PUBLIC CORPORATIONS
Stn,—Mr. Oscar R. Hobson's thoughtful article on thic subject must be read with some qualifications. Of public utility companies he writes, "in getting rid of -the profit motive, they also get rid of the capacity to stand losses." A rationalised trust, however, which controls a monopoly, need have no losses. Its profits are on)), limited by what it can induce the public to pay for its product, for it has no competitive check. Often these are 50 per cent. on the manufacturing cost of the product. Its evils are that the shareholders have (a) no effective control of its policy; (b) generally, no say in the appointment of its directors; and (c) no power to intervene in the management of its employees; while from the labour side (a) there is no security of continual employ- ment and (b) no appeal in the case of ruthless dismissal. A public utility company is free from these vital objections, or can be made so, and it also limits the dividend paid.
The cause of the failure of the Turnpike Trusts is obvious. The management, as Mr. Hobson says, was given to the landlords, who had a vested interest in the mismanagement of their trust. Under these conditions the failure was inevitable. To nationalise coal is to invite disaster for the industry, for coal is not a monopoly, and never car oe; but probably the present adminis- tration could be better controlled by a national public utility company,
• where the present profit incentive was modified. There are, however, special dangers in this policy. In peace-time about one-third of our coal production is exported, and there are no means by which the foreign buyer can be induced to pay more for the product than the lowest alternative price. Wages represent about 7c per cent, of the total British productive ccst, and arc the only largely flexible item in its pro- duction. Private enterprise has tried to meet foreign compe.ition, when this was necessary, by reducing wages, and taken profits up to the hilt when prices were high. Here is the prime cause of labour tamest. H:oi the industry built up reserves n days of prosperity to meet 5ad times, instead of often distributing them as extravagant dividends (which again have been reflected in writing up the shale capital, or the lalue of the shares) the evil could have been largely avoided.
A public utility company could continue die policy of holding up the price of the home market—bad as this expedient is—and subsidising the foreign buyer, as the owners are now doing; but then: is a limit to this policy; and when foreign competitors also pursue it, as they are now doing, the home buyer, ot the tax-payer, has ultimately to provide the loss Also there is a limit in wage remuneration, below which labour cannot continue to produce. The obvious remedy is an international wages agreement (based on real wages), but that is not in sight; and the National Miners' Federation has increased the difficulties of the problem by political intervention. Lack of space prevents a detailed statement of all the baffling interactions involved, but quite certainly State adminis- tration will not provide the solution.—I am, yours faithfully,
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