no claim to repayment of income tax was allowed in respect of the 4% Loan interest. At the time or issue the income derived from the 4% Loan was, for the purpose of super-tax, reckoned as £5 6s. 8d., or 1s. 5d. per cent, more than the income on the 5% Loan. In 1918, when the income tax was raised to 6s. in the pound, the holders of the 4% Loan, though exempt from the tax, found that for super-tax purposes their interest from the Loan was reckoned as £5 14s. 6d. per cent., while that on the 5% Loan remained at £5 5s. 3d. This shows that the terms of the tax compounded issue had been devised with much ingenuity. The right of conversion into any future War Loan which was attached to the 41% Loan, floated in the middle or 1915, and also to subsequent issues of Exchequer Bonds, became operative in connexion with there two Loans, but it was considered inadvisable to attach a similar conversion option to the new loans. Instead, a device was adopted to achieve the same object, viz. protection of the loan against depreciation in price. The Treasury undertook to set aside monthly a sum equal to 1s. 8d. per cent. of each loan to be used in the purchase of stock for cancellation whenever the market price fell below the issue price, viz. 95 in the case of the 5% Loan and par in the case of the 4% Loan. Undoubtedly the operation of this fund contributed to the maintenance of the market price, but it wholly failed to prevent the stocks falling to a heavy discount, though about 30 millions were annually spent in the early years. In March 1918 an issue of nominative [5 bonds was made‘ Their dliel distinction was the facility with which they could be purchased and sold. No filling nl lorrnr was rvquircd. The bomb could he bought like postage stamps. but they iuiled to become popular. The most successxul means or raising money [or the war lrom among small investors was by the isaue of a security entitled War Savings Certificates (see Savings Movement). This novel and important form of popular borrowing was introduced in Feb. 1916. The certificates were purchasahle at post—ollices, banks, and through rmociations farmed lor the purpose of stimulating thnir sale. Subsequently they were placed on sale at shops and rtorru. throughout the country. The certiﬁcates were issued at 155. 6d. each, and could he paid ior in instalments They were rupayahle in 5 year: mm the date olpurthnse at £1; later,thc periodotmaturity wasextend- ed to to years, and the redemption value raised to £1 65. od. The increase of capital was equivalent to a yield ol [,5 43. 7d. per cent. compound interest. This increase ol’ capital was exempted from asaassment to income tax, but no person was allowed to hold morn than 500 at a time. Although thse certifitates were issued (or a deﬁnite period, provision was made for thnir encashment at any time, but premature encrshraent was discouraged by the absence or any capital appreciation in the nrrt year at their currency. But the certiﬁcates being rcpayahle on demand at not less than the price at which they were issued, they could not dcprnriate in capital value like other marketable securities. A great development or propaganda methods took place in 1917, and more particularly in 1918, and resulted in a very great increase in subscriptions to Government securities In Table III. are shown details of the various British War Loan issues, taken from a list drawn up by the Bank of England.
On March 31 1920 the British debt reached its highest total, namely, £7,829,ooo,ooo; on March 31 1921 it had fallen to £7.573,000,000. ((C. J. M.))
Nationalization.—The fact that “Nationalization” had become in 1916-21 one of the burning political questions of the day is unfortunate as regards arriving at a clear appraisal of its principles, for, from the outset, it is difficult for a writer to avoid a certain bias in approaching its discussion. Yet Nationalization of some services and industries has been an accomplished fact for many years, without giving rise to any political controversy. In its narrow sense, Nationalization means taking over the ownership and control of an industry or service by the community, as opposed to ownership and control for the benefit of a person or a certain number of persons, be it in their individual capacity, or in corporate form in the shape of a company. The most familiar example of such a nationalized service in Great Britain and, indeed, practically every country is the Post Office.
The word Nationalization is, however, generally used to denote the principle of Public Ownership (to employ the much better term used throughout N. America) as opposed to that of private enterprise. For instance, in 1908, the three separate dock companies (one of them already an amalgamation of several companies) which owned and operated those undertakings in and around London were bought out, and ownership and management vested in a composite body known as the Port of London Authority, the Board of which is constituted as follows: seventeen members are elected by the payers of the dock dues; one by the wharfingers; four are selected by the Government (one representing Labour); two by the Corporation of the City of London, and two by the London County Council (one of them representing Labour). Strictly speaking, it would not be correct to say the Docks of London were “nationalized,” for the taxpayers and ratepayers of Northumberland, for instance, are not in any way directly concerned with the undertaking, but the exploitation or the carrying on of the enterprise of the Docks of London has been converted from a number of private undertakings directed to the earning of profits for a certain number of proprietors, into a public undertaking the primary function of which is to render to the town of London, and the region dependent thereon, services connected with the provision of dock accommodation and of the things accessory thereto. This is not really Nationalization, but it embodies the principle meant by ninety-nine people out of every hundred who use the word, viz.: Public Ownership, be such ownership vested in a national authority, a municipal body or an ad hoc authority like the Mersey Docks and Harbour Board or the Metropolitan Water Board. It is, therefore, with this interpretation of Nationalization that we shall deal in this article.
Relation to Socialism.—A word must be said as to the relationship of Nationalization to Socialism. The two are by no means identical and although the nationalization of the means of production, distribution and exchange has long been a Socialist shibboleth, many modern Socialists oppose Nationalization as being merely “State Capitalism,” a form of industry, they say, in which the workers might still be exploited for the benefit of those who control the national machine—probably the same governing classes as we now possess. The truth of the matter is that, although Nationalization is not Socialism, it is the most suitable economic machine whereby the aims of Socialism can be carried out, because, by eliminating the private entrepreneur and converting him into a rentier in receipt of fixed interest instead of being a participator in the profits, it removes one of the conflicting factors in industry, namely the owner, and reduces these factors to two, viz. the community in its dual capacity of owner and consumer, and all the workers in that industry.
It is the elimination of this private profit-making incentive which, in the minds of the advocates of Nationalization, is one of the principal arguments in its favour, and, in the minds of its opponents, is the chief argument against it. Nationalize industry, say the latter, and you do away with the desire of personal gain which is the dominant human motive leading to improvement, invention and efficiency; you stereotype existing conditions, you do away with competition and all the benefits arising therefrom, and you get wasteful management from a horde of Government officials who ride on the backs of the tax-payers.
Against this, the advocates of Nationalization urge that private enterprise, precisely because its dominant motive is personal gain, often fails to render the service that is its ostensible justification; it leads to adulteration, misdescription, and all sorts of chicanery, and while competition has its undoubted value as a stimulus to invention and new methods, our present system of industry does, of itself, run to amalgamations, absorptions and price agreements resulting in the abolition of real competition with its attendant advantages, so that we arrive at much the same result as if we had Nationalization, in the shape of monopoly, open or concealed, but with the profits arising from the elimination of real competition and the economies resulting from monopoly and unification going into the pockets of a small section of the community instead of being spread over the whole nation,