THE "FIRST STEP" TOWARDS SOCIALISM "State Socialism" as I have described it will doubtless continue to be the guiding policy of governments during a large part, if not all, of the present generation.

Capitalism, in this new collectivist form, must bring about extremely deep-seated and far-reaching changes in society.
And every step that it takes in the nationalization of industry and the appropriation of land rent would also be a step in Socialism, _provided_ the rents and profits so turned into the coffers of the State were not used entirely for the benefit either of industry or of the community as a whole, as it is now constituted, but were reserved in part _for the special benefit of the less wealthy, less educated, and less advantageously placed, so as gradually to equalize income, influence, and opportunity_.
But what, as matter of fact, are the ways in which the new revenues are likely to be used before the Socialists are either actually or practically in control of the government?
First of all, they will be used for the further development of industry itself and of schemes which aid industry, as by affording cheaper credit, cheaper transportation, cheaper lumber, cheaper coal, etc., which will chiefly benefit the manufacturers, since all these raw materials and services are so much more largely used in industry than in private consumption.
Secondly, the new sources of government revenue will be used to relieve certain older forms of taxation.

The very moderately graduated income and inheritance taxes which are now common, small capitalists have tolerated principally on the ground that the State is in absolute need of them for essential expenses.

We may soon expect a period when the present rapid expansion of this form of taxation as well as other direct taxes on industry, building, corporations, etc., will be checked somewhat by the new revenues obtained from the profits of government enterprises and the taxation of ground values.

Indirect taxation of the consuming public in general, through tariffs and internal revenue taxes, will also be materially lightened.