144 
THE A B C OF TAXATION 
inspection and accounting. This tax would appro 
priate 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 owner 
ship 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 "taxa 
tion of franchise,” are now in mutual and harmonious 
control of the situation, from which speculation and 
exploitation will have been eliminated as superfluous.