908 REPORT—1890. 
the advantages of the public management of indivisible undertakings on the 
Continent, the greater part of the younger English and American economists are, 
I think, inclined to oppose it for England and America. We are not sure that 
we could exchange our own industrial virtues for those of the Continent if we 
wished to, and we are not sure that we do wish it. And though we recognise that 
the management of a vast undertaking by a public company has many of the 
characteristics of bureaucratic management, yet we think the former is distinctly 
the better suited for developing those faculties by which the Anglo-Saxon race 
has won its position in the world. We believe that a private company which 
stands to gain something by vigorous and efficient management, by promptness in 
inyenting, as well as in adopting and perfecting improvements in processes and 
organisation, will do much more for progress than a public department. 
Again, while a public company is inferior to a small private firm in its power 
and opportunities of finding out which among its employés have originating and 
constructive ability, a department of Government is far inferior to a joint-stock 
company, especially in England. And, further, such a department is more liable 
to have the efficiency of its management interfered with for the purpose of 
enabling other persons to gain the votes of their constituents on questions in which 
it has no direct concern; and as a corollary from this, it tends to promote the 
growth of political immorality, and it suffers from that growth. 
There is certainly a growing opinion among English and American economists 
that the State must keep a very tight hand on all industries in which competition 
is not an effective regulator ; but this is the expression of a very different tone of 
thought from that which is leading so many German economists towards what is 
called State Socialism. In fact, so far as I can judge, English economists at all 
events are even more averse to State management than they were a few years ago ; 
the set of their minds is rather towards inquiring how the advantages claimed for 
State management, without its chief evils, can be obtained even in what I have 
called indivisible industries ; they are considering how a resolute intervention on 
the part of the State may best check the growth of Imperia in Imperio, and pre- 
vent private persons from obtaining an inordinate share of the gains arising from 
the development, through natural causes, of what are really semi-public concerns, 
at the same time that it leaves them sufficient freedom of initiative and sufficient 
security of gain by using that freedom energetically to develop what is most 
valuable in the energy and inventiveness of the Anglo-Saxon temper." 
But, though we dislike and fear the present tendency towards a widening of 
the area of public management of industries, we cannot ignore its actual strength. 
For more forethought and hard work are needed to arrange an effective public 
control over an undertaking than to put it bodily into the hands of a public 
department ; and there is always a danger that in atime of hasty change the path 
of least resistance will be followed. 
By way of illustration of the inquiries that have had their origin in this fear 
of public management, as contrasted with public control and public ownership, 
I would here mention a notion which has been suggested partly by the 
relations of some municipalities to their tramways, gas and water works. At 
present it is in a very crude form, and not ready for immediate application; 
but it seems to have occurred independently to a good many people, and it 
may have an important future. It is that a public authority may be able to 
own the franchise and, in some cases, part of the fixed capital of a semi-public 
undertaking, and to lease them for a limited number of years to a corporation who 
1 Among the younger English economists who have written on the subject of 
Combinations, Trusts, and Government interference, I would specially refer to 
Mr. Rae and Professor Foxwell. Most of the other young American economists 
have written on it instructively from various points of view, and in Mr. Baker’s 
Monopolies and the People, to which I am myself much indebted, the English reader 
will find condensed into a short compass an account of the general position of these 
questions in America, together with some bold and interesting suggestions for reform. 
Some useful documents relating to Trusts have recently been published in a. 
Consular Report by our Foreign Office [5896-32]. 
