The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface
• Translator's Note
• Where and Why Public Ownership Has Failed
• Book I: Public and Private Trading Operations
• Chapter I: Two Precepts
• Chapter II: The Three Mainsprings of Human Action
• Chapter III: Determining Motives of Private As Against Public Enterprises
• Chapter IV: Government and Municipal Trading Operations
• Book II: Financial Results of Government and Municipal Ownership
• Chapter I: Bookkeeping In State and Municipal Trading Enterprises
• Chapter II: The Belgian State Railroads
• Chapter III: Prussian Railroads
• Chapter IV: State Railways of Austria and Hungary
• Chapter V: Italian Railways
• Chapter VII: Railways of New Zealand
• Chapter VIII: Government Railroads In France
• Chapter IX: Public Vs. Private Operation
• Chapter X: The Holy Cities of Municipal Operation
• Chapter XI: Operation of Gas and Electricity In the United Kingdom
• Chapter XII: Tramways In Great Britain
• Chapter XIII: Housing of the Working Classes and Public Ownership In Great Britain
• Chapter XIV: Housing of the Working Classes On the Continent
• Chapter XV: Government Control of Food Supplies
• Chapter XVI: Victims of Government Ownership
• Chapter XVII: Charges, Debts and Credit
• Chapter XVIII: Fictitious Profits
• Chapter XIX: Fiscal Monopolies
• Chapter XX: The Alcohol Monopoly In Switzerland and Russia
• Chapter XXI: Financial Disorder
• Chapter XXII: The Purchase Price
• Chapter XXIII: Delusions of Profit and the Life Insurance Monopoly In Italy
• Chapter XXIV: The Fiscal Mines of the Saar District
• Chapter XXV: Public Versus Private Enterprise
• Book III: Administrative Results
• Chapter I: Administrative Results
• Chapter II: The Safety of Travelers Upon State and Private Railway Lines
• Chapter III: Disorders, Delays and Errors
• Chapter IV: Official Conservatism
• Chapter V: Labor
• Chapter VI: The Consumer
• Chapter VII: Programs of Organization and Regulation
• Book IV: Political and Social Consequences of Public Operation
• Chapter I: Socialist Programs and the Facts
• Chapter II: Bluff
• Chapter III: Results of Experience
• Chapter IV: The State a Dishonest Man
• Chapter V: Corruption
• Chapter VI: Nationalization of Public Utilities and the Foundation of Great Fortunes
• Chapter VII: Disintegrating Character of Public Operation
• Appendix %u201ca%u201d: Alcoholism In Russia
• Appendix %u201cb%u201d: the Financial Year In Australia
• Appendix %u201cc%u201d: the Shortcomings of the Telephone In England

CHAPTER II

BLUFF

In November, 1911, Edgard Milhaud, editor of the Annales de la Règie Directe, declared in that publication:

“Operation by public groups—that is to say, government ownership—is being substituted more and more for operation by individuals or by private corporations. In the field of municipal operation we might mention water supply, gas, electricity, tramways, highways, sewage disposal, sanitation, undertaking, crematories, markets, department stores, savings banks, pawnshops, weights and measures, employment offices, real estate offices, cheap lodgings, slaughter houses, public baths, grain elevators, fish ponds, etc. To-day municipal operation of water, gas, electricity and tramways forms a total of 338 undertakings in Switzerland, 569 in Italy, and 1805 in the United Kingdom. Water and gas enterprises alone reach a total of 3,210 in Germany.

“In the field of state undertakings we would mention the postal, telegraph and telephone systems, railways, canals, insurance, title guaranty and trust companies, banks of issue, mines, salt works and salt marshes, hydro-electric power, forests, various manufactures (powder, munitions of war, matches, tobacco, tapestries, fine porcelain, etc.), monopolies of several imports and exports (the camphor trade with Japan, Colombian emeralds, etc.). Moreover, one international federation of national undertakings was established 37 years ago, in 1874. This is the Universal Postal Union.”

M. Milhaud is an exponent of that particular rhetorical method which consists in producing effects by piling up words one on top of the other in such a manner as to give an impression of large quantities in face of really small ones. If we are to credit his statement, people far advanced along the path of evolution are finding themselves carried away by an irresistible impulse to substitute public for private undertakings. Then he enumerates these undertakings for us.

Now municipal undertakings are by no means novelties; they are traditions, at least in the case of public roads, sewage disposal, cemeteries, common sewers, markets, public weights and measures, etc. The aqueducts of the Romans prove to us that their water supply was a municipal affair. Therefore, as novelties, we have the distribution of gas, electricity and the tramways.

He quotes Germany as having the greatest number of municipal undertakings. These also are traditions and not innovations. The case is the same in Switzerland, where the paternal policy of the cantons has never established a definite limit between what belongs to the individual and what to the public domain. The number of local governments in the United Kingdom which have taken over such enterprises is astonishing; but experience is decidedly against any further extension of similar activities on the part of municipalities. In France, up to the present, and despite all the allurements of the Socialists, the municipalities have shown themselves distrustful.

As for national undertakings, Edgard Milhaud points to the postal, telegraph and telephone services.

The two last mentioned undertakings, except in the United States, are integral parts of the postal system. The Assyrians also had a government postal system, not for the use of the people, but for the service of the king. A similar institution was established and for the same purpose by the kings of France and other sovereigns. It is a government tradition. The majority of the railway lines still belong to private companies. As for insurance, there is scarcely one system under public management outside of the municipal fire insurance in Germany. Because Prussia is a great mine owner, it does not follow that that country is pointing out the future economic course of other peoples. The public forests are a remnant of the feudal régime.

Tobacco and match monopolies are limited to one or two countries. The Gobélin tapestry and the Sèvres porcelain are monarchical heirlooms.

In Austria, toward the close of 1911, a bill for the nationalization of coal mines was presented. But Superintendent Holmann, representing the government, gave it as his opinion that the nationalization of Austrian coal mines would require an amount of capital so extravagant that it would be impossible to procure it. Moreover, he considered that it would be a mistake to hope for large results from such nationalization, as it would have all the economic defects and inconveniences of similar monopolies everywhere. The project was, therefore, abandoned.

And yet M. Milhaud can say: “The unceasing march toward nationalization and municipalization is supported, stimulated and commanded by economic evolution.”

Neither government nor municipal monopolies are novelties; they are antiques. To represent them in the light of consequences of modern economic changes is to commit a solecism. They are not indicative of evolution, but of retrogression.

As a matter of fact, if throughout the world we compare the economic activity of private undertakings with those of governments, either local or state, the latter appear almost insignificant. The 338 Swiss municipalities may be each in itself most interesting in its public economic activities. But Switzerland has only 3,763,000 inhabitants, and the importance of their activities is therefore limited.