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The lighthouse system of lighthouse economics

The bodies that build and maintain lighthouses in the UK are the Pilot Guilds (in England and Wales), the Northern Lighthouse Board (in Scotland) and the Irish Lighthouse Board (in Ireland). Expenditures for these institutions are funded by the General Lighthouse Fund. The source of income for this fund is the lighthouse tax paid by ship owners. The payment and reporting management of the lighthouse tax is the responsibility of the pilot guild (payable in England, Wales, Scotland and Ireland), while the specific tax collection is completed by the port's tax bureau. The money from the lighthouse tax belongs to the General Lighthouse Fund, controlled by the Department of Commerce. Lighthouse agencies receive their expenses from the General Lighthouse Fund.

The relationship between the Department of Commerce and various lighthouse agencies is somewhat similar to the relationship between the Treasury and British government departments. The budgets of these agencies must be approved by the Department of Commerce. Budget proposals for the three agencies must be submitted to the Department of Business over Christmas and are considered at the annual Lighthouse Conference in London. In addition to the three lighthouse agencies and the Ministry of Commerce, the conference was also attended by members of the Lighthouse Advisory Committee, a committee of the Shipping Association, a business association representing shipowners, marine underwriters and freight forwarders. Although the Lighthouse Advisory Committee has no statutory authority, it nevertheless plays an important role in the discussion process. Its input is taken into consideration by the Lighthouse Agency when formulating its budget and by the Department of Commerce when deciding whether to adopt the budget. The standards for the lighthouse tax are determined by the Ministry of Commerce so that the tax revenue within a certain year is sufficient to sustain expenditures. However, when formulating work plans and changing original arrangements, conference participants, especially members of the Lighthouse Advisory Committee, must consider the impact of new work plans and changes to original arrangements on lighthouse tax standards.

The grounds upon which the lighthouse tax is levied are set out in Schedule 2 of the Merchant Shipping (Merchant Shipping Fund) Act 1898. Although the standards and some aspects of the lighthouse tax have been modified by subsequent Council Regulations, the current tax structure was essentially established in 1898. For all ships arriving or departing from the UK, the tax rate per ton varies greatly from voyage to voyage. "Domestic" ships will no longer pay lighthouse tax after 10 voyages in a year. "Foreign shipping" ships will no longer be taxed after 6 voyages. The tax collection standards for these two types of ships are different. If the size of the ship is the same, the tax paid by the "domestic" ship for 10 voyages is approximately equal to the tax paid by the "foreign ship" for 6 voyages. Certain vessels have lower tax rates per ton, such as sailing ships and cruise ships over 100 tons. Tugboats and yachts are taxed on an annual basis rather than a per-voyage basis. Moreover, some vessels are exempt from lighthouse duty: vessels belonging to the British or foreign governments (other than those carrying cargo or passengers), fishing vessels, bottom-loading vessels and dredgers, sailing vessels (other than yachts) of less than 100 tons, vessels of less than 20 tons All vessels (including yachts), those only loading bottom cargo, waiting for fuel coal, loading supplies and avoiding marine risks (except tugboats and yachts). All of these regulations have limitations, but they are sufficient to illustrate the nature of the regulations.

The current situation is that the expenditure on lighthouse services in the UK is allocated by the General Lighthouse Fund, whose income comes from the lighthouse tax. In addition to the expenditure on lighthouses in Great Britain and Ireland, the fund also provided for the maintenance and construction of lighthouses in some colonies and the removal of debris, although this constituted only a small part of the total expenditure. The Lighthouse also has some expenses that are not allocated by funds. If a "local lighthouse" benefits only certain ships using a particular port, the cost of its construction and maintenance is not charged to the fund, and the fund is limited to the financial expenditure of lighthouses normally intended for "general navigation." Expenditures for "local lighthouses" are usually funded by port authorities and offset by port taxes.

The evolution history of the British lighthouse system

In Mill's 1848 work and Sidgwick's 1883 work, in terms of the existence of the British lighthouse system in their minds , they must be thinking of the early situation. In order to understand Mill and Sidgwick, one should first understand something about the British lighthouse system in the 19th century and how it evolved. However, studying the history of the British lighthouse system not only helps us understand Mill and Sidgwick, but also helps us broaden our horizons to understand the various institutional arrangements available for the provision of lighthouse services.

