TRANSACTIONS OF SECTION V, 699 



the combine must therefore depend on the promised large economies. How far 

 the promise that two and a half millions sterling can be saved each year by cen- 

 tralisation of control is subject to the comments that, though the expenses may be 

 cut down the incitement to individual effort is continuously lessened, whilst the 

 beneficial effect of laying up redundant vessels in slack times is minimised by the 

 fact that the large items of interest on cost, depreciation, and insurance run on 

 against the laid-up ships, whilst the competitors of the combine — who do not con- 

 tribute to the charges in respect of these ships — benefit, equally with their owners, 

 by their removal from the competition. The considerations which make it doubtful 

 how far the shareholders in the absorbed companies will benefit by what is taking 

 place do not apply to Belfast's interest in the matter. She will undoubtedly benefit 

 by the certainty of regular demands for the produce of her yards. Nor is it 

 likely at present that a change of flag will take place. But whilst the promised 

 economies in working may prove illusory or transitory, the additions to the capital 

 on which any return to shareholders must be made are certain, large, and abiding. 



3. Municyml Trading. By Hon. Robert P. Porter. 



The broadest objections to municipal trading would seem to be six in number : — 

 The injurious effect upon the work strictly within the municipal sphere of opera- 

 tion; the fact that in giving attention to trading operations the 'unproductive' 

 work is almost certain to be neglected ; the tendency to discourage improvement 

 or development ; the engendering of ill-feeling which is sure to arise when the 

 taxpayer finds himself obliged to help defray the cost of competing with himself; 

 the difficulty in adjusting the burden of a trading imdertaking on the right 

 shoulders, and such an equitable regulation of the charge as will not put a burden 

 on those who derive no benefit ; the impossibility of drawing a line as to which 

 industries shall be taken up by municipalities, and which shall be left to individual 

 enterprise. 



In the early part of the last century the various State Governments of the 

 United States entered into financial partnership with the promoters of canals ; 

 and later, when steam railways were introduced, States and cities, and towns and 

 counties, were alike appealed to for assistance in building railways. Nor was the 

 appeal unheeded, for in the forties and fifties an epidemic, very similar to the 

 present fever for municipal trading in England, literally swept over the country, 

 and ended in bankruptcy and ruin, not only of cities and towns, but of important 

 States. Bonds issued by State and local authorities for the promotion of railways 

 went in default. 



These and kindred experiences taught us the useful lesson that there was a 

 limit to State and municipal credit. The taxpayers of those times, who saw their 

 property practically confiscated to pay for enterprises which should have been left 

 to individual endeavour or private speculators, invented a device known to us as 

 ' the debt-limit clause ' ; and this clause, in some form or .other, has been inserted 

 in nearly every State Constitution drawn and adopted since those days of financial 

 disaster and destruction of State and local credit. 



Partially because of the debtlimitation, and partially because private enterprise 

 has been allowed a freer headway in such undertakings as the supply of gas, 

 electric lighting, tramways, and telephones, we find in the United States no city 

 owning and operating its own tramways and street railways, probably less than 

 half a dozen manufacturing gas, a very few engaged in supplying electric light, 

 and, I think, not one in the telephone business. 



Municipal trading is rapidly increasing municipal debt in England, and serious 

 complaints may be heard on all sides in consequence of the increase of local 

 taxation. The answer is that the debt is ' productive,' and that the profits of 

 these industrial undertakings will be used to reduce the taxes. Sir Henry Fowler's 

 admirable statistical classification of indebtedness shows that the so-called ' pro- 

 ductive ' debt is only about half of 1 per cent, beyond the danger line ; that is, the 

 dividend or profit from this debt averages half of 1 per cent. If, in consequence 



