SHALL WE BUY OR SHALL WE TAKE?
SHALL WE BUY OR SHALL WE TAKE? How Shall the Nation Acquire the Industries? Shall It Be Confiscation or Compensation? On* of tkt most laluable and tug. gettuc reports ever submitted to a...
...Hence a Socialist Government setting out on a policy of nationalisation muat at the s»me time deal with the burden to the community, constituted by the receiver of unearned income...
...Compensation on a basis inflated by those conditions could not equitably be permitted...
...e* we hive preMouely rated, ia entitles » made to compeneatine «Sl st sWsnL^j tad tke lareata ef le*l*lguea are rt«eotai It the value today gad thia laeeegritg "QtUj^JM^ H etjer caaee, materially reduce TwrBBKi eTipe<fflly "UiTsT mTala, rerallies bee already keen pet ioto aatrZ Ilea by CaaMeitat Oevernmeatg...
...I R.CWALLHEAD.M...
...Compare the fate of two capitalists of equal wealth, I one hsving his capitsl invested in | railways while the other holds no railway shares, but hat invested entirely in breweries, armaments and Dally Mail shares...
...It ia not possible te distinguish between various classes of capital on the basis of moral judgments passed on the means wkftreby capital has been acquired or augmented...
...Our opinion is, that as a general rule, the payment of compensation would be necessary and that confiscation is not expedient...
...ported that the tribunal charged with the duty of assessing fair compensation, would take those factors into consideration...
...ind (I) greatly strengthen opposition to Socialism, and prevent us from carrying out our policy as rapidly as w* would otherwise he abl« to do "• 1. Let us' consider as a practical example the nationalisation of the railways, and suppose that the Government aimply confiscated all railway shares...
...ment would be wiae to adopt...
...For the above reasons we believe that the general principle of paying compensation, when private property is transferred to the State, must be accepted...
...Half of the excttt of every estate above ?5,000 might be exchanged for a terminable annuity, say, for twenty yean or, perhaps, for the life of the annuitant, the annual payment of which should equal five per cent on the capital value of the property surrendered...
...Tkt) Justice and Expediency of It Is possible to argue that private ownership of all land and capital or of certain categories thereof is, by its very nature, unjust, and that a transfer to...
...or other royaltiea, lordships, or rights in connection therewith...
...Very exeeptiontlly in the case of small proprietors a lump sum might be payable...
...d ) The Form of Compensation Compensation would he paid in the form of bonds or annuities equal te the ascertained capital value of tht property...
...Thie document is inval--uable ior Socialiitt in all countries and uie are glad of tke opportunity to present it to our readers...
...i Where prices or charges are fixed by Parliament, or the municipality, tht result naturally affects the site of tht company's profits and the value of its shares...
...It may well be, therefore, that arrangements may have to be made for a portion only of the Sums necessary for payment ef compensation to be payable by the industry during the first few years of nationalization...
...Tht Principles of Com pen tat ion The conclusions having been reached that confiscation is inexpedient and inequitable (except when a case of national emergency exists, at indicated on page 2), the next step ia to determine the principle upon which compensation should be paid...
...Broadly speaking, factors such as over-capitalization, wasting assets or future expectations, will express themselves in the market value of the property...
...This would mean that part of the eharge for compentstien would have to be borne on' soma other fund than that of the national-, ized industry...
...These cues should therefort be considered aa exceptions to the general rule that sll undertakings should be compensated on the seme bssit...
...N6te.-r-The possibility of the Government competing with trusts and thus reducing their profits should also b* borne in mind...
...We propose, therefore, that, thougfi the holders of such stock should not be entitled to demand redemption st any fixed date, the Government should be entitled to re...
...gettuc reports ever submitted to a Socialist conference in any country was that made by a sub-committee of tkt Information Committct of the Independent Labor Party of Great Britain at its annual Banter Conference xn Gloucester...
...It would create the maximum of reelttance to Socialism and would unite all property owners, large and small, and also many others, who would be afraid of losing their employment or their livelihood, in common opposition to the whole of our program...
...It would give a golden opportunity for pahic-mon-gering to the capitalist press and would certainly result in a severe political set-back for the Socialist movement...
...and W. T. SYMONS, diasent ill...
...It would not, hew-ever, appear that any new principle ia involved in the treatment of these undertakings as far aa transfer to the community is concerped...
...The Question of Finance Finance ef Nationalised Industries It would be outside the terms of our reference to consider the structure of the nationalized industries, but certain financial points mutt be considered...
...It must ir»l»rt, he raog^aferti ttttt Jt IS MMflW w«*jnMU <*3» Ptmated...
...the third place, piecemeal confiscation would ,have very aerious political effects...
