to that now to be incurred. At the same time we do not consider that the sum set aside as sinking fund from the revenue of this undertaking should necessarily be used to pay off the holders of the particular security issued for the purposes of this undertaking; first, because it is unsound finance to require that any sum which may be available for the repayment of debt should be used by the State to repay a particular part of its debt, when it might be more advantageous to extinguish some other obligation carrying a higher rate of interest, or more onerous for some other reason; secondly, because the attachment of a special sinking fund to one 4 per cent. Government security would tend to depress the value of other issues not so redeemable.

The accounts of the undertaking would be misleading if they did not include an allowance for the taxation now payable through and by the trade.

It is not possible to forecast in detail and with precision all the financial consequences to the State of the proposed transfer. But it is possible to indicate the principal elements, beneficial or detrimental, which necessarily enter into the calculation.

On the one hand, State acquisition and management should be found to be economically advantageous as compared with the present system in that the former will involve

(a) the elimination of redundant breweries, with a consequent large saving in management and standing charges; (b) the concentration of distribution and sale, with corresponding savings;

(c) the brewing of a lighter (and therefore more profitable) beer, the price of which will not be affected by competition; and

(d) the saving of all that class of outlay which arises under strenuous commercial rivalry.

On the other hand, the substitution of public for private ownership may be expected to have a prejudicial effect on profits in the following respects:

(a) the brewer and the publican will be replaced by representatives of a public authority, who are under no incentive

to push sales; hence less drinking may be anticipated and the turnover will be reduced.

(b) the community will no longer be deterred by the difficulty of dealing with private interests from imposing such further restrictions upon the trade as seem socially desirable, and in so far as the social policy of the State aims at discouraging drinking, this policy will be in direct conflict with financial profit.

(c) the contribution of 11⁄2 per cent to sinking fund will be an additional charge against profits.

Under the present law, old on-licenses contribute to a compensation fund out of which those interested in a license which is suppressed as redundant are compensated. Under the proposed scheme the compensation fund, so far as undistributed, will pass to the State, and compensation levies will cease, this last item removing from the profit and loss account an annual sum of nearly 900,000l. now chargeable against gross earnings.

The financial prospect of the trade under State monopoly depend on the effect, pro and con, of the new conditions above indicated; they depend still more on efficient business management and economy in the conduct of the undertaking.

The Committee realise that there are indirect economic advantages from a proposal such as this which it is difficult to dissociate from its strictly financial aspect, but into those matters they do not regard it as their province to enter.

HARTLEY WITHERS,

Secretary.

HERBERT SAMUEL (Chairman).
CUNLIFFE.

JOHN SIMON.

JOHN BRADBURY.

ED. F. COATES.

J. S. HARMOOD-BANNER.

WILLIAM PLENDER.

PHILIP SNOWDEN.
THOS. P. WHITTAKER.

THE ROAD TO CONFISCATION

By Lee J. Vance

(In Yale Law Journal, February, 1916)

In his learned and suggestive address on "The Growing Law" before the graduating class of the Yale Law School, June, 1915, Justice Francis J. Swayze made this significant statement:

"The police power has proved a most potent instrument for sustaining the powers of government and limiting property rights. It is a long way from the decision of the New York Court of Appeals in 1856 that a law prohibiting the sale of intoxicating liquors owned by any person within the state when the act took effect, was unconstitutional, to the decision of the United States Supreme Court in 1887 that the prohibitory legislation of Kansas did not deprive the citizens of the state of their constitutional rights. We have traveled farther in the last thirty years." 1

When I read this statement there came at once to my mind the charge of Mr. Justice Brewer, of the United States Supreme Court, to the graduating class of the Yale Law School, June, 1891. Referring to the prohibitory legislation of Kansas, he said:

"There is not only justice, but wisdom in this rule that, when a lawful use is by statute made unlawful and forbidden, and its value destroyed, the public shall make compensation to the individual. . .

"That while the government must be the judge of its own needs, and in the exercise of that judgment may take from every individual his service and his property, or the property itself, and in the interests of public health, morals and welfare, may regulate or destroy the individual use of his property, yet there 25 Yale Law Journal (Nov., 1915), p. 7.

remains to the individual the sacred and indestructible right of compensation."

2

The righteous demand of Mr. Justice Brewer for compensation to the individual, whose property rights are damaged or destroyed by prohibitory legislation, is as valid to-day as it was in 1891. His vigorous objections to legalized robbery can be overruled only temporarily, for in the end common honesty and simple justice must be observed in spite of stare decisis or precedent.

Of course the law grows; it is growing and must grow in order to meet changing habits of thought, customs, and new conditions of our present civilization. But there may be an unhealthy as well as a healthy growth of law. It was the unhealthy growth of law in England that started Bentham in his great work of legal reform. And yet, as Sir Henry Maine points out, radical reformer as he was, Bentham urged extreme caution against hasty acquisition of private property by the state for public advantage, and made vehement protests against the removal of abuses without full compensation to those interested in them.3 It is the unhealthy growth of prohibitory and other law in the United States that is largely responsible for delay of justice, disrespect for law and lawlessness; that has, from time to time, called forth strong protest from members of the bar and has led bar associations to propose and urge radical reforms.

This question of just compensation is one of vital and growing importance to the nation. It calls for fair and straightforward discussion. The issues raised should not be considered from a narrow, sentimental, partisan standpoint, but on broad lines, as the personal liberty and property rights of the citizen are involved. The question of prohibitory legislation thus goes to the very foundation of society and government.

As tersely stated by Judge Baldwin, organized society is created to secure antecedent rights of individuals or groups of indi

'Address on "Protection to Private Property from Public Attack," published by Law Department, Yale University, p. 17.

'Maine, Pop. Government, p. 85.

viduals. These fundamental rights of an American citizen-notably the rights of life, liberty and property-are guaranteed and protected in almost every constitution against class, oppressive, and confiscatory legislation. Prohibitory laws directly and indirectly attack the personal and property rights of the citizen. Such attacks become dangerous when the citizen can not, or does not, defend and fight for his rights, and when the courts ignore, excuse, or explain away constitutional guaranties and limitations.

That is just what our courts have done in order to sustain prohibitory legislation. Nowhere in the reports of the Supreme Court of the United States, and of our highest state courts, will you find. more quibbling, more refinement of reasoning and sophistry, more fine-drawn technical and legal distinctions, more cant and clap-trap about the abuse of drink or intemperance, about public morals and public good, than in the line of decisions beginning in 1847 with the License Cases.5

A few months ago Senator Elihu Root in a debate over the judiciary article in the New York State Constitutional Convention said:

"Wherever a special class of men have been entrusted with the formulation and administration of law, they tend to make it a mystery; they tend to become more and more subtle and refined in their discriminations, until ultimately they have got out of the field where they can be followed up by plain, honest people's minds, and some power must be exerted to bring them back." •

This statement by an acknowledged leader of the American bar condemns those judges who, in the formulation of anti-liquor law, have been subtle and refined in their discriminations in order to disguise the wrong and the injustice done to the individual whose personal rights have been infringed, or whose property rights have Two Centuries of Am. Law, by Members of Faculty, Yale Law School,

4

6

Reprint of speeches by Elihu Root under title "Responsible Government," p. 28.