Arizona republican., 1903-09-10
PHoENIX. ARIZONA, SEPT. 10. 1sO3
The Failure of Socialism in Australia


 outing series of interesting articles to the Railway Age on the government ownership of railroads. In the issue of the Age for September i. MT. Meyer discusses at length the experiment of public ownership and socialism in Aus tralia. and shows exclusively that the venture has been disastrous for both taxpayer and producer.
 MT. Meyer points cut that one of the first things to strike the student of Australian affairs is that the state rail- ways have been great burden upon the taxpayers. In 1898 the annual sums by which the railways of Victoria had failed to earn the interest which the government had been obliged to pay on the money borrowed for the purpose of building railways. had aggregated s49, ,0O0, GOO, sum equivalent to 25 per cent of the cost of building the rail- ways. In New South Wales the annual deficit had aggra gated s44,500. .00O. a sum equivalent to 23 per cent of the cost of building. In recent years the people of Victoria have had to raise by taxation some $3,500,0O0 to s4.000,OOO an- nually, to pay the interest not earned by the states various business ven- tuIes.. The people of New south Wales have had to pay about s2. eco year: and those of South Australia have had to pay five dollars per man, woman and child.
 Errors of judgment made by the state in investing money in business ventures fall upon the taxpayer. Therein state enterprise differs from private enter prise. The errors of private enterprise fall in large part upon the lender: the eff; and thus industry avoids accumu- lating burden under which it ulti- mately would break down. To illus trate: In 1890 the business corporations of Australasia had borrowed in Great Britain some s575.OOO,OOO for various business enterprises and speculative ventures, having promised to pay, on an average, from to per cent a year. In 1892 came the great crisis: companies by the score went into receivers hands, adjusted to . corrected estimate of the earning power of the ventures for which they stood. By 1897 not less than $150.000,0 900 had been thus written off as lost and irrecovera blc. and the aggre- gate sum due from Australasian cor porations 10 Great Britain had been re- duced tc s425, ,000, coo. On that reduced indebtedness the Australasian borrow CTS were paying, not to per cent. but BE per cent. In other words, the British lenders had borne q large part of the losses due to the errors of judg- ment made by the Australasian bor- rowers. Australasian industry had been relieved of large part of the burden of carrying misdirected investments. It was prepared to start anew, with practically a clean slate.
 Not so. the state enterprises. In 1890 the various. colonies had borrowed $1,- 075,0OO,0OO. promising to pay. on an aver age. 4.0S per cent a year. The business ventures represented by that aggregate sum conained the same percentage of error that was to be found in the in vestments made by private enterprise But for the state. that is, the taxpayer, there was no relief, since the state could not well pass through the bank ruptcy court
 It would not do. however, to attribute solely tc misdirected investment the constant deficits of the Australian state railways. In very large part these de- ficits have been due to mismanagement.
 To sum up, in Australia the earning power of a business venture in the hands of the state is much smaller than the earning power of that venture would be were it conducted by private enterprise. Furthermore, the state cannot adjust the capitalization of it's ventures to such earning power as those ventures have in the states hands
 Great as has been the burden impos- ed on the people of Australia as tax payers, it yet has been comparatively small compared with the burden inn posed upon them as producers who have had to make use of the services offered by the states various business enterprises. For example, at the close of 1899 it cost as much to ship wheat a distance of 100 miles over the best railroads of Australia, those of New South Wales. Gs it cost to ship wheat from Chicago to Liverpool. In Vic toria the corresponding distance was only 250 miles. What that meant the reader will appreciate after being told that from 1893 to 1900 the pioneer farm
 tctoria were making the experi-