vital to their success that both producer and consumer shall have an early settlement of all essential questions in dispute.

5. The question, shall we have federal or state regulation?-is now rapidly pushing into the foreground as one of the prime issues in the successful working out of our regulative policy. The federal system has won a notable victory in the Shreveport decision and in order to realize the progress which this decision marks let us contrast it with the opinion in the Minnesota rate case. The real principle involved in these two opinions is extremely simple despite the complicated circumstances in which it was wrapped up. In the Minnesota rate case, Simpson v. Sheppard, 230 U. S. 352, the state authorities in Minnesota had reduced materially the freight rates to be charged within the state. The railways found that this affected the charges which they could make on interstate traffic passing through the state as well as on local traffic, because shippers whose freight was passing through Minnesota to other states could easily claim the advantage of the low rate within the state. In brief, the local Minnesota rate change immediately reduced the through rates on national traffic-"interstate trade." The railways accordingly claimed that the law was unconstitutional since it was in substance and effect a state regulation of interstate trade, and only the national government could legally regulate such national traffic. But the supreme court overruled this objection and upheld the state's regulation on the ground that while it did undoubtedly have the effect of influencing interstate rates its real purpose was to control local rates and this the state had a clear and undisputed right to do under the constitution. This decision seemed to destroy at one blow the freedom of national railway traffic from local interference and subjected such trade to all the petty, various and conflicting rules of the states through which it passed. It was indeed an ominous ruling which seriously undermined the prosperity of all the interstate carriers. But in the following year federal control was reasserted and the necessity for it clearly shown in the celebrated Shreveport case, Houston etc. Railway ". United States, 233 U. S. 342. Here the state authorities of Texas and the railways under their jurisdiction had established a system of local rates within the state which kept out trade from the commonwealth of Louisiana. Shreveport, La., was on the boundary line. It wished to become a distributing center and its merchants to this end sought

freight rates from Shreveport into the state of Texas which would enable them to send goods into large areas of that state and compete actively with the Texas distributing cities. The local railway rates, however, were so arranged from the boundary of Texas into the disputed markets as to discourage such outside competition while the local rates from the Texas cities to the disputed markets were kept at a lower point to favor the merchants of the Texas cities. Could the federal authorities intervene in such a situation? The Shreveport merchants appealed to the Interstate Commerce Commission for a through (interstate) rate which would enable them to compete in the territory in question. The Commission ruled in their favor, ordering the railways to remove the discrimination against interstate trade by readjusting the relation between interstate and local rates, that is, the railways should either lower the interstate rate to the same proportinate level as the local rate, or raise the local rate to the same proportionate level as that on interstate traffic. At once the railways and the state authorities appealed from this ruling, claiming it to be an infraction of the state's authority to fix its own local rates as it pleased. Basing their appeal on the Minnesota rate decision they maintained that since the state could determine the rates to be charged in local business within its boundaries, the federal authorities could not interfere with this action. The court upheld the national commission and declared that that body was authorized to regulate national railway rates. Its province was to protect and further interstate trade and in doing this it could remove any discrimination or barrier erected against such trade by no matter what local authority. The court explained further its opinion in the Minnesota case by saying that all state action which influences directly or indirectly interstate trade was only upon the suffrance of federal authorities. While a state law might be allowed to stand in the absence of Federal action, in the moment the Federal Government acted the state power ceased. This clear unequivocal definition of the national control has reëstablished, not the freedom, but the possibility of freedom from state interference, if Congress will act. Contrary to the belief in certain business circles we need not less regulation but more, and it must be by the federal government.

While all the above-mentioned changes in our regulative system are highly encouraging because they show the tendency to

bring policy into harmony with actual conditions, there are still needed two other important, even vital, improvements in this policy, both of which fortunately lie along the lines of our present growth and conform in principle to the ideas above described. These are a change in the powers of the trade commission and the further enlargement of national at the expense of state regulative control.