In discussing the history of the British lighthouse service I confine myself to England and Wales, where the lighthouse system was with which Mill and Sidgwick were most familiar.

The main lighthouse organization in England and Wales is the Pilot Guild. It is also the UK's main pilotage agency. It ran sanitariums and administered charitable funds for seamen, their wives, widows, and orphans. It also has many responsibilities, such as maintaining "local lighthouses" and providing maritime advisors and pilot masters for court hearings of maritime cases. It is a member of the Ports Commission, which includes the Port of London Authority. Members of the Pilot House serve on many committees, including government committees, dealing with maritime matters.

The pilot guild is an ancient system. It probably evolved from the seamen's guild in the Middle Ages. In 1513, a petition for the formation of a guild was submitted to Henry VIII, and a charter was issued in 1514. The certificate gives the pilotage association the right to manage the pilotage. This power and philanthropy were for many years the chief work of the Pilot Guilds. It wasn't until much later that the lighthouse itself was considered.

Before the 17th century, there were almost no lighthouses in Britain, and even in the 18th century, lighthouses were rare. However, various types of beacons do exist. Most signs are located on shore and are not intended for navigation. These include churches and steeples, houses and groves, and more. Buoys and beacons are also used for navigation purposes. Harris explained that the beacon was not a lighthouse but "a pole that stood on the shore or beach, perhaps with an old-fashioned cage on top." At the beginning of the 16th century, the management of navigation aids and the provision of beacons was the responsibility of the Lord Admiralty. For the provision of buoys and beacons, he appointed representatives to collect fees from vessels benefiting from them. In 1566, the Pilot Guild was given the power to provide and manage navigation aids. They are also responsible for overseeing the management of private navigation aids. For example, a person who cut down a grove of trees used as a navigational aid without permission would be charged with "disloyalty" and would be fined 100 pounds (the proceeds of which would be divided equally between the king and the pilot guild). The 1566 Act states: There seemed to have been some doubts about whether to give the pilot guilds the power to set navigational aids on the water. This doubt seemed to be eliminated in 1594, when the Lord Admiralty transferred the management of buoys and beacons to the pilot guilds. How this was done is unclear, as the Lord Admiralty continued to manage buoys and beacons after 1594, but the authority of the Pilot Guilds in these areas appears to have been recognized in the early 17th century. The Guild of Harbor set up lighthouses at Custer and Lowestoft, but it was not until the end of the century that another lighthouse was built by private individuals, Harris wrote. The basic characteristic is that those supporters of public projects appear to be for public welfare, but in fact they are seeking private gain. The lighthouse did not escape their attention. ” Later he wrote: “After the completion of the lighthouse at Lowestoft, the members of the Pilot Guild were satisfied and stopped working…. In February 1614, 300 captains, shipowners and fishermen asked them to build a lighthouse in Wintertor, but they seemed to have done nothing. To turn a deaf ear to such requests not only undermined the confidence of the guilds, but also invited private speculators to intervene given the prospect of profit. Soon they did so. "Between 1610 and 1675, the Pilot Guild did not build a single lighthouse, but private individuals built at least 10. Of course, the requirement for private construction of lighthouses made it difficult for the Pilot Guild. On the one hand, the Pilot Guild hoped to be the only one to build lighthouses. authority; on the other hand, it was unwilling to use its own money to build a lighthouse, so it opposed private efforts to build it, but as we have seen, it was unsuccessful. He was a typical representative of speculators during this period. They are not primarily motivated by public service. ...Sir Edward Coke's speech to Parliament in 1621 provides a strong basis for this: 'The builders of works, such as shipwrights, appear to be one thing, but are actually another: they claim to be for the public welfare, In fact, it is for personal reasons. ’” The difficulty is that people motivated by public service did not build a lighthouse.

As Harris later wrote: "It should be admitted that the original motivation of the lighthouse builders was personal gain, but at least they were able to complete the task of building the lighthouse."

Private ways to avoid infringing on the legal power of the pilot guild It was patented from the king. The king allowed them to build lighthouses and collect royalties from ships that benefited from them. This is done by ship owners and cargo owners submitting a petition stating that they will benefit greatly from the lighthouse and are willing to pay for its use. I believe that the signatures were collected through normal channels and there is no doubt that they represent people's true feelings. The king might sometimes grant them patent rights in return for their service to him. Later, the power to operate lighthouses and collect royalties was vested in individuals by act of Congress.

