000,000) furnished by the exchequer to 0.41 per cent., or less than one-half of 1 per cent. These figures are a sufficient answer to those partisans of government ownership who are continually reiterating that expense may be incurred with impunity because government monopolies will pay for them. And, moreover, receipts from ports, jetties, quays, and canals, which are not industrial operations properly socalled, are included in these figures.

Moreover to the loans previously noted as granted to local governments, £23,210,000 ($113,033,000) should be added for the Port of London; £25,720,000 ($125,256,400) for the Mersey Docks and Harbor Board; £49,529,000 ($241,236,000) for the Metropolitan Water Board; more than £14,692,000 ($71,550,000) for ports, docks, quays, etc., or a total of £129,288,000 ($625,795,000). The taxable value of all this property was £217,180,000 ($1,057,667,000), from which must be deducted, however, £1,737,000 ($8,459,000) representing government property, which, in lieu of taxes, pays an equivalent sum under the name of "contributions."

The following figures show the total local tax during the three years 1908-1911:

The tax of

The pound sterling is 20 shillings.

1910-1911 represents then more than 30 per cent. of the assessed value of the taxable property just listed.

Municipal enterprises, far from having relieved the taxpayers, have not prevented local taxes from soaring higher in 1910-1911 than they had ever done before.

Municipal enterprises make loans necessary, and the increase of loans involves loss of credit.

The Birmingham Daily Mail, of May 24, 1911, published the letter of a correspondent, who says:

"The town made last year a profit of £132,174 ($643,687), from which must be deducted a loss of £57,091

($278,033). The citizens of Birmingham have loaned to the city £12,500,000 ($60,875,000), on which they lose all their taxes and receive in turn about £60,000 ($292,200), or less than 0.45 per cent., whereas if they (the municipal undertakings) were paying 5 per cent. they would yield £650,000 ($3,165,500)."

Hilaire Belloc, during a debate at Memorial Hall, in London, with Ramsay McDonald, the president of the Labor Party in Parliament, said:

"Municipal enterprises have been established by means of loans contracted with capitalists to whom the various local governments offered returns which these undertakings either did or did not furnish. The result has been that municipal undertakings have been bringing in about 1.8 per cent., while 3.2 per cent. interest was being paid out. The debt has been increasing. There has been more and more need of capitalists who have refused to consent to new loans seeing that the debts were growing in an alarming manner." (Labor Leader, May 12, 1911.)

Major Darwin, in his objective study of municipal industries, reaches the following conclusion:

"Municipalities can manage markets, public baths, slaughter houses, cemeteries, and waterworks. Municipalities may own tramways. But all these enterprises ought to be operated privately. Gas, electricity, tramways, the telephone, ought to remain in the hands of private individuals."

He further suggests that municipalities be forbidden to manufacture electrical apparatus; to own houses; to

engage in construction without contractors. Municipalities should be forbidden to attempt to make money, and their borrowing power ought to be restricted.1

In the United States the debt limit for municipalities is: 10 per cent. of the taxable value in New York, 5 per cent. in many of the western states, and 2 per cent. in others.

This year (1913) the German cities are being much hampered for lack of credit. A loan sought by the city of Carlsruhe has had to be indefinitely postponed The smaller and medium sized municipalities, in the absence of funds, have been obliged to postpone necessary work.

1 Constitutional Amendments to be added to the Declaration of Rights.

CHAPTER XVIII

FICTITIOUS PROFITS

Railway Charges.-Local Taxes on Prussian and English Railways.-The Victorian State Coal Mine and the Government Railways.-New Zealand.-Profits of the National Printing Office.-The Insurance Monopoly.

Private enterprises are subject to certain charges from which state undertakings are exempt. These exemptions create an illusion of profit. Local taxes paid by the government railroads in Prussia amount to £750,000 ($3,652,500), while similar taxes, paid by the railways of the United Kingdom, having nearly the same length of line, reach £5,000,000 ($24,350,ooo). If both were taxed at the same rate the profit on the government railroads in Prussia would be proportionally reduced.1

Further, the profits of one state undertaking are frequently obtained only at the expense of another. For example, the Victorian state coal mine, in Australia, is called a success; but the director of railroads, Mr. Fitzpatrick, complains of losing 45,000,000 francs ($8,550,000) through being forced to use government coal.2

At the end of 1912 it was announced that the New 'Edwin A. Pratt, Railways and Nationalization, page 3. For New Zealand see Book 2, Chapter VII.