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THE GROWTH OF PUBLIC OWNERSHIP.
The growth of the socialist movement has been contemporaneous with the extension of public ownership of various forms of enterprise. Since 1850 the state has gradually abandoned its old ideas as to the scope of its functions. Individualism preached that the government should keep to a few clearly-defined duties; of these the chief were defence, the administration of justice, the protection of life and property, and the levy of taxes. All else must be left to private enterprise. Gradually this attitude was modified as it became evident that life and property could only be protected by the imposition of some restrictions and regulations on the actions of those engaged in economic affairs. Hence came the period of industrial legislation and public control over the conditions of labour, the quality of goods, the prevention of fraud, the fostering of industry and agriculture, and the establishment of charitable institutions. But more still was required, and from regulation the state passed on to actual public enterprise. This step has been taken by governments the world over, and in some instances public ownership came before public regulation. Hence to-day every government is engaged in some form of activity beyond defence and the administration of justice. It employs workmen as well as policemen, and is occupied with such matters as production, finance, transport, public health, the provision of light and water,' education, or recreation. This activity is shared alike by central and local governments; municipal enterprise has developed at a very rapid rate since the middle of last century, but state action usually came later. The war extended the scope of public effort so that every aspect of life and labour is, in some part of the world, the subject of collective ownership and enterprise.
Motives. The forces which drove public bodies along this line were seldom socialistic. The socialist attacks capitalism primarily because of its exploitation of the worker. Socialism would give the worker “the full product of his labour''; it is primarily a gospel for the producer. Collectivism has drawn most of its inspiration from a quite different source the interest of the consumer. The plea is that certain commodities or services are required by the government or the community, and can be better provided by the public authority than by any group of private capitalists. They can be supplied better in quality and cheaper in price by a body working for use rather than for profit. Hence there has been little idea of a more just distribution of wealth, or consideration of the improved lot of the producers. The state, like co-operation amongst consumers, has been interested in cutting out profit for the benefit of the buyer, not of the maker. As such, collectivism has been preached by men who, far from subscribing to the socialist creed, were often its bitter opponents. Chadwick, who in the thirties and forties pleaded for public administration of sanitation and health provisions; Joseph Chamberlain, who led Birmingham on a vigorous policy of municipal action; the Australian legislators who decided that our railways should be state-owned; Bismarck, the Japanese, Russian, and French nationalizers, all attacked socialism with their lips, whilst in their actions they invaded the field of capitalism and reserved large areas from private exploitation.
The motives for undertaking public works were many and varied.
(1) It was recognized that there was a vital need for some services and commodities which, since there was no strong immediate demand or prospect of early profit, would not be provided by private enterprise—e.g., lighting, paving, drainage, water, hospitals, housing, etc. A community could not wait until the demand for such services induced capitalists to take up the work.
(2) It was felt that some things should be provided gratuitously or at a nominal cost, because of their social value and their effect in improving the mental or physical equipment of the whole population-e.g., education, parks, museums, libraries, theatres, concerts, etc. Other services and goods were taken into public hands in order to control or restrict their capacity for harm-e.g., the totalizator, liquors, opium.
(3) Some activities enjoyed a natural or artificial monopoly which might be used in a harmful manner. For instance, there could be no freedom of enterprise in supplying a town with gas or trams. It would be impossible to allow rival tramway companies to compete in the same street, or rival gas firms each to have their own sets of mains and pipes in the same area. The work must be put into the hands of one company, which was given a legal monopoly. But this monopoly might be used to give an inferior service, charge excessive prices, and make big profits. Such evils might be checked by vigorous regulation, but it would be much better, safer, and possibly cheaper if the enterprise was publicly owned. This applied to postal facilities, means of transit, and docks, as well as light.
(4) It was felt to be desirable to unify un one central authority particular services which were not merely of vast economic, but also of national importance. A postal system, to be effective, must be united on a national or, if possible, on an international basis. Educational institutions must be organized and correlated on a large scale, and railways and roads must not merely serve the economic requirements of a country, but also be planned so as to discharge their duties most effectively in time of war.