...The Committee do not lay down any hard and fist principle, but it has been suggested that a central fund might be formed into which should be paid the profits of - State enterprises ef all kinds— from which deficiencies in the earlier stages of nationalization should he met...
...The economics of the new regime csnnot become effective all at once...
...It is essential, of course, to give proptr conditions to the workers and the publie will slso expect better service...
...whole, satisfactory...
...Even in less extrems cases, the injustice is equslly apparent...
...a) Atseaament of Compensation The general principle which we recommend is that when land or capital is transferred from private to public ownership,'the private owntr should receive compensation from the State based On the value of theproperty transferred...
...JAMES MAXTON, MP...
...ALF* SALTER, MP...
...We assume that in this country socialization will take place gradually, one industry after another being transferred to public ownership and organized as a public service...
...In addition to the payment of death dutiea, a certain proportion of all tstates passing at death, in txceta of a certain minimum, the aid he required te be handed over to the State ia exchange for a terminable annuity For example, we give the following aa an illustration of hew this proposal might be carried out...
...On this assumption the case against confiscation is three-fold* It would (1) t)f aMJlMt at between ovltri of different kinds of capital...
...Trustees Who held railway shares would also be affected, and many would default If the existing economic and financial machinery is to be trans formed in a Socialist direction it is essential not to throw it violently out of gear before we are ready to replace it with something better...
...The corollary was thai any compensation being paid waa purely a matter of trace...
...Relation of Compensation to Taxation Before proceeding to outline tht policy of compensation which they advocate, the Committee with to emphattla the distinction het.w een the two quite distinct problems...
...The appropriate number of years' pur-Chase varies with the character of the property...
...Companies may have been formed for the purpose and shareholders have invested their savings in them, as they might have done in apy other form of undertaking...
...A per ton pottettinf a few hundred pounds of savings all invested in railways would be ruined, while a millionaire with no capital invested in railways would be unaffected...
...In tht case of shares the value may be either the market value on an appointed day or may bt the average value taken over a period ef time...
...This plan would strike at the root of l*rt* fortunes but without involving any immediate reduction' Of the income of the rich in addition to that caused by other taxation1, it would speed up the extinction of War Debt over and above the effects of the Capital Levy, and it would steadily accelerate the second stage Of nationsliza-tion as defined above by clearing off private compensation claims...
...Assessment of Compensation The adoption of auch a plan at the preaent time would result in the transfer to the State, over and above the yield of the death duties, of some ?200,000,000 worth of property annually, in exchange for the issued terminable annuities...
...the ittt rains th* %mf*m at* wttaUtt, iwith which wjm* wrrition must in Ba A|Mrj| allied...
...e) Trusts and Monophe...
...This principle is recognised in the existing death duties and in the proposals for a capital levy...
...deem at par whenever it pleated, e. g., if a fall in the rate of interest enabled it to borrow moire cheaply...
...Special reference' will be made to this matter (see footnote) when the problem will be related to tht attitude of public opinion and the practice of Capitalist Government with regard to it The other class of property for which special treatment it sometimes demanded is that constituted by private undertakings which are carried on under special license or permission from the community, the amount of profit made by these undertakings being in some sense' subject to the community's vote...
...But we do not consider that thia latter contingency is at all likely to arise, and we do not feel called upon to discuss it in this report This, however, assumes that the propertied class would act constitutionally in their opposition to a Socialist Government If they attempted to sabotage Socialist changes by unconstitutional means, we should be confronted by a state of national emergency, which would require to be dealt with on aimilar lines to those adopted during the war.* * During- the war the Government claimed the nth' to lake land or juiy other properly without l,einR leeellv bound to pav any compeneatlon' whatever, on tht) etrength of t doctrine of tho Royal Prerogative propounded by Sir John Simon ant F. ?. Smith (now Lord Birkenhead) aa Law Officers ef the Crown...
...Heavy expenditure for reconstruction, etc., will have to be met...
...GRAHAM, MP...
...jahjagi, should precede nationalise• OeJeetWM...
...E. F. WISt ERNEST E. HUNTfl, (Secretary...
...it would remove the basis of credit from many individual concerns and would as a consequence gravely injure trade and employment...
...It ia clear, however, aa we have stated, that expropriation without compenaation could only occur in the event of a sudden and catastrophic revolution, and, ca thia is not contemplated here, the question of confiscation will not be further discussed...
...HUGH DALTON, M.P...
...Piecemeal confiscation would undoubtedly have this effect Justice and Expediency i. In...
...The "respectable" industry of today has vary frequently been built up on extortion and sweat, 'frig in t he past...
...merits...
...When, there, fore, the existence of such circumstances is established, it- may bt-ex...
