This section of the book is from the "Introduction To Public Finance" book, by Carl Copping Plehn.
In modern times public industries can be quite as properly considered under the head of expenditure as under that of revenue. Historically, State industries, like public or princely domains, lands, forests, and mines, were mainlysources of revenue. But a railroad isplaced in the hands of the State primarilybecause of the public interests involved,and the expenditure for that purpose is more significant than the moderate surpluses that accrue, in some cases, to the government. For that reason we called attention to these activities under the head of expenditure. We have now to consider them as productive of so much total wealth, a part of which is immediately spent for the purpose which led the State into this activity, and a part, generally a very small part, saved to assist in the accomplishment of other purposes.
The oldest form of public property is land. The public land originally embraced all the territory of the State. Gradually parts of it were alienated to a private purpose subject only to the law of eminent domain; but considerable portions, even to the present day belong to the State, or what is the same thing, to the local governments. In the monarchies of Europe such lands were once considered the property of the prince. These lands were the main reliance for public revenues in the feudal State. As the people gained a voice in the government they laid claim to these sources of revenue for public purposes. From that time on, the public domain diminished both absolutely, by sale or alienation, and relatively as the wealth of the people swelled. Some countries adopted a very conservative policy in this respect, and retained their domains in land and forests, while others adopted the plan of steadily disposing of them. German states are examples of the former policy, while England, France, and the United States have been examples of the latter. England receives only £400,000 annually of "Woods, Forests, and Land Revenues of the crown." In the United States it was the possession of vast tracts of land by the federal government, acquired by gift from the commonwealths, and by purchase, which gave that government an independent territory over which its control was absolute and formed one of its strongest supports, contributing most materially to the growth of federal influence. But the public lands have not been a source of revenue to the government. The money received from settlers has amounted to little more than fees for the registration of titles, and except for the ten years from 1830 to 1840 the lands have not yielded a clear revenue. The extensive surveys which the government carried out have been a large expense attributable to this source. Under constitutional government there is little danger of the failure of taxation as a permanent and regular source of revenue. So that public lands are not regarded as necessary for the integrity of the government. The retention of public lands in Germany and Austria is not explainable by any danger of the failure of taxation, but by the greater tenacity of the older communistic idea. Democratically governed cities and towns cling to their lands as strongly as the royal governments. Prussia's public lands and forests yield about 50,000,000 M. annually after all expenses have been met. Cities and towns get as much more, and in many cases supply burgher families with wood without charge. In Russia the process of emancipating the serfs has changed the receipts from public lands into taxes, and left practically little revenue of the older character. In spite of the absence of constitutional government Russia has gone faster, in proportion to wealth and revenues, in the abolition of public domains than many German states. Russia's gross receipts from domains are about $12,500,000, while Prussia's are nearly $22,000,000. The alienation of public lands in Russia is recent, and it has progressed as that country advanced in civilisation.
Except when in charge of a highly trained body of expert officials, as in Germany, the public lands do not form a satisfactory source of revenue. They are not as a rule as well managed as similar lands in privatehands. Forests form an important exception to this statement. A private owner cannot afford to wait long enough for economical use of timber land. The destruction of forests at private hands is a serious danger. Only a permanent, long-lived institution like the government can take proper care of forests.
Closely allied with the public ownership of lands and forests is the public ownership of mines. This is one of the oldest State industries, which is of falling into disuse. The working of mines by the government is being replaced in Europe by a system which allows of private operation, but guarantees the public interest by the collection of royalties, or mining taxes. In the older countries, where the idea of public territorial ownership is stronger, the old system still prevails, and, even where it is partially surrendered, the revenues derived from royalties and taxes are proportionately large. But in the new countries of the American continent and Australia private ownership generally prevails, and no more revenue is derived from this source than from any other taxed industry. The feudal idea of territorial ownership, a remnant of of which still survives in those countries of Europe which retain their interests in the mines, is very different from that of private ownership in fee simple as in America. This accounts for the difference in the revenues from this source.