700 REPORT— 1902. 



of the anxiety in financial circles at the steady increase of local debt, the rate of 

 interest should rise ^ per cent, on all local securities, what would become of the 

 ' productive ' debt P Assuming that the trading debt represents oue-third of the 

 total local debt, a rise of a :|^ per cent, would extinguish the ' productive ' properties 

 of these loans, and, in a sense, throw them on the rates. 



Without suggesting any remedy for municipal trading, an alternative plan 

 would be the leasing system, which, when the contracts are wisely drawn, secures 

 the revenue for the city treasury and good cheap service for the public. On the 

 other hand, it shifts the financial risk from the ratepaj^ers' shoulders. This, with 

 some form of debt limitation, will gradually modify existing conditions, especially 

 if backed by a strong public opinion in opposition to further use of public funds in 

 this manner. In spite of the activity of municipalities in England, private capital 

 has not been entirely beaten in the race ; while I observe in certain quarters it 

 holds its own admirably in competition with tax-exploited industry. Even the 

 capital invested in private company electrical undertakings is increasing, and this 

 in spite of almost insurmountable obstacles. It is a case for gradual readjustment, 

 not violent change. With the facts fully understood, the people will by degrees 

 curtail these unwise and dangerous economic experiments, and bring cities back to 

 the sphere of work which is strictly their own. 



4. Municipal Policy and State Control. By Percy Ashley, B.A. 



1. The problem of municipalisation has ceased to be argued on theoretical 

 grounds; it has become a question of practical expediency. In this it resembles 

 the larger controversy about national economic policy, and it is possible that the 

 growing belief in the necessity of State intervention in economic matters, in order 

 to promote national efficiency, is due in part to the development of municipalisation. 



The municipalities have realised that for them competition has rarely been 

 effectual, and that in the interests of city administration it is advisable for them to 

 intervene. The tendency has been therefore for public services to pass rapidly 

 from the uncontrolled to the controlled state, and then to municipalisation. This 

 is the case not only in Great Britain, but elsewhere ; for example, in Prussia, 

 where it is the work of an anti-Socialist bureaucracy. 



2. The theoretical line of demarcation between services which may or may not 

 be municipalised is then abandoned ; a practical distinction must be sought. 

 Each case must be considered separately, with reference to two questions : 

 (I) Is it likely to promote municipal efficiency ? (2) Can it be properly conducted 

 by the municipality which proposes to undertake the service ? 



In regard to (1), municipalisation will, prima facie, promote efficiency when 

 the particular public service concerns (a) public health, which is the real reason 

 for the existence of modern local authorities, and (b) the control of the streets. 



In regard to (2), there are two important matters to be considered. The first 

 is the financial aspect of the proposal. The problem of local debt is much dis- 

 cussed at present, but it must be remembered that nearly half of it has been 

 incurred for remunerative services (lighting, water-supply, &c.) ; and of the 

 remainder much has been incurred compulsorily, and some part {e.g. expenditure on 

 sewers) is indirectly remunerative. But in regard to any particular proposal, 

 account should be taken of the amount of debt to be incurred, the relation of the 

 total debt of the town to its assets and rateable value, the arrangements for 

 payment of interest and contributions to depreciation and sinking funds. It is 

 also necessary to decide if a service is to be classed as remunerative or unremunera- 

 tive ; for the first a fee should be charged rather than a-jji-ice, for the second a 

 charge on the rates may be allowed. It is possible that housing will have to be 

 placed in the second class. The other point to be considered in regard to (2) is 

 the administrative ability of the local authority concerned, and its real intention to 

 make use of the powers sought (so as to avoid the recent scandals in the matter 

 of the supply of electricity). 



3. Can we devise a system of control which will deal adequately with all these 