Our regulative laws need greater elasticity and flexibility. These qualities can only be given in the administration of the law. It is hopeless to attempt to secure flexibility by court action for reasons which we have already examined. We must rely to an ever greater extent upon administrative commissions and boards, particularly in the federal government, to apply the general principles of our regulative acts to the manifold and various conditions of national trade. The best instance of this can be seen in the much discussed and really important question of price protection in retail trade. Shall the manufacturer have the right to arrange with retailers that they shall sell only at a certain figure? On this point volumes have been written. The supreme court has covered it in two leading decisions: Bauer v. O'Donnell, 229 U. S. 1, and Miles Medical Co., v. Park Drug. Co., 220 U. S. 373. In these and other cases it has declared that price-fixing by agreement in interstate trade is a violation of the Sherman act because it is an agreement not to compete in prices but to fix a single price. An agreement not to compete is a restraint of trade. Accordingly the whole fabric and structure of price protection by agreement is illegal. There is no flexibility in this principle. The good and bad pricefixing agreements alike, the extortionate and the justifiable are both condemned. We need We need some administrative investigation and weighing of each agreement so that it can be condemned or approved in each case according to its purpose and effects. There is only one way of securing this. The powers of the federal trade commission should be enlarged to approve any agreement which would otherwise fall under the ban of the trust laws but which on careful inspection proves to be beneficial or harmless. Its present authority is too exclusively negative and prohibitive in character. It may forbid and investigate and deny but its permissive power is too limited. For example, Section 11 of the commission act provides that

nothing contained in this act shall be construed to prevent or interfere with the enforcement of the provisions of the anti-trust acts or the acts to regulate commerce, nor shall anything contained in the act be construed to alter, modify, or repeal the said anti-trust acts or the acts to regulate commerce or any part or parts thereof.

This makes it clear that the commission cannot legalize any agreement. Section 7, of the Clayton law, dealing with holding corporations and the union of competitive companies, declares that "nothing in this section shall be held or construed to authorize or make lawful anything heretofore prohibited or made illegal by the anti-trust laws, nor to exempt any person from the penal provisions thereof or the civil remedies therein provided." And Section 11, of the same act, after outlining the powers of the commission to prevent unfair competition, again limits the commission's authority by declaring that "no order of the commission or board or the judgment of the court to enforce the same shall in any wise relieve or absolve any person from any liability under the anti-trust acts.” We have therefore in these two statutes several clearly worded clauses which emphatically reassert all the provisions of the Sherman act and prevent the new trade commission from using its power to apply the law in an effective and flexible way. Yet we have seen that the great advantage to be gained by such a commission is precisely this sound modern view of the law which would distinguish between various types of combinations in restraint of trade, allowing those which are beneficial to stand and suppressing those which are harmful. If the commission had this power it would solve the problem far better than a legislative control with its inflexible prohibitions and penalties.

There is no reason why our government should fix prices except in public service industries but there is every reason why it should not condemn indiscriminately all agreements to fix prices. It is feared by many that such an enlargement of the commission's power might fasten upon the country, by legal action, a scale of artificially high prices and might continue in existence with a guaranteed profit, the inefficient producer or merchant who refuses to adopt modern ideas and processes. But of this we need have no fear if our experience with the Interstate Commerce Commission is a safe guide. Rather would the tendency of public opinion compel an administrative body to keep prices at a reasonable level and this

pressure would in itself stimulate the producer to make use of every new and improved method in manufacture and merchandise. Such a change would give a much broader scale of liberty to interstate companies and would above all provide a much clearer definition. of what they can and what they cannot do under the law. It offers the further advantage of being directly in line with our past administrative experience and precedents.

Finally the enlargement of the federal, at the expense of the state jurisdiction over national trade, is of equal, if not greater importance. Our supreme court today allows the states both to tax and to regulate interstate companies to an extent that was never intended by the constitution and in a way which seriously burdens and obstructs national business. Originally the federal courts resolutely defended national trade from state levies of this kind. In such statesman-like decisions as in Brown v. Maryland, Chief Justice Marshall and later his successors, in McCall v. California, Galveston Railway v. Texas and similar cases, held that the state must not interfere with national commerce because the regulative power over national trade had been given to Congress alone. In fact as late as 1909, in Western Union v. Kansas, 216 U. S. 1, the court declared that a state tax on the total capital stock of a national carrier was a burden on the national business of the carrier and therefore a violation of that clause which gave to Congress the regulation of national trade. These rulings all carried out the manifest intent of the clause in question but many of them had been rendered by a divided court, and nearly all the most important decisions were made by a vote of five to four.

The fluctuating majorities of the court have usually turned in all essential points against protection of interstate business and we have a series of rulings which threaten to modify if not repeal the protection of the commerce clause. A state may tax all the property located within the state belonging to an interstate carrierThompson v. Union Pacific, 9 Wallace 579. It may tax even the gross receipts within the state, from all sources, of an interstate carrier, provided it excuses the carrier from other taxes-U. S. Express Co., v. Minnesota, 223 U. S. 335. A state may even tax its share of the capital stock of an interstate carrier-Pullman Co. v. Pennsylvania, 141 U. S. 18. The state's share in this case is measured by its proportion of the total mileage covered by the