Lighthouse usage fees are collected by the agent in the port (which may act for several lighthouses). This agent can be an individual, but is usually a customs official. The usage fee for each lighthouse is different. Every time a ship passes a lighthouse, a user fee is paid based on the size of the ship. There is a usual standard charging rate per ton for each voyage (such as 1/4 or 1/2 penny). Later, a register containing the corresponding charges for the lighthouses required for different voyages was issued.

Meanwhile, the Pilot Guild implemented a policy that would preserve both power and money (and possibly even the Bo-Research Alliance). The Pilot Guild applied for the patent right to operate a lighthouse, and then leased it to private individuals who were willing to finance the construction of the lighthouse themselves and collected rent. A prerequisite for private charter was a guarantee of cooperation and not opposition to the pilot guild.

One such example is the construction and reconstruction of perhaps Britain's most famous Lighthouse, Editstone, which sits on a rocky 14 miles off the coast of Plymouth. D. Alan Stevenson commented: "1759 wrote the most dramatic chapter in the history of lighthouses: in order to withstand the impact of the waves, the builders showed a high degree of professionalism, talent and courage." 1665 , the British Lord of the Admiralty received a petition calling for a lighthouse to be built on Editstone Rock. The Pilot Guild commented that although it was worthwhile, "it is almost impossible." Seychel Smyers, chronicler of private enterprise, wrote: “…never before had any bold private adventurer built a lighthouse on Editstone Rock, where not even the shadow of a stone could be seen on the sea. , not even a small place to stand." In 1692, Walter Whitefield made a proposal, and the Pilot Guild reached an agreement with him. The agreement stipulated that he would build the lighthouse and the pilot guild would share half of the profits. Whitefield, however, did not embark on the project. He transferred his rights to Henry Winstanley, who negotiated an agreement with the Pilot Guild in 1696. The agreement stipulated that he would get the profits for the first five years, and the Pilot Association would share half of the profits for the next 50 years. Winstanley built a lighthouse and later built another to replace it. The lighthouse was completed in 1699. However, a big storm in 1703 washed away the lighthouse. Winstanley, the lighthouse keeper and some of his staff perished. At that time, the total cost of the lighthouse was 8,000 pounds (all borne by Winstanley), and the income was 4,000 pounds. The government gave Winstanley's widow a pension of £200 and an annual pension of £100. If lighthouses had to be built by public-spirited people, there would be no lighthouse on Editstone Rock for a long time. But once again, private interests prevailed. Two men, Lovett and Rudyard, decided to build another one. Citing the power of reconstruction and charging granted by Act of Parliament, the Pilot Guild agreed to lease this power to the new builder, and the terms were more favorable than Winstanley's - the lease term was 99 years, the annual rent was £100, and all profits went to the builder. who. The lighthouse was completed in 1709 and worked until 1755 when it was destroyed by fire. The lease has 50 years left until it expires. The rights to the lighthouse pass into other hands. The new owners decided to rebuild and they invited the greatest engineer of the time, John Smeaton. He decided to build it entirely of stone, whereas the previous lighthouse had been of wood. The lighthouse was built in 1759. It continued to operate until 1882 when it was replaced by a new lighthouse built by the Pilot Guild.

If we examine the situation at the beginning of the 19th century, we can understand the important role played by private individuals and private organizations in the construction of lighthouses in Britain. In its report of 1843, the Lighthouse Committee stated that there were 42 lighthouses (including floating lighthouses) in England and Wales belonging to pilot guilds; 3 lighthouses were leased to individuals by pilot guilds; 7 lighthouses were leased to individuals by the king; The four lighthouses were owned initially by patent and later by act of Congress to private owners. In other words, 14 of the total 56 lighthouses are operated by private individuals or private organizations. Between 1820 and 1834, the Pilot Guild built nine new lighthouses and purchased five that were leased to individuals (in addition to the nine new lighthouses, two new lighthouses were built at Burnham to replace one purchased a lighthouse) and purchased three lighthouses owned by Greenwich Hospital (they were built by Sir John Meldrum around 1634 and later gifted to Greenwich Hospital according to his will in 1719) . The situation in 1820 was that 24 lighthouses were operated by pilot guilds and 22 by private individuals or private organizations. But many of the lighthouses of the Pilot Guilds were not originally built by them, but were acquired through purchase or lease expiration (Edystone Lighthouse is an example, the lease expired in 1840). Of the 24 lighthouses operated by the Pilot Guilds in 1820, 12 were the result of expiry of leases and one was transferred by the Council of Chester in 1816. Therefore, only 11 of the 46 lighthouses in 1820 were built by pilot societies, while 34 were built by private individuals.

