NATIONALIZATION, in broad economic terms, the governmental appropriation of

property other than land, transferring it from the domain of private property to national

control. More specifically, the term designates the assumption by a nation of the

ownership of privately owned industry, distributive enterprises, or other businesses or

services. When applied as part of socialist or Communist programs for abolition of

private property, nationalization is sometimes known as socialization. Following a severe

change in government, such as a revolution, nationalization may be effected by

expropriation without compensation to the owners of the property, as in Soviet Russia in

1917-18 and in Cuba in 1959. In more gradual governmental evolution, property

appropriation may be effected by some form of payment to the owners, as in Great

Britain after the installation of the Labour party government in 1945. Denationalization

also occurs, as in the case of Britain's steel industry.

Historical Background.

Although some degree of government ownership of national resources, industry,

transportation, communications, or services essential to social welfare has been a feature

of every form of organized society, the subject of nationalization, prior to the latter part

of the 19th century, remained the concern primarily of social reformers. The 17th-century

English reformer Peter Chamberlen, for example, held that poverty could be eliminated

by the nationalization of royal and church estates, the commons or parks, forests, mines,

and other assets of land and sea; he advocated the confiscation of what he characterized

as unearned increments in manufacturing, trade, and agriculture. During the French

Revolution, the French socialist leader François Noël Babeuf advocated the immediate

nationalization of all corporations and of the property of individuals following their


Periodically, reform movements in the U.S. have advocated specific nationalization. In

the late 19th century, the People's party proposed to break the monopolistic control of

freight rates by the railroads through "national ownership of . . . transportation."

The first government to initiate a complete nationalization of industry was that of the

Soviet Union under Lenin. With respect to other governments, nationalization was used

by formerly colonial and semicolonial countries to secure their natural resources against

exploitation by foreign capitalist interests; a typical example was the nationalization by

the Mexican government in the 1920s and '30s of the country's various mines and, to

safeguard Mexico's vast oil deposits, of the subsoil.

More recent examples of nationalization can be found in the Middle East and in Latin

America. One was the expropriation of the Suez Canal by Egypt in 1956. During the

early 1970s many of the foreign-owned oil interests in the Middle East were either partly

or totally nationalized in a concerted move by the Arab states to gain control over their

leading, and sometimes only, international commodity. In Latin America utilities and oil

and mining operations have been nationalized in Bolivia, Chile, Mexico, and Peru. When

nationalization does not work out favorably, some countries may follow Chile's example

and denationalize certain properties. C.J.F.


acquisition and operation by a country of businesses owned and operated by private

individuals or corporations. It is usually done in the name of social and economic

equality, often as part of Communist or socialist doctrine. Nationalization of foreign-

owned property, e.g., the Suez Canal by Egypt (1958) and the copper-mining industry by

Chile (1971), typically attempts to end foreign control of an industry or the economy and

poses complex problems for INTERNATIONAL LAW. After World War II, Communist

Eastern Europe nationalized all industry and most agriculture, and Western European

nations nationalized some key industries, such as transportation. By the 1990s the trend

in many former and current Communist countries and Western nations was toward

PRIVATIZATION, mainly because political pressures have usually led governments to

operate businesses very inefficiently.


Richards Ralph, Nationalization, Random House, 1988

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