bulk. No jugglery, not even a complete transformation of our industrial system in accordance with the ideals of state socialists or guild socialists, would enable a community to maintain higher real wages than are warranted by the prevailing conditions of financial prosperity. Under the present social system, the fact is apt to be lost sight of, owing to an exaggerated impression of the extent to which increased wages may be paid out of profits, instead of out of prices. According to English statistics, if the national income were equally divided among all, the result would only be 3/- a day at pre-war prices. Writing with reference to the lessons of the war, a contributor to The Round Table for December last remarks: 3 "We have learnt that the true wealth of a nation consists in a healthy, strong population, and in the utilisation of its material resources to that end. But unfortunately—as we shall find—we have discovered no new Aladdin's lamp, no new short new cut to prosperity. Wages and profits depend as of yore on hard work, saving, efficient management, co-operation between Capital and Labour, and up-to-date plant. There is no inexhaustible fund of riches into which the State can dip its hand, and which it can distribute gratis to its citizens. Our wealth is what we produce and what we save. If we have wasted capital in war, we shall have to make it good. If our production is impeded and saving gives way to extravagance, profits and enterprise will decline and wages and employment with them. We must not be misled by the fallacious appearances of war. We have been enjoying the temporary prosperity of a spendthrift, speeding towards bankruptcy. We have been living easy, because we have been living on our capital." In illustration of the fallacious appearance of prosperity during the war, the same writer relates that in Russia peasants now weigh instead of counting their paper money; that in revolutionary France, Mirabeau's paper-money policy was pursued until a pair of boots cost £100 in the depreciated currency, and that the consequence of thinking only of the distribution of wealth, as distinct from production, is seen at the present moment in Russia, where the great proportion of factories is likely before long to be closed, and the town populations, at any rate, to be without the necessities of life. If a statutory direction authorizing a complete automatic adjustment of existing awards according to variations in the cost of "The Financial and Economic Future," 33 THE ROUND TABLE, December, 1918. living is to be materially helpful, several things are necessary: (1) A clear apprehension, on the part of both employers and employed, of the ideal in view. That ideal includes nothing less than the stability of industry, and the economic security of the workersecurity of employment, security of earning power of wages, and security in respect of those general conditions of work which safeguard the worker's health and comfort. (2) A clear apprehension on the part of both employers and employed of the means conducive to the realization of the ideal just indicated. Superficially, those means involve progressive production; but a material increase in production will be found on analysis to demand a wholehearted coöperation, in my opinion, some form of real partnership between employers and employed. Only thus can the pernicious doctrine of "go-slow" be eliminated. Apropos, the term "go-slow" is by custom reserved as a monopoly of the employed. But when I compare the methods of industrial organization in Australia even with those in force in America, or in Germany before the war, I cannot resist the conclusion that so far as concerns Australia, there is considerable room for improvement in most industries, both as regards the work done by employees, and also as regards the methods of business organization and management by employers. Employers cannot have it both ways; they cannot argue that brain as much as muscle is the source of wealth, and at the same time deny the possibilities of very materially increasing production by means of better methods of business management and organization. If the views just expressed were taken to heart by the employers and employed, a statutory direction authorizing automatic adjustments of existing awards in accordance with new standards could be given effect to without any catastrophic increase in prices, or any perilous dislocation of trade and industry. Under conditions of mutual recrimination and conflict between employers and employed, even the purposes of wise legislation are frustrated, the possibilities of judicious action by industrial courts are nullified or hampered at every turn, and that future social justice which is the inspiration of progressive thinkers is postponed to some remote and imaginable future. If the real good now within our grasp is missed, even though the motive should be the attainment of something imaginably better, then that something imaginably better will have been made the enemy of an actual and immediately attainable good. For the present conditions, neither employers nor employed can escape censure. While many employers desire to do the fair thing, most employers suffer from the obsession of profits, and the weight of the dead hand of a traditional industrial organization. On the other hand, while many employees would prefer the