Numerous examples occur where the state supplies services of a commercial nature which might be supplied by individuals. These are not the same in all countries, nor at all times in the same country. Where services are thus supplied, they are usually such as are given by the post office, waterworks, gas plants, lighting plants, telegraphs, telephones, railroads, canals, and other industries of a similar nature. They are the industries in which the degree of public interest is large, and in which the reason for the government's taking over the industry is usually other than to secure revenue.
Governments may, however, conduct an industry so as to get the highest revenue; that is, in the same manner as an individual would conduct it. Various government monopolies, such as the French tobacco monopoly, the Indian opium monopoly, or the older salt monopolies, are examples of this condition. The public interest is negligible, and the consumer buys from the state on the same basis as if he were buying from an individual. There is no benefit in state ownership except that it is getting returns from industry that otherwise would go to individuals. The charge is made on the same principle as if it had been made by private management, and has been called a quasi-private price.
Nature of Public Price. - Generally, however, when a government takes over an industry, the item of revenue is not the only consideration - in fact, it is usually incidental. The feeling exists that the general public has an interest in the conduct of the industry which an individual operator cannot or will not recognize. It is to supply the demands of this public interest that the industry is run by the government, and the amount charged for the service is known as a public price. A public price might be defined, therefore, as a more or less voluntary payment, made for a commercial service, by individuals who receive a special benefit from the service. The word " rate'' has sometimes been used to designate this charge, but this only adds greater confusion to the already too numerous meanings of "rate." Various charges are known as rates, as passenger and freight rates, there is also the rate of taxation, while in England the local taxes are known as "rates."
The amount of the public price is usually governed by the degree of public interest in the conduct of the industry. If the public interest is negligible, as has already been indicated, the basis of the charge will be the same as if the industry were in the hands of an individual. If the conduct of the industry becomes of more importance to the general public, the price charged may be reduced until the service is given at cost. As the public concern becomes more vital, the charges are reduced until the returns do not begin to meet the cost. In this situation the price partakes somewhat of the nature of a fee. The difference remains, however, that the payment of the price is voluntary - that is, a man may ride on the municipally owned street railway and pay the price, but he may avail himself of any other means of going to town he may choose, and not pay the price. In the case of fees, the avenue for supplying the service is usually limited to the government, while in the case of a price many avenues may be available. The deficit is made up from general taxes. The government may even go so far as to make no charge to the recipients, and meet all expenses from the general tax fund. In such cases the interest of the industry to the public is, or should be, of paramount importance.
Reduction in Public Prices. - The general tendency has been toward a reduction in public prices. Examples may be found representing the various conditions of charge from the quasi-private price down to where no individual charge is made for the service. Public education, as has been previously indicated, has passed through the various stages, and the cost is now met out of the common fund. The same is true of the maintenance of highways and bridges, while a few years ago the cost was partially met from tolls. The public interest has varying effects on postal charges, as has previously been pointed out. Postal rates indicate that some parts of a service may be considered as of greater public interest than others, and prices are fixed accordingly. In this way low magazine rates, and postage - free newspapers within the county of publication, can be justified. Likewise, no individual charge is usually made for water used in sprinkling the streets. There is no doubt that this tendency will continue, and that a greater amount of services will be given by the government, the cost of which will be partly or entirely met from general taxes.