Since the main tower-building activities of the pilot guilds began at the end of the 18th century, private lighthouses played an even more important role in the early days. Regarding the situation in 1786, D. A. Stevenson writes: "It is difficult to assess the attitude of the Pilot Guilds towards lighthouses on the British coast at that time. Judging by its actions rather than its claims, the Guild's determination to build lighthouses was never very firm: before 1806 , it leased the rights to build lighthouses to lessees whenever possible, and in 1786 it controlled four lighthouses: Custer and Lowestoft (both of which used local buoys. administered by royalties), Winterson and Sicily (where the guilds erected towers to prevent individuals from exploiting the royal patent for profit").

However, by 1834, as we have seen, the Pilot Guilds operated 42 of a total of 56 lighthouses. At that time, Parliament strongly supported the Pilot Guild's proposal to purchase a private lighthouse. The proposal was made by a small select committee of the House of Commons in 1822. Soon the pilot guilds began to purchase certain private lighthouses. In 1836, an Act of Parliament granted all British lighthouses to pilot societies, which had the right to purchase remaining lighthouses in private hands. This work was completed by 1842. Since then, there have been no privately owned lighthouses in the UK, except for "local lighthouses".

Between 1823 and 1832, the Pilot Guild spent £74,000 purchasing ships to Flatholme, Firth, Burnham, North Freelands and South Freelands. Place for rent in lighthouse. After the Act of 1836, nearly £1,200,000 was spent on the remaining private lighthouses, with a large sum being spent on Smalls Lighthouse (the lease was due to expire in 41 years) and three other lighthouses: Marmouth, Sberth and Skerius (whose lease has not yet expired by Act of Parliament). The cost of purchasing these four lighthouses was: Smalls, £170,000; Timamouth, £125,000; Sbourne, £330,000; Skeles, £445,000. The sums of these expenses were enormous: the £445,000 paid for Skeros would have been equivalent (according to authoritative estimates) to $7-10 million today, while the benefits it would have generated would have been much higher than today (because of lower tax levels). ). So we find that these men not only - in Samuelson's words - "made a fortune running lighthouses," but that they were indeed successful.

The reasons for supporting the centralized management of all lighthouses by pilot societies can be understood from the "Report of the Small Select Committee of the House of Commons for 1834":

The committee was surprised to learn that the lighthouses were built in England Different places have completely different systems. Different management agencies have different lighthouse tax rates and tax amounts, as well as different collection principles. This Committee finds that the construction of lighthouses, an undertaking of vital importance to the British navy and commerce, was not carried out under the direct supervision of the Government, but was directed by a unified department, by responsible and far-sighted personnel, and carried out in the most efficient and effective manner. The people's servants managed the ship with a frugal plan to ensure shipping safety, but left it alone. The lighthouse could only be built slowly at the request of the local people after the shipwreck. All of this may be seen as a disgrace to our great country. In the past, and even now, lighthouses were built largely as a means of taxing the country's trade, for the benefit of a few who were enjoying this privilege given to them by the country.

This Committee believes that it is unreasonable to unnecessarily tax any sector of our industry at any time. Taxing the shipping industry is particularly unreasonable because it puts it at a very disadvantageous position in unequal competition with other countries' shipping industries. It is the opinion of this Committee that the shipping industry should be exempted from every unnecessary local and unfair tax openly levied upon it.

This committee, therefore, strongly recommends that in all cases the lighthouse tax should be reduced to a level commensurate with the management of existing lighthouses and floating lighthouses, or the construction and management of new lighthouses necessary for the commerce and navigation of the country. Minimum.

