Swept into office on an incoming tide of public anger toward the Southern Pacific, Governor Johnson took action beginning in 1911 to attend to that matter and regulate the economy in other areas as well. This meant reining in the power of railroads and utilities
Figure 9.1 Hiram Johnson relaxing at home just before the 1910 election. Courtesy of the Bancroft Library, UC Berkeley.
Companies, while closely monitoring governmental expenses, protecting injured and sick workers, and regulating child labor. In many of these endeavors California reformers were inspired by policies across the Pacific in New Zealand, a self-governing British “dominion” in the vanguard of social democracy.
Effective regulation of the Southern Pacific came in the form of the Stetson-Eshleman bill, championed by Johnson and approved on February 9, 1911, and three later constitutional amendments aimed at greatly strengthening the state Railroad Commission. The Stetson-Eshleman law empowered the commission to set transportation and passenger rates, subject to judicial review, for all railroads and other transport businesses. By the end of June 1912, the commission had saved shippers and passengers an estimated $2 million in railroad fares. The three constitutional amendments, adopted in October, 1911, authorized the legislature to further broaden the commission’s power by, for example, extending its regulatory control over public utilities. Such utilities included gas, electricity, telephones, telegraph, water services, pipelines, and warehouses used in connection with rail and ship transportation.
As authorized, the legislature passed unanimously the Public Utilities Act, which the governor signed into law on December 23, 1911. Accordingly, the number of commissioners was increased from three to five and they were to be appointed by the governor as
Opposed to being elected as previously was the case. All public utilities in the state fell within the jurisdiction of the commission, except for those incorporated exclusively in cities or towns.
Johnson’s stress on efficiency and economy, hallmarks of progressivism nationwide, is evident in the establishment of the Board of Control in 1911. The legislature created the board to monitor the state’s finances. The agency conducted annual audits of the accounts of the state’s hospitals, prisons, bureaus, and commissions, as well as other institutions. By 1913, 16 state officers had been investigated, fired, and required to repay the monies they embezzled. The cost of funding the board amounted to $42,000 a year. As of January 1, 1913, according to the chair of the board, the state registered net savings of $750,000. The complaints of critics about the cost of regulation rang hollow in the face of these figures.
As an earlier defender of labor unions, Johnson’s governorship addressed workers’ concerns. In response to pressure from labor unions and public officials, in 1911 the legislature passed and the governor signed a workers’ compensation law to protect the interests of employees injured on the job. The measure provided for voluntary compensation, paid by employers. No such payments would be made, however, if employers could show that workers’ negligence had played a role in their injuries. Seeing these provisions as inadequate in terms of safeguarding workers, the California Department of Insurance board of commissioners refused to enforce the law. Instead, the commissioners turned to a New Zealand workers’ compensation law for guidance. As a result the state legislature created a state insurance monopoly, as New Zealand had earlier. The monopoly took the form of a mutual insurance company, that is, an entity owned by citizen policyholders, who, unlike investors in commercial enterprises, had no incentive to pursue profitmaking. This discouraged private sector competitors from entering and controlling the workers’ compensation market, keeping job-related accident insurance affordable for employers and workers. In 1913 a new California workers’ compensation statute went into effect, making employer participation in a broadened state insurance program compulsory, except in agriculture. In accounting for the new and more effective measure, commission chairman A. J. Pillsbury declared “We borrowed the idea from New Zealand.”
In the area of labor relations, reformer and journalist William E. Smythe of San Diego encountered limits as to how progressive the state would be. In 1901-2 he promoted compulsory arbitration of labor disputes. To him, a recent strike in San Francisco constituted “a blot on the history of California.” “Thousands of men were idle for weeks. . . . Assaults were committed and blood was shed.” The fact that the Pacific dominion of New Zealand had successfully implemented compulsory arbitration of disputes between workers and employers had caused Smythe to underestimate the culture of property ownership and a relatively weak regulatory state that prevailed on the American side of the ocean. In the face of employer opposition, his efforts came to nothing. In the early 1900s, California, at least, was not ready for the arbitration reform championed by some progressives.
Labor market reforms, nevertheless, came on other fronts. At the turn of the century in California, children of poor families worked in fields, factories, and canneries, often enduring exploitative conditions and earning wages that were a fraction of those paid to adults. In 1913 California progressives, led by Katherine Philips Edson, pushed for and secured a minimum wage law for women and children, and the establishment of the Industrial
Welfare Commission, which, among its other duties, investigated the wages, hours, and working conditions of children. The information gathered helped lead to the passage of another minimum wage law for children and others three years later. Working conditions for women further improved in 1913 when Berkeley socialist Elvina Beals and her female colleagues secured an amendment to the existing eight-hour-day law, extending its provisions to women employed in public lodging houses, apartment buildings, hospitals, and other places exempted from the original statute.
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