substance to the shadow, and are willing to work for other ideals by evolutionary process, the great majority of employees in Australia are under the leadership of those who mean well, but have very vague conceptions of exactly what they want, and still vaguer conceptions of the processes involved in the realization, in a complex community, of what they want. If this state of things continues, employers and employed alike will suffer. An industrial court may punish in various ways employees who strike; but even industrial courts cannot maintain a high standard of work. Nor can they, save possibly by a painful and long-drawn-out struggle, bring enlightenment or a sense of justice to employees as a class. The present struggle is educative, but expensive. Incidentally, it thwarts the desire which an industrial court may have to insure progressive and all-round adjustments of the rates of wage according to variations in the cost of living. ADELAIDE, Australia. W. Jethro Brown. INDIRECT ENCROACHMENT ON FEDERAL WE III. SUMMARY AND CONCLUSION E are often told that a state cannot tax interstate commerce or an instrumentality of the federal government. This is commonly accepted legal doctrine. But in the law, as in human life elsewhere, actions speak louder than words. What judges actually permit and prohibit is more important than what they say about their approval and their disapproval. By their fruits ye shall know them better than by their professions. If judges do in fact permit the states to tax interstate commerce and the instrumentalities of the federal government, that commerce and those instrumentalities may be taxed by the states, all doctrine to the contrary notwithstanding. It is perhaps too much to hope that all conflict between the formulations of legal doctrine and the substantial results of legal decisions will ever be resolved. Until all catch phrases which clothe half truths in the majesty of the universal and the absolute are banished from common speech, we cannot expect the imaginary deity which calls itself The Law to be free from the foibles of its mortal makers. But those who are interested in law, not as a conceptualist vision, but as an instrument for the actual ordering of human affairs, must necessarily seek to discover how the law does actually order human affairs. They will wish to make their own formulations of the law as it is laid down and applied by those duly vested with authority in the matter. They will be unwilling to accept the formulations of others that do not square with results of the adjudications. When in this frame of mind we approach the limitations imposed upon the taxing powers of the states by the existence of 1 For preceding instalments of this discussion, see 31 HARV. L. REV. 321-72 (January, 1918); Ibid., 572-618 (February, 1918); Ibid., 721-78 (March, 1918); Ibid., 932-53 (May, 1918); 32 HARV. L. REV. 234-65 (January, 1919); Ibid., 374-416 (February, 1919); and Ibid., 634-78 (April, 1919). the federal system of government, we find the line of demarcation by no means so clear as familiar formulations would entice us to assume. We discover that in certain ways and to a certain extent a state may tax a federal instrumentality and may tax interstate commerce. We face the problem as one of methods and of degree. We see the solution reached by compromise and by practical adjustment and not by simple discovery of a sharp boundary between two entirely separate spheres of power. We find that the law cannot be summed up in a phrase, but that we must go behind the phrases to the facts. To Chief Justice Marshall we are indebted for clarity and confusion on the problem of marking the limits of state power. The confusion appears when he professes clarity, and the clarity is manifest when he owns up to perplexity. By neglecting the concrete and rising to the heights of political theorizing, Marshall attains an artificial simplicity which would banish all our difficulties, if words alone were adequate to the task. In McCulloch v. Maryland,2 he tells us: "If we measure the power of taxation residing in a State, by the extent of sovereignty which the people of a single State possess, and can confer on its government, we have an intelligible standard applicable to every case to which the power may be applied." 3 Find the limits of state sovereignty, and all difficulties are at an end. Sovereignty is the intelligible standard applicable to every case. In praise of his solution, Marshall continues: "We have a principle which leaves the power of taxing the people and property of a State unimpaired; which leaves to a State the command of all its resources, and which places beyond its reach, all those powers which are conferred by the people of the United States on the government of the Union, and all those means which are given for the purpose of carrying those powers into execution. We have a principle which is safe for the States, and safe for the Union. We are relieved, as we ought to be, from clashing sovereignty; from interfering powers; from a repugnancy between a right in one government to pull down what there is an acknowledged right in another to build up; from the incompatibility of a right in one government to destroy what there is a right in another to preserve. We are not driven to the perplexing inquiry, so unfit for the 2 4 Wheat. (U. S.) 316 (1819). 3 Ibid., 429-30. |