MlINICIPAL TRADING.
WE are told on the authority of Lord Salisbury and Mr. Balfour that a Joint Committee of both Houses will shortly be appointed to investigate the subject of municipal trading. And with this investiga- tion and collecting of evidence we may look for some attempt to frame a general policy on the matter. The question is, indeed, one of direct interest to the com- munity, and more intricate than the casual politician is likely to admit. If we are not all Socialists now, as some would have us believe, we are most of us ready to welcome the thin end of the Collectivist wedge in our municipalities. We think it a sign of an enlightened mind to say that while Socialism, like the poor, is bad "i' the lump," a little of it may be an excellent seasoning. Certain municipalities, notably Glasgow, have shown that experiments in municipalising particular industries may be highly successful. At one time people talked about "natural monopolies," and were willing to confine such experiments to gas, water, tram- ways, and other matters of direct and universal public concern. But naw, as Mr. Charleton has shown, munici- palities aim at becoming "universal providers," and nothing is too small for their activity. In the present Session, there are before Parliament Bills asking for powers to undertake banking, pawnbroking, coal supply, saddlery, telephones, tailoring, electric fittings, the supply of apparatus for games, Turkish baths, refrigerators, estate agency, printing, and the making of lifts. Some day the municipalities will clothe and feed us, buy our dwellings, attend to our every convenience, and arrange for ,cur funerals at the end. But is there any principle to guide all this activity ? Clearly the " natural monopoly" theory has been consigned- to. limbo, and we must look out for a substitute. Now we are far from desiring to hamper ourselves needlessly with dogma. We have always maintained that in all questions of Collec- tivist experiment each case should be tried on its own merits ; for a facile condemnation or approval of a general principle is a matter for academic rather than practical. politics. But we demand an attitude though we repudiate dogma. Granted that each case should be judged by itself, we can yet see certain general advantages and dangers in the system, and these we wish shortly to summarise.
The supreme merit of municipal trading, its supporters maintain, is that it provides a trader who does not necessarily seek profit, but rather the excellence of the commodity supplied and its accessibility for all classes of citizens. The municipality, it is held, is not hampered for lack of capital, it is free from the necessity of providing large profits to shareholders, and it is directly responsible to the people. Let us see how the case stands ? A trading municipality is either an ordinary business company, or it is not. Let us suppose for the sake of argument that it is the former, which some have held to be its true character. In this case it acquires a capital in the usual way on municipal securities, it issues shares and enters ou business. It has certain advantages over an ordinary company, for it may hold a monopoly, and it has certain facilities for trade which only a public body can possess. Let us suppose that it makes large profits. It pays its shareholders their dividend and the residue of the surplus goes to increase the capital. The consequence is that the particular commodity which it supplies becomes cheaper for the buyer without deterioration of quality. The accounts are audited and a balance-sheet is issued, just as with any other company.
On the other hand, let us suppose that the municipality continues in its present condition, not a purely business concern, but a philanthropic body which pays the interest on its capital from the rates. It may make a profit, in which case the surplus is as a rule applied in the way of subsidy to other municipal undertakings. If the Corpora- tion does badly it does not go into the Bankruptcy Court. It is only the rates again which suffer. Now each form of trading has its own merits and defects. If the Corporation is organised as an ordinary company—an experiment which, as far as we know, has not yet been tried, but is far from impossible—it will be responsible to the shareholders, and the shareholders will be the wealthier portion of the community. Here, then, will be less chance of waste and mismanagement, but the very serious difficulty will arise that a body elected by all the ratepayers has become responsible to a single class. Again, such an organisation will prevent the employment of surplus profits in the way of subsidy to necessary but unremunerative undertakings. If, on the other hand, the trading municipality continues in its present vague form, there is a chance that the general undefined responsibility to the ratepayers may have small practical value. There is indeed a report and an audit in all undertakings, but, as is well pointed out in a leading article in the Times of last Saturday, we are at present too much " dependent on the report of a committee probably more or less responsible for the experiment." "A proper audit, a uniform system of municipal book-keeping, and outside judgment on the results of municipal trading are essential, if we are to know whether municipalities are doing business or playing the popular part of philan- thropists." The danger of the first arrangement is that the various activities may develop into gigantic monopolies, like the Trusts in America, and in losing touch with the ratepayers acquire something of the Transatlantic "spoils system." The danger of the second is that the ratepayers' money may be often wasted in futile, if well-meant, experiments.
All municipal trading brings with it certain disadvan- tages. If it were carried to any great extent, and the number of men in the employment of a Corporation largely increased, the relations between elector and elected might develop into relations between employ6 and employer, a state of affairs which would sooner or later mean the downfall of civic honesty. If the Corpora- tion were only the monopolist of gas and tramways and electricity there would be some chance of the peculiar nature of the industry Minimising this evil, kit there is nothing civic and " natural" in the monopoly of saddles and dumb-bells. But it is useless to deny that municipal trading is in the air, and the experiment, whatever its perils, is upon us. And to the undertakings, if they are genuinely municipal, and seek to offer better and cheaper services to the people, we can offer no reasonable objection. To Collectivism as a general principle we are strongly opposed ; but measures advocated by Collectivists which justify themselves on their merits and not as deductions from an immature political creed, we are ready to welcome. We would only suggest two safeguards, which we trust th.. Joint Committee will consider. It seems to us that the old talk of "natural monopolies" should to some extent be revived. There are certain industries which are best left to private enterprise. If a Corporation can undertake certain services with success, that is no reason why it should constitute itself a " universal provider." A muni- cipality may be a very good tramway-owner, but it may be a very second-rate saddler, and to us there seems some- thing undignified and futile about this huckstering mania. In the second place, let the fullest reports of success or failure be laid before the public. There can be no question of arresting the experimental fever, but we can make sure that its results are strictly supervised. Some form of Government inspection and detailed report would often prevent public monies being squandered out of philanthropy on whims.
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