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Arendt, Charles, Economie Politique Scientifique ; Définitions et Methodes.
with the Observations upon the Bills of Mortality, more probably by Captain
Constructive Study in Economic Theory. By Prof. F. Y. Edgeworth 233
and Development of the Theory of Labour Claim to the Whole Product of
Neymarck, Alfred, Vocabulaire Manuel d'Economie Politique. By E. Castelot 236
duction, de la Circulation, de la Distribution et de la Consommation de la
NOTES AND MEMORANDA:-
Acworth, W. M., Professor Cohn and State Railway Ownership in England...
The Regulation of Wages by Lists in the Spinning In.
NOTES AND MEMORANDA (continued)-
Dawson, William Harbutt, The Housing of the Working Classes in Germany 445
Professor Seligman on the Mathematical Method in
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RECENT PERIODICALS AND NEW BOOKS... 150-150, 312-332, 194-504, 674 -687
THE ECONOMIC JOURNAL
OUGHT MUNICIPAL ENTERPRISES TO BE ALLOWED
TO YIELD A PROFIT ?1
WHATEVER views he may hold as to the remote future, I do not suppose any one will be inclined to deny that just at present in this country the economic work—the purely and obviously economic work—of municipalities and similar local governments is increasing in importance, not only absolutely, but also in proportion to the whole of human economic activity. So if an English economist holds that economics ought to be useful to the population of this particular planet, not merely as an intellectual exercise affording food for thought and speculation, as Adam Smith says of religion, but also as affording some guidance in practical affairs, he is bound to endeavour to give some general answers to the important questions to which the extension of municipal economic activity gives rise. One of the most important of these questions is: Should municipal enterprises pay, or should they be worked at cost price ?-should they bring in where possible something in aid of the general rates of the locality, or should all such aid be foregone by the general body of ratepayers ?
Recently a Minister of the Crown, who had considerable municipal experience many years ago, likened a municipality to a joint-stock company. If the parallel were exact, there would be an end to the question which I have propounded, for no one supposes that joint-stock company enterprise could be carried on if dividends were disallowed. But the parallel is not at a! exact. It is a useful comparison, however, and we cannot do better than approach the question with a brief review of the at this very
1 Read before Section F of the British Association, 1898. No. 33.-VOL. IX.
points of resemblance and difference between a municipality or other local government, and a public joint-stock company.
Probably the first thing to strike the casual observer will be the similarity of the government of the two institutions. Just as the government of the joint-stock company is entrusted to certain elected representatives called the directors, so the government of the locality is entrusted to certain elected representatives called the town or district council. Neither the electors of the directors nor the electors of the council often interfere directly in the management, and both in the company and the locality their powers of direct interference are almost entirely limited to placing a veto on the raising of new capital. There is, of course, nothing surprising in the similarity, for the municipal corporation and the jointstock company are only two kinds of corporation, and in America, indeed, every company is called a “corporation moment. So far as their government is concerned, the chief difference between the municipal corporation and the business corporation lies in the fact that in the municipal corporation the electors exercise their right of election, at any rate to the extent of taking their choice between the nominees of two political caucuses, whereas in the other corporation the electors seldom do more than acquiesce in the election of directors nominated by the directors themselves. The shareholders of an ordinary public company are a widely scattered body, knowing nothing at first hand either about each other or about the business of the company; whereas the electors in a locality are each other's neighbours and have the results of the working of the municipality immediately before their eyes every day of their lives. Consequently the electors in a locality are able and willing to exercise far more influence than the shareholders in a company.
Secondly, it will be observed that the municipal corporation and the business corporation resemble each other in the fact that the bond of union between the members of the corporation is not a directly personal one, but one founded on the connection between persons and certain property. Just as you become a proprietor or shareholder in a public company by purchasing certain stock or shares, so you become a citizen, burgess, or parochial elector in a place by owning or occupying in a certain way for a certain period a particular kind of fixed property within the area of the city, borough or district. In neither case is there any power to reject a new member or expel an old one. Neither the proprietors of the G. W. R. nor the citizens of Bristol can refuse you admittance to their register because you have cheated at cards or married