Sec. 1. #Waves of opinion as to public ownership.# Opinion and practice in the matter of the public ownership of wealth and the direct management of enterprises has moved in waves.  In feudal times, when government was practically identical with the personal ruler, and the private “domains” of the lord or king were the sole source of his public revenues,[1] holdings of this kind were very large.  Their public nature came to be more fully recognized, but they did not yield large revenues, and gradually were in large part sold or given away to private owners.  This was particularly true in England, and in a less degree on the continent of Europe.  The conviction grew that the state, or government, was an inefficient enterpriser, and that the sound public policy was to foster private industry and obtain public revenues by taxation.  The ideal was embodied in the laissez-faire philosophy that government should confine itself exclusively to the most essential political functions, leaving the economic functions absolutely alone.  It should keep the peace, prevent men from beating and robbing each other, and preserve the personal liberty of the citizen.[2] Thus, it was believed, all of the economic needs would be provided for by competition, in the best way humanly possible, in the quantities and at the rate needed.  This policy attained its maximum influence in the first half of the nineteenth century in England, and in America probably just before the Civil War, in the decade of the fifties.

Sec. 2. #Primary functions of government favoring public ownership#.  Some public ownership, however, is necessary for the exercise even of the primary political functions of the state.  Civilized government requires the use of numerous material agents.  Buildings for legislative and executive offices, custom-houses, post-offices, lighthouses, can be rented of private citizens, as post-offices usually are in small places; but it is obviously economical and convenient in large cities for the government to own the public buildings.  Government can reduce to a minimum its direct employment of officials by “farming out” the taxes, as all countries once did to some extent, and as France continued to do up to the French Revolution.  It is now the general policy for government to own or control its essential agencies, but this does not involve in every case the employment of day-labor direct as in cleaning the streets or collecting garbage.  The more simple political functions shade off into the economic.  To coinage usually are added the issue of legal-tender notes and certain banking functions:  the post carries packages, transmits money, and in most countries now performs the function of a savings-bank for small amounts.  The social and industrial functions undertaken by public agencies have steadily increased since the middle of the nineteenth century, and the sphere of the state has been enlarging.[3] The question ever open is as to the proper limits to this development.