SOCIALIST ATTACK

Manawatu Standard, Volume XLV, Issue 141, 19 May 1925, Page 10

SOCIALIST ATTACK

ON PRIVATE OWNERSHIP. AN AMAZING SCHEME. c Definite proposals for the transferring of property in England from private to public ownership, and for the imposition of “Socialist’' taxation, and plans for the socialisation of banks and credit were drawn up for discussion at tho annual conference of tho Independent Labour Party at Gloucester.

The schemes are the work of the Finance Inquiry Committee of the party, and are embodied in the report of that committee issued in pamphlet form.

“NO CONFISCATION.”

COMPENSATION PROPOSALS. At the outset the report on the transference of property discusses the question of whether compensation should be paid when private properly is socialised, or whether the process should be that of confiscation. The committee report in favour of compensation on the three grounds that:—

Confiscation would be Unjust to owners of different kinds of capital. Would lead to economic disturbance; and Strengthen opposition to Socialism.

Enlarging on the effects, which, in their view, would attend confiscation, the committee say: Confiscation of any particular form of capital would remove the basis of credit from many individual concerns and would as a consequence gravely injure trade and employment. . . If tho existing economic and finfancial machinery is to be transformed 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. Piecemeal confiscation would undoubtedly have this effect. Piecemeal confiscation would have very serious political effects. It would create tho maximum of resistance to Socialism and would unite all property owners, large and small, and also many others, who would bo afraid of losing their employment or their livelihood, in common opposition to the whole of our programme. It would give a golden opportunity for panic-mongering to the capitalist press and would certainly result in a severe political set-back for the Socialist movement.

These arguments, tho committee say, would lose most of their force if Socialism were to be achieved not gradually but at one swoop, and they add:

But we do not consider that this 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 tho propertied classes 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 similar lines to those adopted during tho war.

EQUITY AND EXPEDIENCY. As arguments in favour of the granting of compensation, the committee say that if certain persons, during the transition stage to Socialism, are to be allowed to draw profit because the undertakings in which their capital is invested are not ripe for nationalisation, then equity demands that persons whose investments are in undertakings which are ripe for nationalisation should not thereby be penalised. Equity, proceeds the report, is reinforced by expediency. Nationalisation bv a Socialist majority with an acquiescent majority of non-Socialists involves the satisfaction of the sense of justice of the ordinary man. The possessions of the small capitalist bulk very big in his mind, and unless the small man is satisfied, ho will become the shield of the big capitalist. It is essential, therefore, if Socialism is to lx> peacefully achieved, that the violent opposition of the small capitalist should not be aroused by any course of conduct with the appearance of confiscaThe report goes on to distinguish between the problems of the transference of property and that of the redistribution of wealth, with special reference to unearned income and declares that the State should, cither by capital levy or by methods of graduated taxation on tho lines of the present income tax and death duties, progressively reduce tho share of the national wealth taken by the capitalists. It proceeds: 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. In order to limit the period of capitalist exploitation we suggest that,, in addition to the payment of death duties, a certain proportion of all estates passing at death, in excess of a certain minimum, should be required to be handed over to the State in exchange for a terminable annuity. For example, half of the excess of every estate above £SOOO might be exchanged for a terminable annuity, say, for 20 years, or, perhaps, for the life of the annuitant, the annual payment of which should equal 5 per cent, on the capital value of the property surrendered. . . • The adoption of such a plan at the present 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. Under this arrangement a steadily increasing quantity of terminable annuities would be running off annually. This plan would strike at the root of large fortunes, but without involving any immediate reduction of the income of the rich in addition to that caused by other taxation, it would speed up the extinction of the war debt over and above the effects of the capital levy, and it would steadily accelerate the second stage of nationalisation as defined above by clearing off private compensation claims.

NO “EXTORTIONATE RANSOM.” As to the assessment of compensation, the committee as a “general principle” recommend that when land or capital is transferred to public ownership the private owner should receive from the State compensation based on the value of the property. They are in favour of the present methods of assessment (as in the cases of death duties local rating etc.), and they add that it is, “of course,” important to prevent the community having to pay an “extortionate ransom” to the capitalist. On the subject of the form of compensation the report states:— Compensation would be paid in the form of bonds or annuities equal to the

ascertained capital value of the property. Very exceptionally in the case of small proprietors a lump sum might bo payable. Compensation would, by these annuities, thus take the form of freely negotiable Government stock. This would bear a fixed rate of interest equal to the existing yield on longterm Government loans or similar trustee securities. Note, the possibility of the Government competing with trusts and thus reducing their profits- should also be borne in mind. Concurrently with nationalisation proposals legislation for a national minimum wage, price control, and reform of tho Companies Acts should, the committee declare, be instituted. This would have a tendency to reduce excessive proits, “and thus also to reduce tho amount of compensation payable.” This legislation (the report explained) will have a tendency to reduce excessive jrofits, and thus also to reduce the amount of compensation payable. It shoull. however, be general in its scope; what is riquired is not that drastic legislation on wages and prices should bo applied to a particular industry, in order, when the industry is nationalised, that compensation might be paid to (hareholders in the industry at a special y low figure, but that a policy of genert.l legislation on the above lines, with its inevitable resultant effect on the market value of the shares of all undertakings, should precede nationalisation,.

NATIONALISING THE BANK.

“DRASTIC REMODELLING.” Socialisation of banking and credit is considered in the second report, which lays it down that “the monetary system and currency policy of Great Britain lequire drastic remodelling.” The objects of the reform are: To regulate the emission of credit and currency in the general interests of the whole community, and especially of the industrial classes. To direct the flow of savings into the most socially useful channels; to secure that finar ee is available on the cheapest terms for undertakings and trading operations of national importance. To secure for the community a larger share of tho “excessive profits” now made by hankers and others in control of the credit resources of tho country.

To reduce the charges made for fin aiming bolh short and long term opera tions.

Proposals are put forward for tho nationalising of the Bank of England, whose powers are described as being “too great to bo entrusted to a purely private concern.” It is suggested that the board of directors should not only include representatives of the Treasury, but banking and economic experts. Compensation to eixsting shareholders is recommended. Full powers are proposed to be granted for the establishment of municipal banks. As to other banks, the committee prosionally recommend the following steps, which should be subsequently taken, leading progressively to the complete control of the nation of its banking and credit resources. The banks would continue to be distinct legal persons or corporations as now, and would not be assimilated to Government departments. It. might be well to create a special Banking Advisory Counc 1 to co-ordinate the individual hanks.

The banks would bo required to keep the bulk of their cash deposits and reserves with the Bank of England, which would bo a regular State bank; and the provision as to a legal minimum reserve would be designed to give the Bank of England greater control of tho credit situation.

As the system developed, the existing shareholders would be relieved of all liability on the paid-up and unpaid capital of the banks and given a fixed interest redeemable security charged on the profits of the banks. This would wipe out Ihe share capital over a period of yetrs. The Government would guarantee the solvency of the banks (but not any fixed rate of profit) thus giving depositors absolute security. In a concluding paragraph the report adds: — In its policy for controlling the operations of the banks and in influencing and assisting the investment of savings, the State should pay regard to far wider considerations than those which have prevailed with banks and other organisations whose sole criterion in the past lias been the rapid accumulation of profits for their shareholders. In deciding between different methods of utilising its resources of credit and capital the State wil, of course, take into account the ultimate value to the community cf this or that enterprise. Even if the rate of cash return in a particular case is low, it may still be much more profitable to the community that its capital resources should be used for this purpose than for another. The supplying of the needs of the mass of the population would, of course, always receive preference as against the provision of means for satisfying the demands of the better-off class.