Note 38 — Chapter IX · The Episode of Mr. Wells: 1906-8
Reading edition
A Tramway or a Gasworks consists of two things: the actual plant, and the nominal capital which represents its value. When the plant is municipalised, its control is vested in the community, and the shareholders are "compensated" with municipal securities or cash obtained by loans from other investors in these securities. The capital value of the tramway still virtually belongs to the private holders of the municipal loan. But no second such step is possible. Holders of municipal stock cannot be "compensated," if it is taken from them. They can be paid off; or their property can be confiscated either by taxation or by repudiation of the debt: there is no middle course. The whole problem therefore arises from confusion of thought.