in connection with municipal affairs. The granting of franchises is directly opposed to public ownership. Many are of the opinion that a city should own all branches of public service that are natural monopolies. A gas system, a telephone, and a water system are of this description. Some franchises, as the right to operate a ferry, can be acquired by common law. A monopoly is his who establishes the first ferry so long as he renders efficient service; but ordinarily franchises are conferred by formal grant of a duly empowered body, as a city council.
The granting of franchises is the occasion of public scandal and corruption. It is beyond dispute that corrupt men seek places in legislative bodies, and particularly city councils, to traffic in privileges. Corporation officials, having or desiring to hold a franchise, pay agents to lobby. They entertain councilmen, subscribe to campaign funds, push the nomination and election of tools, buy votes outright, and pay blackmail to ward off the raids of vicious councilmen. The matter has been managed with a greater degree of honesty, and with more regard to the interests of the public, in European cities than in America. The toleration with which the plundering of the public is regarded in this country has no counterpart in Europe. Some principles that should govern are:
1. Franchises should not be granted at all. The public should own its plants and should employ skill and honesty to manage them.
2. If a franchise is to be granted, an intelligent committee of the council should visit other towns or cities, read trustworthy publications, and, in case of doubt, employ an honest expert. A few hundred dollars spent in this way is an excellent investment.
3. All grants should be for a limited term. The duration of the franchise should be made to fit the difficulty and expense of installment. A telephone service is not difficult to install. A large part of the outfit may be moved without serious loss. A gas plant and a system of pipes are expensive, and once in are practically useless for removal. If a ten year term is a sufficient inducement for a telephone company, thirty years is little enough for a gas franchise. In any case, the rights of the company should terminate at the expiration of the time limit. The franchise should return to the city, just as a leased farm returns to the owner when the time is up.
4. Explicit provision should be made for taking over the plant at the end of the term, if desired, at a fair appraisal value, not counting the franchise, which, of course, returns to the city.
5. A city or town desiring to grant a franchise or to renew an old one should draw up its own franchise and advertise for takers. It is a mistake for a council to allow itself to be beseiged by a proposed company. A new town may find it necessary to pay a bonus, but ordinarily a franchise worth the having is worth paying for. The larger the city the greater the value of a franchise, and the better the bargain the city should make.
6. A franchise should be leased like a house or a farm. The rent may be an annual return; it may be a service to the city; it may be a share of the proceeds; or it may be a proper combination of all three. Here is where the interests of the public need guarding. This is the point where incompetent and dishonest councilmen sell out the interests of the public; for streets are property and a franchise has value. As a plain illustration of what is meant, the Edison Electric Illuminating Company obtained a lighting franchise from New York City, paying the pitiful sum of one cent per lineal foot for the streets occupied by wires and tubes. A committee, appointed in 1901 to investigate the affairs of this company and its successors, reported substantially that the holders were paying themselves $2,000,000 interest on fictitious bond issues, had $8,000,000 undivided surplus on hand, were charging private consumers as high as fifteen cents for what cost not to exceed 6.32 cents, interest on watered stock included. Nor is this all; in return for giving the company this opportunity to plunder the public, the city of New York was paying the company $80,000 for lights that the company would have been glad to duplicate for a business firm for $25,000. Contrast the street car system of Berlin which paves from curb to curb the streets on which the cars run, and pays the city $200,000 a year in taxes. It is not well to live in a state of suspicion and distrust, but officials ought to make the same kind of a bargain for the public that they would make, under similar conditions, for themselves.
7. A franchise, if granted, should be exclusive. The company takes the franchise to make money, and should be guaranteed the opportunity to do so without ruinous competition. Fair dealing--favorable terms to the company and favorable terms to the city--should be the policy.
8. Every franchise should provide that the accounts of the holder should be open for the inspection of a public examiner. This feature is essential. Publicity of accounts is necessary to intelligent action. A company unwilling to make its accounts public should be permitted to confine its operations to private business.
9. The charge for service should be fixed on a sliding scale. As the volume of traffic or consumption increases, rates should fall.
10. The quality of service should be stipulated and safeguarded. To this end, the plant should be open to official inspection.
11. The corporation should be sheltered from arbitrary and dishonest demands. The city should give the company a fair opportunity to make money. The city is the owner. The corporation is the renter. Unless the owner gives the renter a fair chance, the renter cannot do well by the owner.
See Suffrage
Francis I (1494-1547), a king of France. He succeeded to the throne in 1515. In 1519 he strove to be placed at the head of the Holy Roman Empire, but he was defeated by Charles of Spain who became the famous emperor Charles V. The life of Francis was spent chiefly in carrying on expensive wars with his successful rival. In 1525 he was taken captive at the battle of Pavia and was held a prisoner until the next year. He has been severely criticized by Christian historians for an alliance with Solyman the Magnificent, sultan of Turkey. Francis was a ruler of ability and deserves to be held in esteem by his country. His grandson, Francis II, is known in history chiefly as the husband for two years of Mary Stuart, Queen of Scots.