"Half the municipal debt is of a nature which can never yield a profit."[704] The other half is invested in enterprises many of which are run regardless of economy and of expense, regardless of profit and loss, in accordance with the Socialistic principles stated in this Chapter. The policy of deliberate waste and of constant increase of debt, the principles of "launching out into something new" and "levelling up their districts," perhaps also the fear of eventual bankruptcy and repudiation, have at last frightened the investor. Corporation stocks can no longer be considered as safe first-class securities. Besides, the banks have begun to refuse to accommodate Socialistic municipalities with the necessary funds by overdrafts, short loans, &c. Socialists have therefore begun to complain when they saw that the unlimited supply of other peoples' money was diminishing. They consider it a grievance that they can no longer arbitrarily squander on fantastic undertakings what is not their own. "The hostility of the banking interest to municipal borrowing, and the threat to 'cut off supplies' has at length taken practical form. Disappointed in their attempt to secure sufficiently favourable treatment from their bankers (Parr's), the Chester Corporation applied to four other banks in the city, viz. Lloyds, North and South Wales, National Provincial, and Liverpool Banks. All refused to tender for the account. The banks are not run for the public, the public are run for the bankers."[705] Also, the banks, instead of lending their funds gratis to Socialist corporations, are heartless enough to demand interest "usury" on their loans. "Unfortunately at present public bodies must pay heavy tribute as interest on borrowed money."[706] "Our embryo Socialistic enterprises are even now suffering from the toll of interest which a restricted credit and currency permit the money lords to exact."[707]
Has the attitude of the investing public and the banks caused the Socialist municipalities to restrain their insane expenditure, and to keep it within legitimate bounds? No, they have tried to obtain money by borrowing it in small sums directly from the public. "The Corporation of Bolton, the Boroughs of Heywood, Middleton, and others, invite the investment of small sums of money in municipal enterprise, offering a higher rate of interest on deposits than the banks can supply."[708]
Many Socialists advocate that the municipalities should raise money by issuing paper-money in unlimited quantities or that they should become bankers, pay interest on deposits, and invest the savings of the poor in highly speculative enterprises carried on without regard to economy and expense, or to profit and loss. "Why pay in usury at all? Abolish the gold monopoly by demonetising metals, and the sole remaining argument against municipal trading disappears along with the most crippling restriction under which public enterprise labours."[709] "Credit notes would be of little use were the city's credit gone, because the people would be afraid to take them. However valuable the assets of a municipal authority might be—and municipal concerns are usually far more substantial and sound than banking companies are—it is public confidence that constitutes the first requisite, and this it is the duty of all reformers to establish and maintain against the assaults of those whose interest it is to break it down. The institution of municipal savings banks under the protection of, and subject to inspection by, the State would assist public authorities and render them less dependent on the bankers; then when people had become accustomed to thinking their city's credit at least equal to that of the leading banks, a limited issue of notes might be allowed."[710] Further proposals for "demonetising" gold and issuing unlimited amounts of unconvertible notes, on the model of the assignats of the French Revolution, will be found in Chapter XX. "Some Socialist Views on Money, Banks, and Banking."[711]
These and many other dangerous experiments could easily be undertaken by needy demagogues with fantastic ideas, if the supervision of municipalities by the national Government were abolished. Therefore the Independent Labour Party passed at the last Annual Conference the following resolution: "That this Conference urges the Labour party in Parliament to secure the extension of power to municipalities, enabling them to undertake trading and the development of existing municipal concerns, without the sanction of the Local Government Board, and to use any profits accruing from same in such manner as may be decided by the municipality, without the necessity of promoting Parliamentary Bills."[712]
No administration can continue for long a financial and general policy of waste and pillage, such as that followed by the Socialist municipalities of Great Britain, without diminishing not merely private wealth but also the national wealth. The British Socialists seem determined to do all they can to destroy as fast as possible the accumulated wealth of the country and its productive power.
FOOTNOTES:
[668] The Advance of Socialism, p. 2.
[669] Keir Hardie, From Serfdom to Socialism, pp. 27, 28.
[670] Snowden, Straight Talk to Ratepayers, p. 8.