It was pointed out in an earlier chapter that a state may take over and conduct an industry, and that in doing this it may be impelled by any one of several motivating forces. If the thing which leads the state to enter industry be primarily fiscal or sumptuary, then the effect is much the same as that produced by the use of excise taxes. As long as the motivating force is to give a service at the lowest possible cost, the situation is different. When Queen Elizabeth granted monopolies to particular industries in return for a payment to the state, while it was not precisely a state industry, yet the effect was much the same as if there had been a levy upon the articles produced. The plan of producing and distributing intoxicating liquors which is used by some of the smaller European countries, as well as the state dispensary system, which was formerly used in South Carolina, are examples of the interference of governments in industry for sumptuary purposes. At present, in some of the European countries, government monopolies are maintained over particular industries, primarily for the purpose of securing revenues. Monopolies of the salt and match industry are found, but the best example is the tobacco monopoly, which is found in Austria, Italy, and France. The most systematic use of this monopoly is in France, and as an illustration of a government monopoly for revenue, a brief examination will be beneficial.
French Tobacco Monopoly. - The French tobacco monopoly is by no means a new experiment, but was begun nearly two hundred and fifty years ago, and has had an uninterrupted existence for more than a hundred years. The growth of tobacco is prohibited except in certain districts, and here it is only allowed by persons to whom licenses have been granted. Painstaking government supervision and inspection are carried out, primarily to prevent any of the crop from passing into other hands than those of the government. The prices allowed for the crop are determined by a board of experts. The manufacturing is carried on in government factories, and the selling is done by government officials. As a general thing the price has been much higher for tobacco in France than in most other countries. It has been so high, in fact, as to act to some extent as a sumptuary institution, yet even with this situation enormous revenues are secured.
Government Ownership. - This is not the place for a discussion of the merits or demerits of government ownership and operation of industry. That it can be used successfully, both for fiscal and sumptuary purposes, cannot be denied. This does not mean, however, that the state can enter all fields of industry to advantage to its citizens. While revenue may be secured, the keenness in developing a perfected plant, and in adopting more effective productive processes, may be much less than if the plants were competitively run by individuals. In such cases the patrimony of the state is impaired, and a greater burden is placed upon posterity because their income will not be as great as it might have been. The quality of materials and services is not always of the highest, consequently all these indirect effects must be weighed when a question of the state's entering industry is under consideration.