...The question immediately arises as to whether this principle should, so far as jt proves possible of application, be the same for all classes of property...
...1 The transferase of property frees private te, publie ownership Iseh of the** M*»lspi 4e«wU» * different method of treatment...
...It is alleged that since the existence of these royaltiea is in po sense due to the foresight, energy or initiative of the landowner he is not entitled to receive any compensation when the, royalties are sequestered by the State...
...Compensation would, by these annuities, thus take the form of freely negotiable Government stock This would bear a fixed rate of intereit equal to the existing yield on long, term Government loans or similar truttee securities...
...On the assumption that the transition from Capitalism to Socialism is to be gradual, extending over a period of years, equity demands that compensation should be paid to the owners of euch land and capital as are transferred to the community in the earlier atagea...
...We do not consider that the holder of such stock should be entitled to profit from a subsequent fall in the rate of interest...
...Only certain categoriea should bt accepted by the State in exchange for these terminable . annuities, including (1) War Loan, (2) Government stock created by way of compensation (3) land, (4) sharea in certain specific undertakings, which the State intended to nationalise subsequently, or in which it is desired to have a controlling interest, e. g., trusts not yet ripe for nationalization...
...annuities would be running off annually...
...2. In the second place, the confiscation of any particular form of capital would lead to aerious economic disturbance...
...Z) lesd to serious econofaic dla-turbaneea...
...Equity is reinforced by expediency...
...In such cases, therefore, compensation would automatically be payable at a lower figure than would have been the case had the undertakings been entirely uncontrolled...
...The possessions of the small capitalist bulk very big in hia mind, and unless the small man is satisfied he will become the shield of the big capitalist...
...the community without compensation for the owner*, therefore, is justifiable...
...Under this arrangement a steadily increasing quantity of terminable...
...In considering even this class of property, however, it should" be remembered that, in many cases, such mineral rights have been disposed of by the original landowner to other persons for value received...
...If Socialism is to be achieved, not gradually but at one swoop, by means of a catastrophic revolution, the above arguments against confiscation lose moat of their force...
...Socialist principles do not justify arbitrary discrimination of this kind...
...This would be unjust to J railway shareholder!, poor and rich alike, at compared with the owners of other farms of capital...
...Rapid transference of property is one of the distinctive features of the present system...
...la«f...
...This commute kad studied the problems that muet accompany jke trantjer of property in the meanc of production and distribution from private to public ownership...
...If the inherittd estate did not contain a sufficient proportion ef these categories of property, the executors would be required to sell other assets and to pay over the bait a nee in cath...
...Transferring Property From Private to Public Ownership I. The Problem of Computation THE first question that arises for consideration is whether it is desirable to pay any compensation at all when private property is socialized, or whether private property should be aimply confiscated...
...If, in ether worda, certain peraona are to be allowed during the transition stage to draw rent, interest and profit, because the undertakings in which their capital is embarked are not ripe for nationalization, those persons whose investments are in undertakings ripe for nationalisation should not, thereby, be penalised...
...In this connection, it may be noted that the Nationalization of Minn and Minerals Bill (1919), 1924, submitted by the miners to the Sankey Commission, proposed that no compensation should be paid in respect of "all rights and easements arising out...
...Although, owing to the superiority of Government over in-dustrisl credit, the interest payable to the former owners on the bonds will be less than the amount paid out as interest and profit before nationalisation, and although greater efficiency and economy under nationalisation will be forthcoming, it is necessary to face the fact that in some industries special circumstances msy make it difficult to meet the full burden of capital charges...
...It should, however, be general in its, scope...
...For a wasting asset, like coal the appropriate number is obviously less than for agricultural land...
...In this connection we regard it as a fundamental principle that regard should primarily be paid, not to the character of an individual's wealth, but to its value, or amount...
...We recommend that, as a general rult, the pretent methods of assessment should be adopted...
...In order to limit the period of capitalist exploitation we suggest that tin wUmjm$ eortemtion should We grteta tftttg pretest policy of taxing iahwitdejftaltf...
...In most casts, the method adopted is to take tither stock exchange quotations or a certain number of years' purchase of the income, or annual value...
...This quest ion is a difficult one and raises a number of controversial issues...
...The annuitant would be entitled to this annual payment for the specified term, but to nothing more...
...The former would 1 lose all his wealth, and the latter would lose nothing...
...ditioa, however is tail pitim, the*, aMaaStaaav mattHstmaitM td aaMemaaL...
...High dividends may mean" slhill return en capital ta the present Solders who have bought, at inflated prices while the rest mtmti haS cleared off with his booty...
...Signed) CLIFFORD ALLEN (Chairman...
