isproportionately large to the
economic service actually rendered.

In dealing with this question of possibly excessive profits under such a
method of economic organization, the state has many resources at its
disposal besides the most obvious one of incessant official interference
with the essentials of corporation management. Of these the most useful
consists unquestionably in its power of taxation. It can constitute a
system of taxation, in respect to the semi-monopolistic corporations,
which would deprive them of the fruits of an excessively large margin
between the cost of production and the price at which the product or
service could be increasingly sold. Net profits could be taxed at a rate
which was graduated to the percentage paid; and beyond a certain point
the tax should amount to much the larger fraction of the profits. In
this way a semi-monopolistic corporation would not have any interest in
seeking profits beyond a certain percentage. A condition would be
established which, while it would not deprive the managers of a
corporation of full responsibility for the conduct of its business,
would give them an additional inducement always to work for the
permanent improvement of the economic relation of the corporation to the
community. They would have no interest in preferring large but insecure
net earnings to smaller ones, founded on a thoroughly satisfactory
service, a low schedule of prices, and the constantly increasing
efficiency of the plant and organization of the company.

The objection will, no doubt, be immediately urged that a system of this
kind would prevent any improvement of service from going beyond a
certain point, just because it would cease to be profitable beyond a
certain point. But such an objection would not be valid, provided the
scale of taxation were properly graduated. I shall not attempt to define
any precise scale which would serve the purpose because the possible
adoption of such a plan is still too remote; but the state should, in
return for the protection it extends to these semi-monopolistic
corporations, take a certain percentage of all profits, and, while this
percentage should increase until it might at a certain level reach as
much as one half or three quarters, it should not become larger than
three quarters--except in the case of a corporation earning, say, more
than 20 per cent on its capital. To be sure the establishment even of
such a level would conceivably destroy t