The management ignores the fact that independent agencies continue to extract large amounts of revenue (contrary to the above principles); they are nominally collecting lighthouse taxes to pay for the management of lighthouses, but in fact they are for the personal benefit of a few people. , to achieve purposes that were not considered when building the lighthouse. This committee has to express its regret. The Committee is particularly opposed to the renegotiation of leases for certain lighthouses. For 12 years, the Small Select Committee of the House of Commons has been calling on the House to pay attention to this issue...

Although this report specifically emphasizes the irrationality of existing management and believes that some private lighthouses are poorly managed, To be sure, the main reason for insisting that lighthouses be unified under the management of pilot guilds was the belief that doing so would reduce lighthouse taxes. This suggestion, of course, that lighthouses should be paid out of the treasury would lead to the abolition of the lighthouse tax. But this cannot be done. We will not discuss this here.

What is puzzling is why the unified management of lighthouses by the pilot association can reduce the lighthouse tax. This view can find some basis in the theory of complementary monopolies, however Cournot did not publish his analysis until 1838, so it does not affect the views of those who care about British lighthouses, although they are faster than economists. Recognize the importance of Cournot's analytical work. There is no reason to think that unified management will result in any reduction in the lighthouse tax. Because to compensate the former owner of the lighthouse, the same amount of money as before would be required. As the Pilot Guild pointed out, since "the lighthouse tax was mortgaged as security for the repayment of the loan, ... the lighthouse tax cannot be abolished until the debt is paid." In fact, the lighthouse tax was not reduced after the loan was paid off in 1848.

Another way to reduce lighthouse taxes is for pilot guilds to give up the net income they receive from operating lighthouses they own. The money was of course used for charity, mainly to support retired seamen, their widows and orphans. This use of the lighthouse tax was opposed by parliamentary committees in 1822 and 1834. The 1834 committee specifically mentioned that the workhouse supported 142 persons. There were 8,431 men, women and children receiving annuities ranging from 36 shillings to 30 pounds. It recommended that people who were receiving a pension continue to receive it until their death but that no new places were added, however this was not done.

At the same time, the system for calculating lighthouse tax has also been simplified. The tax for each voyage was no longer, as before, based on the number of lighthouses from which the vessel could profitably pass. What was established in 1898 was essentially the financing and management system described in Section 2. Of course, the details have changed slightly, but the basic features of the system have remained since 1898.

Conclusion

The overview of the British lighthouse system and its evolution shows that the conclusions drawn from the discussions of Mill, Sidgwick and Pigou have great limitations. Mill seems to have believed that private management of lighthouses would have been impossible if something like a system for the financing and management of British lighthouses had not been established (which is probably not how most modern readers understand him). Sidgwick and Pigou argued that if there were ships that benefited from lighthouses but could not charge for them, then government would have to intervene. However, the ships that benefit from British lighthouses without paying royalties are mainly those that do not call at British ports but are managed by foreign owners. In this case, it is unclear what the nature of the government action required is, or how the government should act. For example, do the Russian, Norwegian, German and French governments have to pay royalties even though their ships do not dock in the UK? Or will a levy have to be paid into the UK General Lighthouse Fund? Or should the British government use part of its tax revenue to pay the lighthouse fund to make up for the shortfall that foreign governments failed to pay?

The discussion about the British lighthouse system in the article only reveals a certain possibility. Early history suggests that, contrary to the beliefs of many economists, lighthouse services could be provided privately. At that time, shipowners and cargo owners could apply to the king for permission to privately build lighthouses and charge (specified) royalties to the benefiting ships. Lighthouses are privately built, managed, financed and owned. They could make a will to sell and dispose of the lighthouse. The role of the government is limited to the determination and exercise of property rights for lighthouses. User fees are collected by the lighthouse's agents. The issue of property rights enforcement is no different for them than it is for suppliers of goods and services to ship owners. Property rights play an unusual role only insofar as they regulate the price of royalties.

Later, lighthouses in England and Wales were entrusted to the Pilot Guild, a private organization accountable to the public, but the costs continued to be paid by ships' lighthouse royalties. The system Samuelson was so passionate about, whereby the government financed it from general taxes, had never been implemented in Britain. This system of government financing did not necessarily preclude private enterprise from building and managing lighthouses, but it did not seem to allow private ownership of lighthouses (except in a small form), which was very different from the British system that lasted until the late 1830s. Big discrepancy.