I wish to explain briefly to this House why the passage of this bill and this change in the title is not only fair and just, but the failure to pass this bill would, in my judgment, be very unfair to the 75,000 people in the city of Tacoma. [Footnote: Speech of Hon. Francis W. Cushman of Washington, in the House of Representatives, Feb. 28, 1905.]
(3) GOVERNMENT MANAGEMENT OF INDUSTRIAL ENTERPRISES. [Footnote: A. T. Hadley, Economics, pp. 390-393.]
By far the most important part of consumers' co-operation is exemplified in government management of industrial enterprises. This differs in two important particulars from the co-operative agencies already described. In the first place the choice of managers of a government business enterprise is connected with the general political machinery of the country, and regulated by constitutional law instead of by statutes of incorporation. In the second place, these managers are likely to fall back on the taxing powers of the Government to make up any deficit which may arise in the operations of a public business enterprise; or in the converse case to devote any surplus above expenses to the relief of tax burdens elsewhere. A government enterprise is managed by the people who represent, or are supposed to represent, the consumers; but the good or bad economy of its management does not necessarily redound to the profit or loss of those who most use it.
In the beginning of history, the government is the power that controls the army. When tribes were in a state of warfare with one another defense against foreign enemies was a matter of primary importance. No man could let his private convenience stand in the way of effective military operations. The discipline and subordination necessary to wage successful war were all-important; and all the powers necessary to maintain such discipline were entrusted to the leaders of the army.
Somewhat later the military authorities undertook the work of maintaining discipline in time of peace as well as war, and of defining and enforcing the rights of members of the tribe against one another, no less than against foreign enemies. This function was not accorded to them without a struggle. The priests, under whose tutelage the religious sanction for tribal customs had grown up, tried to keep in their own hands the responsibility of upholding these customs and the physical power connected with it. In some races they succeeded, but among European peoples the military authorities took the work of enforcing and defining laws out of the hands of the priests, and made it a function of the state as distinct from the Church. As security from foreign enemies increased, this law-making power became more and more important. The Government was less exclusively identified with the army, and more occupied with the courts, the legislatures, and the internal police. Its judicial and legislative functions assumed a prominence at least as great as its military function.
The growth of private property was also coincident with the development of these domestic functions of government. In fact, the two things reinforced one another. The production and accumulation of capital, to which private property gave so vigorous an impulse, placed the strong men of the community in a position where they had less to gain by war and more by peace. It put them on the side of internal tranquility. It thus made the government more powerful, and this in turn still further increased the accumulations of capital. But along with this mutual help, which strong domestic government and strong property right rendered one another, there was an element of mutual antagonism. The very fulfillment of those functions which made the accumulation of capital possible, rendered it impossible for the government to do its work except at the expense of the capitalists. It was no longer possible to support armies by booty, or courts by fines and forfeitures. The expense of maintaining order had to be paid by its friends instead of by its enemies. The growth of private property was followed by the development of a system of taxation, which, in theory at any rate, involved the power to destroy such property.
The existence of such a system of taxation, with the machinery for collecting money in this way, allows the government more freedom of industrial action than any private individual can command. It can make up a deficit by compulsory payments; and this gives it a wider range of power in deciding what services it will undertake and what prices it will charge—a power which affords almost unlimited opportunity for good or bad use, according to the degree of skill and integrity with which it is exercised.
Every extension of government activity into new fields restricts private enterprise in two ways: first by limiting the field for investment of private capital, and second, by possibly, if not probably, appropriating through taxation a part of the returns from private enterprise in all other fields. The question whether a government should manage an industry reduces itself to this: Are the deficiencies or evils connected with private management such that it is wise to give government officials the taxing power which constitutes the distinctive feature of public industrial management?
D. Draw an Introduction to a brief on each of the propositions given on page 82.