...v f • /».» tfc^-^iiif^ ?g tuA.-^At \'t rwwt^Hnfm ew, iWMNMjp It li, of neurit, important to prevent the community having tax Ms tn extortionate ransom to the capi-talist, aad the policy of taxation, described above, will be a Military lifeguard la thii tonaaetlft...
...and ex-trmUa compensation Ttl In fact onlv awarded bv the rtefenoe of the Realm Loieea Cornmlftalon In the case of "direct and atibetantlal lata" suffered by Individual owing ta meaaurea directed agclualvely agalnet themselves and net IB tke cage of direct damage or loaeee due m ruuuru of general epoliceiion fr0m Which ell pereont IS similar clrcumetaneea euffered alike...
...Generally speaking the industries first to ha naUowflized will be the old ettablithed undertakings where the rate of profit is not exceptional but it may happen that public opinion will demand the natienalizattoa -eg aome profiteering combine such as the Milk fr«t, . Under conditions of profiteering, exploitstion or monopoly, if the shove prerequisites of nstionslus-tion hsvs not yet been adopted, it is clear thst excessive compensation would have to be paid if market value of the aheres was to bt tht criterion...
...The value of property of all kinds is being constantly assessed at present in connection with death duties, local rating, etc., and the existing methods of assessment are, on the...
...of or necessary' to the working of any mine . . . including all mineral way-leaves...
...earned income...
...Confiscation of railway shares, for example, would not only affect railway shareholders, it would also affect hanks which had lent money ort the security of railway shares, and buaineas men who had borrowed money on the security of such shares...
...It ia essential, therefore, if Socialism is to be peacefully achieved,'that the violent oppoeition of the amall capitalist should not be aroused by any course of conduct with the appearance of confiscation...
...At the same time the Committee would emphasize the necessity of nationalised industries meeting their liabilities at as early a stage as possible...
...They should be deslt with on thai...
...1. Tke redistribution of wealth with Spatial reference to untamed I a teste...
...It thould, in fact, tither by capital levy or by methods of graduated taxation on the linea of the present income tax and death dutiea, 6r by both, progressively reduce the share of the national wealth taken by the capitalists as owners of land and capital, or as drawers of compensation on account of nationalized property, 1. A Policy for Taxation We propose, therefore, in the first place, to outline a policy of taxation, which in our view should supplement the policy of compensation and accelerate the extinction of the private interests which compensation would otherwise perpetuate...
...Different methods of compensation would, no doubt, be found, applicable to different types of business, and these also will be dealt With below...
...C, R. ATTLEE, MP...
...gad muait be further extended la tbta aagttdr of dV taattuea...
...Nationalisation* by a Socialist majority with an acquiescent majority of non-Socialist* involvea the satisfaction of the sense of justice of the ordinary man...
...the second raiMggjfr'tflwnbn of com-sation propter r It is neither possible nor equitable to Combine the solution of these two problems in a single process...
...After careful consideration, fcowever, we are of the opinion that (except in the special rases to which we refer later) there is no ground for discrimination between various classes of property wfth a view to compensating the owners falling within different classes on different bases...
...Instances of this class Of undertaking are the railways (in 191*., for example, the railway companies were compelled to approach Parliament for the right to increase their rates), the provision of gas (gas,companies have to obtain a special license from Parliament enabling them to supply gas, and their prices are to some ¦ extent fixed), and public houses which can, at any moment, be closed by order of the Justices of the Peace for the district...
...Legislation for a national minimum wage, price control and reform of the Com-panies' Acts, should be instituted concurrently with nationalization propossls...
...what is required is not that drastic legislation on wages and prices should be applied to a particular industry, in'order, when the industry is nationalised, that compenaation might he paid to shareholders in the industry at a specially lew figure, but that a policy ef general legislaket valueTthe sha^oTa'n dh...
...it only removes hi* power of control...
...This legislation will have a tendency to reduce excessive profits and thus also to reduce the amount of compensation payable...
...Two Kinds of Owners Two kinds of property owners are frequently cited in this connection as requiring special treatment The first is the land-owner, beneath whose land coal is discovered, who receives royalties from those desiring to exploit the coal...
...Furthermore, it should he noted that there exists a statutory right to purchase undertakings of this class, which is normally, included in the Charter given to local public authorities...
...An incidental advantage would bt to stimulats work and saving and discourage luxurious expenditure by the rich...
...The banks would have suddenly to call in their loans and business men would either be reduced to bankruptcy or would have to restrict their operations and discharge many of the workers...
...Ail Act of Parliament nationalizing a particular industry deals with the property interests of a limited number of persons In the community, some rich, some well-to-do, and aome of very small means, jt must be borne in miotf thjsi nationalization with compensation does not abolish the capitalist qua receiver of un...
Vol. 2 • August 1925 • No. 32
