began to ask for the right to buy the freehold of their properties. The Labor party was constantly proposing a revaluation of rents. In 1907 the right of purchase was recognized, but under conditions of valuation which provoked the strongest resentment. The tenants maintained that the state's interest in the land. was only the capitalized rental of 4 per cent. on the original value of the land.

The lease in perpetuity was abolished by the Act of 1907. However, under this system of leasing, which had been in force for 15 years, over two million acres of the best land in the colony had been parted with. In the place of the "eternal lease" was enacted the "renewable lease," a lease for 66 years, with provision for valuation and renewal at the end of the term with reappraised rent. But the public lands can always be sold immediately on the occupation-with-right-of-purchase system. It is therefore a mistake to believe that the government of New Zealand owns all its soil.

On March 21, 1906, the total area of 66,861,440 acres was held roughly as follows:

It is estimated that 63 per cent. of New Zealand families own property of £100 and above; and it is probable that 75 per cent. of the families own some

kind of property. A number of small properties are exempt from taxation. Those who are without property are young people earning large salaries who, with health and a fair chance, will achieve a good position in life.

The land laws have not only increased the number of proprietors, but, although they have had a Socialist aim, they have actually brought about anti-socialist results, since they serve to encourage the system of private ownership.

The Labor party advocates nationalization of the soil; but the tenants, supported by the freeholders, continue to demand the right of transforming their leases into property holdings. At a crisis they would insist upon a lowering of the rent. One witness, in 1905, made this profound observation before the Land Commission:

"I believe in the freehold because, in times of trouble, the freeholder is the man to whom the state will look; and the leaseholder is the man who, in times of trouble, will look to the state."

Messrs. Le Rossignol and Stewart, the authors of State Socialism in New Zealand, conclude:

"It is not easy to show that New Zealand has derived any benefit that could not have been obtained from freehold tenure combined with taxation of land values."

CONCLUSIONS

8. Except in the United States the telegraph and telephone systems are nationally owned and op

erated. The coining of money is also a function of governments. The railways are government owned, either wholly or in part, in France, Germany, Austria-Hungary, Italy, Denmark, Sweden, and Belgium, but the extent of the private systems is greater than that of government lines.

Industrial operation by governments and municipalities is still very limited in scope. Nevertheless, it is already sufficiently widespread to make a conclusion possible as to whether the dreams of its advocates are being materialized, or their promises fulfilled.

BOOK II

FINANCIAL RESULTS OF GOVERNMENT AND MUNICIPAL

OWNERSHIP

CHAPTER I

BOOKKEEPING IN STATE AND MUNICIPAL TRADING ENTERPRISES

1. Report of Gustave Schelle to the International Statistical Institute.-Denmark.

2. Receipts and Expenses of Public Operation in France; Costs of Construction.-Receipts and Expenses Outside of the Budget. Special Accounts.-Capital Charges.

3. British Municipalities. - Belgium. - Sweden. - City of Paris.

4. Austria.

5. Conclusions.-Attempts to Organize Special Accounts for Government and Municipal Trading Enterprises Have Failed. They Are Incompatible with a Homogeneous Budget. Sane Budget Regulations and Public Operation of Trading Enterprises Are Contradictions in

terms.

I. I have already quoted from the report to the International Statistical Institute, compiled by Gustave Schelle, former minister of Public Works, where

in he discusses the financial situation of the various state and municipal trading enterprises, from which he has received reports, with all the authority of his official position, and with a mind which has remained both alert and independent throughout his administrative career. The difficulties in the way of estimating and comparing the value of such enterprises are very great.

In Denmark, for example, railway outlays for pensions and general administration and inspection costs. are borne by the railroads themselves. For other enterprises such costs are met by the general budget.

Before 1904 and 1905 the postoffice and the telegraph yielded no net proceeds. In 1908-1909 this was also true of the mint.

No report is made regarding the interest charges upon loans for the establishment of such enterprises. In 1908-1909 the results of municipal operation of gas, electricity and water were as follows:

In Holland, according to information furnished by M. Methorst, director-in-chief of the Central Bureau of Statistics, the cost of constructing the postoffice, telegraph and telephone systems amounted, on Janu