Mexico, Australia (since 1860), Japan (since 1906), have government ownership.

England, like the United States, has private ownership. (Cf. Logan G. McPherson, Transportation in Europe.)

Motives for Government Ownership in Foreign Countries. The example of foreign countries, as was said before, encourages many in this country to agitate government ownership of railroads, as the only means of doing away with the present evils. It must be borne in mind, however, that foreign states have had other motives for acquiring possession of their railroads besides that of avoiding the abuses of railroads.

The state of uneasiness in which the nations of Europe exist through the fear of foreign invasion has led them to hold possession of a means that would prove of immense service to them in case of war. The power to mass troops along some threatened portion of the frontier at a moment's notice, to hasten reënforcements to any point in case of actual conflict, to furnish constant connection with bases of supplies which could be kept at safe distances from the invaders, to hurl masses of invading troops against the frontiers of an enemy, this power appeals to nations situated so closely together within the confines of Europe, and leads them to adopt government ownership of the railroads.

Again, when the railroads in most foreign countries were started and had passed beyond the experimental stage, there was lacking the private enterprise necessary to carry out any elaborate system of construction. The various governments had to subsidize the roads, to contribute all or much of the capital needed to establish the lines. The policy of government ownership was thus forced upon the nations, and the policy once adopted became in most cases the accepted practice.

The avoidance, through government ownership, of the evils attendant on private ownership was a very subordinate consideration in foreign countries. The two preceding motives were predominant.

With the United States, the last motive would be the only one

that would have weight. Remotely situated as the United States is from foreign countries, there does not exist the same need of watchful guard over the frontiers as among the closely grouped countries of Europe.

Nor was there lacking sufficient capital from private sources to build the many miles of roads that now traverse the country. And were new roads needed to-day, there is no doubt that ample funds could be obtained without any appeal to government aid.

The motives, therefore, that influenced the foreign nations in the adoption of a government-ownership policy do not hold in the United States. (Cf. A. T. Hadley, Railroad Transportation, p. 238.).

Objections to Government Ownership. On the other hand, the following may be given briefly as the objections to government ownership of railroads :

1. The argument that to the state belongs the duty of owning the railroads because they are essential to the common civil prosperity of the citizens, is not conclusive. The state is not obliged to seek the common welfare of the citizens directly by actual personal administration of all the means conducive to the civic welfare. It amply fulfills its duty when it leaves the transportation problem in the hands of private citizens, encouraging them in their efforts and aiding them when necessary, solely reserving to itself the right of supervision and regulation in order to eliminate the abuses that may threaten the rights of the community.

2. Under government ownership inefficiency would replace the present remarkable degree of efficient management that is to be found among railroad officials. Many of the managers of the roads are men who have risen from the ranks, and have owed their promotion to the proof they have given of the possession of exceptional executive ability. These men would be replaced by others, who could not possess the same knowledge of details and the same practical ability.

Inefficient management would entail economic loss, and the

large returns at present earned by the railroads would cease, to the great injury of the public.

3. The returns from the railroads are subject to constant variation. The government could not rely on any certain income from the roads. The amount would vary at times ten or even one hundred millions of dollars. Failures of railroads would happen under government ownership as well as under private ownership. In the thirty years elapsing between 1876 and 1906, 676 roads were placed under receivership and 925 roads were sold under foreclosure. The total amount of stocks and bonds involved in both cases was over $13,562,000,000. The credit of the country would suffer were it to assume the responsibility and risk of conducting the railroad business on a paying basis.

4. The tariff changes have great influence on business throughout the country, causing hesitancy on the part of merchants to engage in extensive commercial transactions. In like manner, if the legislature could control railroads and their rates and change managers at its pleasure, great disorder would result in business. Stability and permanence of business conditions are essential to commercial prosperity.

5. There would be the danger of sectional favoritism. If railroad managers can to-day discriminate by classifications and rates against sections of the country, there is no reason why, under government ownership of railroads, a party in control of the government could not favor one section of country more than another, when there was opportunity of thereby gaining political support or of rewarding party adherence.

6. Government ownership of railroads would destroy personal initiative. The causes of the great advance of railroads in this country in the past have been the personal enthusiasm of managers, the desire of each management to surpass every other in better accommodations, in more perfect equipment, in greater value of railroad property. Much of all this would cease, were the government to possess and operate the roads.

7. Government ownership marks a tendency towards socialism and communism.

POL. ECON. - 20

QUESTIONS

1. What are the evils of railroads?

2. Mention the remedies that exist against the evils of railroads. 3. Why are lawsuits and state commissions inefficient in this matter? 4. When was the Interstate Commerce Commission established? What is the purpose of the commission? Mention the laws that have given greater efficiency to the commission.

5. What are the reasons advanced for the adoption of government ownership of railroads?

6. What is the condition of railroads in foreign countries?

7. What were the motives for government ownership of railroads in foreign countries?

8. Give the main objections to government ownership of railroads.

CHAPTER XVII

CORPORATIONS. TRUSTS

I. CORPORATIONS

THE tendency in business to-day is towards corporate organization. This tendency has become marked since 1887. Before that time, a few hundred millions of dollars represented the total capitalization of all industrial corporations. During the succeeding twenty years the capitalization of corporations represented by their securities reached the enormous sum of over twenty-five billions of dollars. (Cf. H. L. Wilgus, A Study of the United States Steel Corporation in its Individual and Legal Aspects.)

Methods of doing Business. - Industrial business is carried on to-day in the following ways: by individual enterprises; by firms of partners, or partnerships; by corporations; by

trusts.

The report of the Census of 1910 shows the conditions of industrial enterprise. In that report it is shown that there were, in 1909, 268,491 manufacturing establishments. Of these, 140,605 were operated as individual plants; 54,265, as partnerships; and 69,501, as corporations. There were, besides, 4120 coöperative or miscellaneous concerns.

The largest amount of the total product was turned out by the corporations. Thus, the value of the products of the corporations was $16,341,000,000; that of partnerships, $2,184,000,000; that of individual plants, $2,042,000,000. The cooperative and miscellaneous concerns produced to the value of $104,000,000.