144

THE  A  B  C  OF  TAXATION

inspection  and  accounting.  This  tax  would  appropriate ­
  to  the  public  such  net  earnings  (barring  a  liberal
surplus),  leaving  the  industry  itself  free  from  tax.
Such  regulation  would  seem  to  promise  all  the
benefits  which  could  be  claimed  for  public  ownership ­
  without  the  dangers  which  would  attend  that
policy.  It  may  be  that  the  management  and  the
commission  could  be  merged  into  a  holding  company,
which  would  become,  to  all  intents  and  purposes,  a
public  commission  with  all  the  benefits  of  actual
municipal  ownership.
By  way  of  illustration,  let  it  be  supposed  that  a
number  of  railway  experts  (not  exploiters)  have  formed
a  company  to  take  over  the  franchise  and  operation  of
a  great  railway.  Although  small  holders  of  stock,  these
men  naturally  become  the  salaried  officers  and  managers
of  the  business.
Under  what  must  amount  to  a  municipal  guarantee
of  dividends  (out  of  profits  in  good  years,  or  out  of
surplus  in  bad  years),  the  promise  of  a  low  market  rate
suffices  to  attract  ample  funds  from  the  sale  of  capital
stock,  and  the  corporation  is  established  as  a  going
concern.
Let  it  be  further  assumed  that  taxation  has  been
operative,  say,  for  a  generation;  that  it  has  gradually
recovered  to  the  public  the  value  of  the  franchise  by  a
process  so  tentative  and  even  cautious  as  to  make
"grim  financial  disaster”  impossible.  Let  it  be  next
assumed  that,  as  a  result,  the  triple  concurrent  agencies,
"private  ownership,”  “public  regulation,”  and  "taxation ­
  of  franchise,”  are  now  in  mutual  and  harmonious
control  of  the  situation,  from  which  speculation  and
exploitation  will  have  been  eliminated  as  superfluous.