Wairarapa Daily Times. [Established 1874.] TUESDAY, MARCH 19, 1885. STATE SOCIALISM.

Wairarapa Daily Times, Volume XVI, Issue 4979, 19 March 1895, Page 2

Wairarapa Daily Times. [Established 1874.] TUESDAY, MARCH 19, 1885. STATE SOCIALISM.

Mil. Howard Willoughby, in an Australian oontemporary, writes a powerful article pointing out tho dangers attending tho Australasian experiment of State Socialism, and we commend the article to that out-and-out Socialist, the Hon, W, P, Reeves. The State Socialist wants the State to undertake everything; the State must own tlio railways, own the mines, own the steamships, own the banks; the State must subsidise this industry, must protect another with high Customs duties, and in time tho Colonial youth, educated at tho expense of tho State, will find it diffioult to earn his living without coming under State paternalism. Mr Willoughby points out all this, and says, the benefits of this Stato Socialism are more in men's minds than its drawbacks, The Socialist can see no drawbacks in the ideal he has set up, but tliore is one fault in this beautiful edifice of State Socialism, which is slowly developing itself, and will cause tho collapse of the insecurely built structure. This fault, Mr Willoughby points out thus," Tho State, it must be re- " membored, has no gigantic store " of unused capital of its own, avail- " able for investment. The State " merely obtains tho savings of tho " community, and invests those " savings as does any other joint " stock combination. It sells deben- " tares where the company issues ('shares. Whether the company " pays interest on its share capital, " ilepepds altogether upon pjrpp, " stances. If it is a ii gqes !! on paying its way, and if it is not •" a success, why it disappears Or if the enterprise be a partial suc- " floss »nd a partial failure, a due ■" proportion of tjip cflpjtfil wjjl Jjp "written off, and the entp!>pr|§pl " will only be burdened with a just " balanco! But the State, iii a " British community at any rate, can neither write down its deben- " ture capital, nor can it go insol- " y.ent, nor can it ipke a fresh •" stort, and thus its business fail; tires paijnqt die qui The enter- " priso may |)B ftjmijdftifed, but j;he " responsibility of the community tfl " pay interest on the capital, re- " mainß. , , , State Socialism " 1b in conflict with the law of the " industrial world, that the lame and " tho bait, and the blind, shall go to " Ww fffill; and in complete oppo- " sit% fp fjifc Ifrf) it provides for " the survival php f/' To illustrate his coptejpon, tyr Wiltojijjftbjr takes the case of the

State-owned railways, which ap- j parently offer the "most hopeful sphere for the experiment" of State Soeialism. There is no waste of capital in building competing lines, do preferential rates, no boycotting of any particular locality, not much danger of railway strikes, The State s educated children are carried in State railways, at cheap rates. Enormous advantages are obtained, by the State owning the railways, but the drawback, according to Mr Willoughby, is the non-paying lines. He says, " There is no known "country in which the building of " bad, or non-commercial railways, " does not occur, aud in a new " country, where tlio population is " shifting, and where great changes " in the industrial habits and pur"suits of the community willsud- " denly happen, no one can guard " against these errors." Under the competitive system, such errors are wiped out If a railway does not pay, the company bankrupts, or the capital is written down; but 110 such recourse is open to the State. In Now Zealand, according to the Official Year Book, 1894, there were 1948 miles of Statc-ownpd railway, and the revenue for the year 189894, amounted to £1,172,793, while the expenditure was £735,359, leaving a net income of £437,434, which is equal to very nearly 3 per cent, on cost of construction, which is set down at £7770 per mile. The capitalists from whom the money was borrowed to build our railways, receive not less than 3| per cent, interest, so that our railways earned something like £102,820 less than is required to pay the interest on cost, and this difference had to be mado good by the taxpayer, Dilating on this aspect of the question, Mr Willoughby says: "It works out as a' " scheme to save capitalists from the " risks to which they are subjected " elsewhere, and to saddle the all- " round average of losses, either 011 "the public or on labour," "No " doubt capital is deprived, under " State Socialism, of his chance of " obtaining high or inordinate pro- " fits, and this is the one fact which " has hitherto been popularly re- " garded, but then, also he is re- " lieved from all risks of diminished " dividends, or total loss, and this " gain, 011 his part, has been scarcely " taken into account."

The inability of the State to wipe out errors, is the rock upon which State Socialism will strike and collapse. There is no escape from payment, and it it came to a question of repudiation or the abandonment of State Socialism, ive think the die would be cast for the latter. The financial millstones, wliicli State Socialism carries, will eventually sink it. To give emphasis to bis remarks, Mr Willonghby says: " Let "us imagine, in the light of Aus-

" tralian experience, the experience "of two countries after an ex- " perience of a century of the rival " systems, In the one, the mistakes " that had bfcen made, would be for- " gotten. Its works, machinery, and " enterprises would be of the latest " and most efficient type, it would be " paying interest only 011 the capital " represented by the assets of the " day. But in the other conn"try, the failures would still "be in existence, Here and there, " obsolete works would be re- " tiiined. There would be an " enormous interest charge for " enterprises that had burst up long " ago, and assets which had long " since perished. Surely it is a just " inference that .the one country " would be nrogressive, and that the " other would bestatiouary, and that 11 the slower nation would be in im- " minenfc danger of being crushed " out of the world's markets by its " ever lighting competitor," There is far too much truth in the picture portrayed by Mr Willoughby,and in State socialism the balance works out against the community. The dead weight of errors, without any means of wiping them off the slato must tell with crushing effect.