When we read about “government control” in recent years and then reflect upon the old term “government regulation,” we wonder whether a change has occurred. We ask our friends and find that they feel that there is a difference between the old regulation and the new control, but they hesitate to state what the difference is. Then we sit down to wrestle with the problem. The exercise is not easy. Perhaps the historical approach will be helpful.

The nation is just emerging from a state of wartime economic mobilization involving a degree of regimentation of its business life without precedent in this country and hardly surpassed by the most dictatorial régimes abroad. At the peak of the war effort a typical manufacturer was largely directed by the government as to what he might make, what raw materials he might use, to which customers he might sell, in what order, and at what price. He could not enlarge or substantially alter his plant without governmental authority. He was limited in both directions as to the wages he might pay. While not subject to direct coercive control in the selection of manpower, he could generally not hire workers beyond a semi-compulsory employment “ceiling,” and his manpower pool was radically limited by the demands of selective service and of competing war activities. His most important trade journal had become the Federal Register. While his discretion was not completely circumscribed, he moved within a framework so confined as to be tolerable only when the national existence was at stake.

Professor Gras has asked me to talk today on government regulation in the field of Finance. When he first mentioned the matter it seemed to me a most stimulating suggestion. The more I considered it, however, the more difficult the assignment appeared. The more I thought about it the more the subject seemed to be made up of a large number of topics relatively unrelated to each other. Management of insurance companies can hardly be treated in the same paragraph with the divorce of security affiliates from commercial banks, and competitive bidding has little in common with measures designed to protect bank depositors. While many of the particular segments of this subject possess great interest in their own right and deserve careful individual treatment, they are for the most part technical and cannot be dealt with adequately in the time at my disposal. Moreover, they are in many instances special subjects. By this I mean that they have wholly different backgrounds, that their internal logics are dissimilar, and that the kinds of knowledge needed to see each in its proper perspective are quite disassociated. The problem is to knit this compartmentalized subject together so as, on the one hand, to see it as a whole, and on the other hand, to avoid somewhat empty generalities.

The public utilities furnish numerous and outstanding examples of government regulation and later government control if we follow the distinction between these which Professor Gras has indicated. Aside from water, the oldest of our utilities are those furnishing artificial gas, beginning in Baltimore in 1816. The early franchises or charters granted to these utilities represent, according to Professor Gras' definition, extreme forms of government regulation, because these franchises or charters actually fixed rates and prescribed the character of service to be rendered for very long periods of time, say for fifty years or double that length of time. In the case of our earliest railroad charters, granted beginning about the middle 1820's, the power to make rates was often granted to the Boards of Directors of the companies. Some States, while permitting the rates to be made by the railroads themselves, did make reservation of such power to the State if need arose for exercising it.