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cent, Massachusetts 6.45 per cent, and see that money used primarily to benefit other sections of the country?" Grants-in-aid, needless to say, are not given to the states in proportion to the taxes they pay, but roughly according to their needs. Hence the point is well taken. One fact, however, should be noted. The average New Yorker, or the average citizen of any state, does not pay one whit more in taxes nor receive back one whit less return than does the inhabitant of any other state. The only persons who are taxed more heavily are those whose incomes are above the average. The great fortunes and those only!

The opponents of the system point also to certain potential dangers. Grants-in-aid, they say, stimulate centralization. Centralization breeds bureaucracy. Bureaucracy contains elements of danger. The history of Germany alone is sufficient to substantiate their point. So the argument goes.

Two questions very naturally arise. Has centralization been wise? Is a further development along the lines of grant-in-aid desirable? To the first the answer is: It has been inevitable. As local problems have developed a national character, some organ of government has had to arise to cope with them. To the second question the answer is only to be found in the consideration of a great many facts, too many to be set forth in a book of this character.

Suggested Reading

Beard, Charles A. American Government and Politics (1924)

CHAPTER IX

THE SPHERE OF THE STATES

The onward march of national power creates the impression that the states are becoming relatively insignificant cogs in our governmental machinery. And certainly it is true that a large portion of the growth of nationalism has been at the expense of the states. Hemmed in on one side by the loss of power accruing to the federal government, and on the other by certain specific prohibitions imposed by the federal constitution and the amendments thereto, the states, superficially at least, seem to have decreased in importance. We have already analysed the grants of federal power; it might be well, therefore, to examine the specific limitations on the states.

The first deal with the taxing power. They may be briefly summed up. No state may lay an import or export duty, or a tonnage tax save with the consent of Congress. Furthermore, no state may tax an instrumentality of the federal government. Such was the implication the courts read into the Constitution in the case of McCullough v. Maryland. As a corollary to this has been established the principle that the federal

government may not in its turn tax a state instrumentality. It is this implication which is to-day necessitating a constitutional amendment to solve the problem of tax-exempt securities.

A second group of limitations deals with interstate commerce. In general, it can be said that a State may not interfere with such commerce. In fact this principle has been pushed so far that the Supreme Court has even set aside a schedule of intra-state rates on the ground that it constituted an indirect interference with interstate rates. On the other hand, incidental interference with interstate commerce is frequently permitted. The speed of trains in cities may be regulated; their stopping at specific points on Sundays may be prohibited, etc. In these cases, the courts have generally taken the attitude that where the police power of the state is honestly used for the protection of the health, morals and safety of its citizens, it is paramount, even though in fact it does interfere with interstate commerce. Should the State legislature, however, attempt to gain for its citizens through the exercise of this power some commercial advantage, the statute without question would be declared null and void.

"No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of no

bility." Thus were a number of miscellaneous items disposed of in the federal constitution.

With the exception of the last clause of the section quoted, these provisions are chiefly concerned with inter-governmental relations. In great measure, they attempt to clarify the grant of power to the federal government, making exclusive in certain particulars some of the power thus given. Equally important from the point of view of the state are those clauses which create a "sphere of anarchy" into which state action may not go. Of this nature is the last clause of the section quoted above. More important, however, is the opening paragraph of the Fourteenth Amendment. "No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty or property without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws." This provision differs from the others both in the breadth of its sweep and in the exceedingly great discretion it reposes in the court. Particularly is this true of the "due process" clause. In fact, when one attempts to analyse the decisions of the Supreme Court in interpreting this phrase, about the only conclusion one can reach is that that august body has understood the language of the Constitution to mean that no state may deprive any person of life, liberty or property except in a manner and under such circumstances as shall seem to the Supreme Court reasonable and fair.

This does not mean, however, that the caprice of the court is the sole factor in its interpretation. There has grown up a body of precedent and tradition which the court inclines to follow and is very loath to disavow. In procedural cases, particularly, are the lines of precedent fairly definite. And in this field comparatively little check has been placed upon the power of the state. Due process, said the court in one case, is "a course of legal proceedings according to those rules and principles which have been established in our system of jurisprudence for the protection and enforcement of private rights." No such freedom, however, is enjoyed by the states in the field of substantive law. There precedents are fewer and individual judgment holds greater sway. For example, under the police power the state has the right to regulate the rate which a utility may charge. Such regulation may not, however, deprive the company of a fair return on its property. But what is a fair return? The company, if left to itself, could earn possibly as much as fifty per cent on its investment. To the man on the street, who is accustomed to a return of four per cent, or slightly more, this seems exorbitant. Where should the line be drawn? Evidently, somewhere between the two figures. Just where, is largely a subjective matter. And in large measure the decision will turn upon the personality of the judges on the bench. To a great extent this same equation enters into the determination of the constitutionality of almost all regulatory legislation of whatever nature:

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