(5) When governments undertook certain tasks they needed large supplies of materials. If these were obtained from private producers a frofit was made by the seller. Therefore the state saw that it must produce the goods for itself. If it ran railways it must have its own coal mines, engineering and carriage building works; if it used large quantities of timber, it must acquire forests and establish its own sawmills; if it had buildings to construct or roads to make, it must have its own quarries and brickworks, and its own staff of architects, managers, and labourers. It required thousands of uniforms for its soldiers, sailors, postmen, etc., it needed ships for its navy, munitions for its forces; therefore let it have its own clothing factories, build its own vessels, make its own guns, manufacture its own explosives. Thus governments have pursued the policy of integration practised by big private firms and trusts, and have endeavoured to supply their own needs, cutting out profit from the production of the articles they require.
(6) In some parts of the world, especially in Australia, the state has undertaken the manufacture and sale of commodities or the rendering of services in order to break monopoly prices. The state has come in as a competitor, trying to give services more cheaply than they were rendered by private monopolists or trusts. State butcheries, fish shops, woodyards, shipping, issurance, banking, legal assistance in making wills or discharging duties of trusteeship, these are the chief lines of such action.
(7) The state may desire to benefit from the increasing value of land due to the working of social forces and keep for itself the enjoyment of the unearned increment. Hence it may retain land it already possesses or buy back land already alienated, cultivating it or letting it on long or perpetual leases, with periodically reassessed rents. Many municipalities have retained or acquired ownership of the land round their cities, with a view to enjoying its later enhanced value, or for the purpose of directing the growth of the city on town-planning lines.
(3) Finally, all public bodies are faced with the task of raising revenue, and, as no one likes to risk unpopularity by levying heavier taxation, have begun state or local enterprises in order to provide revenue. At first taxation is levied on certain commodities produced by private firms, but as those firms pass on the taxation to the consumer and still make their profits, the state has decided to take over this profitable business itself, and thus secure both taxation and profit. Hence many state monopolies have been established purely for the sake of the revenue to be obtained, and most public enterprises, except education, public health, and road construction, are regarded more or less favourably in proportion to the extent to which they yield a profit.
Extent of Collectivism. The chief economic activity of governments is in the field of communication and transport. The transmission of messages has passed almost completely out of private hands, and the Britisti Postmaster-General in 1915 had to meet a wages bill of £20,000,000. Roads, bridges, and many canals are publicly maintained, and the old turnpike company, a joint stock body of a century ago, has disappeared. The Panama Canal was constructed under a government commission, and, like the Kiel Canal, is state property.
From the making of highways to the work of carrying was a short step. In 1882 one British municipality owned its tram service; by 1913 the number had grown to 171. Street traction is passing rapidly, even in America, out of the sphere of private profit. Of railways, about half the world's mileage is publicly owned. The relation between railways and the state was a subject of keen discussion in the thirties and forties of last century, especially as it was realized that transit would pass into the hands of big monopolies. Even in individualist England the idea of nationalization was toyed with. In Belgium the idea was translated into practice, and the entire task of constructing and working the railroads was shouldered by the state. By 1850, Hanover, Baden, Wurtemburg, Bavaria, and Austria had followed Belgium's example, and here, as in other lands at a later date, existing private railways were purchased, and all new construction was kept in the hands of the state. Of the 70 national railroad systems of the world 50 were in 1914 directly administered by the public authority; others were publicly owned, but leased to private firms. In the United Kingdom and U.S.A. alone of all the big countries private ownership persists, and even the American Government now owns over 1,000 miles of track in Alaska.
Provisions to ensure public health were at first privately established, and a few places still have privately controlled sewage and water systems. There are over 10,000 public water supply systems in the world; sewage is a municipal duty; cemeteries and crematoria are public property, and doctors, chemists, nurses, and undertakers have become in places civil servants. It is not unlikely that during the next few decades the whole prevention and cure of disease will become as much a function of the state as education.
Education and recreation in many forms have become the subjects of intense public effort. Not merely schools and universities, but libraries, orchestras, theatres, tourist bureaux, hotels, etc., are managed by public bodies. Governments are probably the largest printers in the world; there are one or two municipally owned newspapers, and in some Italian cities bill-posting is a civic monopoly.
But action has not stopped short at transport, education, and public health. The fields of production, agriculture, industry, mining, and finance have been invaded with some degrees of success. Land improvement, especially by drainage, reclamation, irrigation and afforestation, is a big public enterprise in many parts of the world. One-sixth of the total area of India is state-owned forest reserve, and produces a net revenue of over £2,000,000 a year. One-seventh of the area of Germany was similarly reserved in 1914, and large areas of woodland in France, Italy, Russia, and Japan yield much revenue to the exchequer. Many German cities and villages own a large part of the land on which they are built; before the war the revenue from this source in some places relieved the citizens of all rates, and in one oft-quoted place (Klingenberg, in Lower Franconia) paid each townsman £15 a year, plus free fuel.
