STATE SOCIALISM.

Timaru Herald, Volume XIIC, Issue 13597, 18 May 1908, Page 7

STATE SOCIALISM.

EXPERIMENTS IS

The experiment of State ownership of S Xi«« b» pr r d » trous "to the overweighted finances of state that already tfiere are rumours of the willingness of the Government to hand over some of its obligation, to a of foreign capitalists (wntes i. A. JEWS* **•» '■»«•"" tte policy of State SocuLsm to a. pomt unequalled bv Western Powers. lobaLto Zt! comphoV, railroads, aad telegraphs are «U now Imperial monopolies. A member *1 the proposed, with grim humour, Government should monopolise tin. newspapers. It would prevent disagreeable monopoly has been a great financial success, but has not been so go from thj point of view of the consumer. The telephone monopoly has. been <teat>trou*. If vou wish to have a telephone installed in" Tokio, you most give notice live or six years ahead, or else buy a right from someone who already lias it. much as from £SO to £IOO w occasionally auked. for a telephone premium. In 1906 a measure was introduced -and carried for the nationalisation of all tbe railways in the Empire, with the exception of » fcw short minor lines. One great argument for this step was that there would be a saving in cost owing by the centralisation of administration of ab least £125,1RJ0 a vearTERMS OF PURCHASE. The .purchase price was to be calculated on the basis of twenty times the average net profit during the past- six halfyearly periods. The: (state was given fi\e vears in which to buy, and payment moist be made in bonds within two yeans after date of purchase, tbe bonds bearing 5 per cent interest. It was estimated that the total cost of the lines would be about £47,000,000. Six railways were taken over at the end of 1906, and the remaining eleven lines were bought out last year. The purchase price was almost uniformly higher than expected. As an illustration, the Kuvshu Railway, which was estimated to be worth £9,700.000, has been assessed at £11,000,000 ; and the Kobu Railway, estimated at £927,000 ha» been provisionally accessed at £1,360,000. Alt hough the nationalisation has_ only been earned out for a few months, it has already given rise to serious difficulties and to mcch discontent in Japan. The tiiat trouble has come from shareholders. It was expected that when tbe Government took over the lines it would issue bonds in payment as quickly as possible. On the contrary, it is availing itself of its power, and is delaying the jsiiß of these as long as it can. The reason of this Iks in the critical financial position of the Japanese Government at the present time. It has now on its hands a heavy amount of uuiioated bonds, £7, COO,OOO of the Extraordinary War Fund, £8,000,000 of the 1906 Budget, and £3,000,000 from the Budget of 1907. Bonds and securities of all kinds are depressed, and the authorities consider, probably rightly, that tbe issue of an enormous amount- of fresh Government securities would cause a further fall in quotations. The Congress of the Clearing House has memorialised the Government asking it to pay as promptly as possible-, but the Government refuses to give wav. THE VALUE OF THE BONDS.

A second dispute is over the value fc»» be placed on the bands. It iw said that the Department of Finance wishes to calculate the bonds ac> worth 90 yen (£9) per 100 yen (£10) face value- Th» price of similar Government bonds on the market is 82.5 yen (£8 Sat, and further issues will probably tend them lower. The shareholders naturally object. Another difficulty ha'S jciafc {wen the cause- of u Cabinet crisis and the resignation of two Ministers. The Minister of Communication? considered it necessary, if he wa» to conduct the service, properly, that he should be allowed to undertake considerable- extensions and improvements. These would have necessitated a loan, either at home or abroad, and the Finance Department declared that such a loan was impossible. After a long tight between the Treasury and the. State Bailway Department, the Minister of Communications cut his estimate for construction and improvements for the coming year to about £5,SCQ.OOQ. This was rejected by the Finance Minister, and a compromise was c»m« to between the two departments, reducing the estimate to under £4,000,000- Th« Elder Statesmen now interfered and <le-

clared that, in tho existing conditions of the national finances, the 1 total expenditure must stili be- farther deereasetlThereupon the Minister of Communications resigned, and. hub for the action of the Mikado, several other Ministers would have- quitted oftioi also. This means, in other wordts, that the question of railway construct tun and development is nf> longer in Japan a business problem to f*» dealt with by businot* men sotely in business lin«w. It. is a matter of State policy, and ther extensions or improvements of th*s service depend on a. hundred other issuo* affecting national finances. HARM FBOJI LACK OF COMPETITION". What has been tho effect of th»i nationalisation on the ordinary railway services? There is a general complaint that, tho lack of competition has done great harm. The management- of the railways has been ao> seriously disorganised that many, t:wn of those why wero formerly in favour of tfw aew method, are now

airaiubt. it. The blame for this disorganisation is laid on the limited authority and power of the President of the Railway Bureau, who is under the jurisdiction ot the Minister of Communications, and has no power to do anything "without that Ministers approval. This makes prompt action on the part, of the Railway Bureau very difficult-. There is considerable discontent amoug the railway employees. The general opinion in the country,, among the Japanese themselves, »» that nationalisation has been a decided mastake. It has imperilled the national finances : it- has prevented necessary railway improvement* that would otherwise have been conducted on ordinary commercial lime,, and it h.ii> checked the efficiency of the service.

ft / will probably l»e found, however, thaf the foreign syndicate which is to help in solving the financial problem of the railways is to do little more than lend money on the .securities of tin" lines. The Japanese Government in unlikely, for political reasons, to surrender real control. It has always been one of its cardinal principles to" prevent foreigners from owning its railways, and it will not abandon that principle to-day.