Page:American Journal of Sociology Volume 3.djvu/859

 PLAN FOR THE CONTROL OF QUASI-PUBLIC WORKS 845

maintained ; but the stock will have no pecuniary value, and will give its owners no control over the concern. Although those who furnish the first capital are recouped, the institution is finally endowed. It is prob- ably impossible to look for immediate endowment of such institutions from the surplus wealth of rich men; but that may come in time.

The rate of interest is rather high, and may, in some places at least, be reduced. But it must be remembered that some degree of risk is involved, that the control of the stock is lost, and that the capital must ordinarily be drawn from the local community; so that the lowest com- petitive rate of interest cannot be secured. An advantage to the com- munity is found in the fact that the interest is ordinarily retained in the neighborhood.

But if the capital must ordinarily be gathered up in the local com- munity, the plan of organization will be applicable only in those cities where there is some surplus wealth. If public works are to be con- structed greatly in advance of the ability of the community to pay for them, capital must be drawn from abroad ; and, if it is drawn from abroad, the foreign capitalist will not allow the control of the enter- prise to pass out of his hands. He must have actual control or a mortgage lien. However, it is doubtless true that most of the larger cities, even in the West, possess enough surplus wealth to pay for public works of this sort. Street paving and public buildings could still be constructed by capital borrowed from outsiders, at lower rates than those paid for capital used on the quasi-public works. In order, also, that the purpose of the organization may not be finally frustrated, it is necessary that its indebtedness shall never become unmanageable. The actual plant must be constructed, and most of the floating capital provided, out of the capital stock. Provision must be made for neces- sary expansion, out of the earnings or by increase of capital stock. A small bonded or floating debt might be safely handled ; but a large one is likely to throw the whole industry into the hands of creditors, on account of a default in payment of interest caused by some very slight temporary backset which does not interfere with the general prosperity of the industry in the least. As we have seen, the gas trust successfully carried, and has entirely liquidated, a very considerable debt ; but it seems desirable, in order to insure the kind of control required, that dependence should be wholly upon the capital stock, the owners of which can never gain control. A small floating indebted- ness might be permitted, but it should be strictly limited in amount.

A further provision, which is not found in the gas trust articles,