Mining and quarrying are carried on by the state or local authority in some countries. The Prussian Government in 1914 owned and worked 345 groups of coal mines, from which the railways were supplied, and 12,000,000 tons sold to private consumers. The King of Prussia was probably the largest coal merchant in the world. But with this one big exception mining has been left almost entirely to private enterprise.
Of state manufactures there is no end. In several countries government monopolies - have been established for the production and sale of tobacco, matches, gunpowder, alcoholic drinks, salt, etc. The aim of such monopolies, especially that of tobacco, is admittedly the production of revenue, and the state generally uses its power to make the biggest possible profit. In some instances the monopoly is leased to a private company, but direct government administration is more general. Further, public authorities have established works to make goods which they require for carrying on various purposese.g., sawmills, clothing and boot factories, shipyards, engineering works, printeries, ammunition plants, etc. Beyond this they have in some cases gone on to compete with private enterprise in supplying the wants of the general community. Some Italian cities own bread shops and drug stores; Buda Pesth, long before 1914, was selling meat, poultry, eggs, and butter; milk and vegetables were handled by many German cities; in 1910-11 some Swiss authorities tried to reduce the cost of living by selling fish, vegetables, groceries, and coal, while municipal restaurants and lodging-houses were scattered all over Europe.
The provision of gas was for many years almost entirely in private hands, and is still so in two-thirds of the towns of the United Kingdom. Dresden and Leipzig were the first cities to take over gasworks (in the thirties of last century), and public ownership is almost universal in Germany. In the United States, Canada, and most of the Australian cities gas is still supplied by joint stock companies. But by the time electricity became a possible cheap source of light and power the idea of municipal enterprise had become much more fully developed. Hence from the start many cities owned their electric plant, though private capital still holds a great part of the field.
Finance and insurance have not been neglected. Years ago the British Post Office became a savings bank, and in 1915 had £200,000,000 deposited with it. The post offices of Austria, Hungary, Germany, and Switzerland began to allow people to open current accounts and draw cheques on them. Austria in 1913 handled £1,800,000,000 worth of such cheques. State banks date back to the Prussian State Bank, established in 1772, and in modern times have done a vast amount of work in discounting bills and especially in making advances to small producers, local authorities, and working men who wished to buy a house. Insurance work began in Switzerland, where public bodies began to take risks against fire; ' to this other governments have added accident and workmen's compensation departments, whilst on the outbreak of war the British Government established à marine insurance department.
'Finally, some municipal authorities have attempted to deal with the housing problem by demolishing slums, providing open spaces, and building dwellings for the poorer section of the population. Zurich in 1911 was working out a scheme which would make it the house-owner and landlord of a quarter of the city. Paris in 1912 voted £8,000,000 to build dwellinghouses, whilst Buenos Aires in the same year decided to begin the construction of 10,000 houses. The great scarcity of houses since the Armistice has compelled most governments to embark on extensive schemes of house construction and ownership.
Australasia. In Australasia public enterprise has been as varied in character as in success. It has been initiated almost entirely by the state, for the municipal authorities have been very shy of encroaching on private preserves. In the early days it was inevitable that the governments should undertake all manner of activities in order to supply the settlements with necessaries and carry out important public works. The colony, therefore, started off with wide state powers. The next big step was taken when railway projects were being discussed in the early fifties. At first it seemed probable that the new form of transit would be left to private capital, but the first parliaments of New South Wales and Victoria decided to follow Belgium rather than England. In Tasmania the main line was built by a private company and eventually acquired by the state, and other lines had a similar history. In 1917, of 25,600 miles of track open for traffic, only 3,000 miles were privately owned. In the same year over three-quarters of the tramway mileage was in the hands of state or municipal authorities, and to-day Queensland, Western Australia, Tasmania, and the Federal Government own steamships.
From owning tracks and rolling-stock it was a natural step to proceed to establishing works for the preparation or building of railway material, engines, and carriages, and to the construction of new lines or the building of ships. Hence in some instances the letting of contracts to private firms has been abandoned and the work undertaken by a government department, employing labourers, buying or making materials and plant. The construction of the East-West line was carried out by a Federal department, whilst the making of cloth and small-arms and the building of ships are in the hands of other departments. Victoria and Queensland own coal mines, and Queensland has decided to undertake the production of iron and steel. The