Front Page Titles (by Subject) CHAPTER XXII: THE PURCHASE PRICE - Where and Why Public Ownership has Failed
The Online Library of Liberty
A project of Liberty Fund, Inc.
Search this Title:
Also in the Library:
CHAPTER XXII: THE PURCHASE PRICE - Yves Guyot, Where and Why Public Ownership has Failed 
Where and Why Public Ownership has Failed, trans. H.F. Baker (London: Macmillan, 1914).
About Liberty Fund:
Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.
The text is in the public domain.
Fair use statement:
This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.
THE PURCHASE PRICE
Telephones.—The Southern Canal.—Swiss Railways.—The Western Railroad.—The “Opération Blanche.”
When there is some undertaking to be purchased the partisans of nationalization and municipalization always start the ball rolling by saying: “Oh, it will cost practically nothing,” and then they proceed to reveal their economic limitations by making estimates which are invariably lower than the facts warrant.
When the French government decided to take over the telephone, it estimated the cost at 5,000,000 francs. The company demanded 18,800,000 francs. The state was finally forced to compromise at 9,313,000 francs, a figure which, with interest and costs added, ultimately increased to 11,334,000 francs, or 126 per cent. more than the first estimate.
Again, when the government determined to purchase the Southern canal, an outlay generally regarded as wholly unnecessary, advocates of the enterprise were unanimous in their enthusiasm over the manifest bargain. “It will cost the state nothing.” But the arbitration commission ordered the state to pay to the Southern company an annual indemnity of 750,000 francs, based on a capital of 25,000,000 francs.
Nor is France the only country furnishing examples of such frauds. Switzerland had similar experiences when she decided to purchase the railways. The Federal government appropriated a sum of 54,300,000 francs for the Central. The line actually cost her 75,000,000 francs, or 20,700,000 francs (36 per cent.) more.
Fifty-four million francs was afterward appropriated for the Northeastern line; 82,000,000 francs, or 28,000,000 francs (51.8 per cent.) more, was the actual price. The original appropriation for the Swiss Union was 31,700,000 francs; 40,000,000 francs, or 26.2 per cent. more, was the final figure.
An account of the government's underestimate of the cost of the Western line—the so-called “operation blanche” of M. Barthou—has already been described.1 The state had appropriated in all 220,000,000 francs to cover the cost of purchase. It actually paid 321,000,000 francs or more than 101,000,000 francs over the original estimate.
See Book 2, Ch. 8.