all of the commonwealths levy license taxes on dealers in liquor, peddlers, travelling vendors, and various kinds of amusements, primarily for the purpose of regulation or suppression. . . . These taxes are more or less systematically employed for state purposes in Pennsylvania, in Delaware, and in all of the southern states, save South Carolina, Missouri, Arkansas, and Texas, and also in New Mexico, Idaho, and Montana. In practically all of these states and in several others similar taxes are employed and frequently much more extensively for municipal purposes. Wilmington, North Carolina, for example, some years ago levied license taxes upon 124 classes of business. The license tax ordinance now in effect in Atlanta contains 466 items, thus permitting few persons other than manual laborers to follow their callings untaxed."1

A fine illustration of the revenue system of a state which has advanced far along the way of separating state and local taxes and imposing special taxes is afforded by this statement of the income of the central government of New York:

The disbursements of state governments are generally distributed with more or less variation among the following objects: (1) maintenance of the government in its executive, legislative, and judicial branches; (2) the state militia; (3) health and

1 H. A. Millis, "Business and Professional Taxes, as Sources of Local Revenue," First National Conference on State and Local Taxation, 1908, pp. 442-451. 2 Miscellaneous receipts of $2,419,007.93 not included.

sanitation; (4) highways; (5) insane asylums; (6) charities; (7) penal institutions; (8) education; (9) interest on public state debt.

The following disbursements for the state of New York for the fiscal year ending September 30, 1907, will serve for the purpose of illustration:

State departments, commissions, etc.

Charitable institutions

$2,913,344 61

2,495,042 66

Trust fund transactions, less amount included in

payments for educational purposes

Miscellaneous

Total

1,935,989 31

27,443 66

$39,012,687 28

2

CHAPTER XXXII

SOCIAL AND ECONOMIC LEGISLATION

FROM certain quarters the demand is often made that business should be taken out of politics, but any person who has given serious thought to the matter knows that the character of a nation's politics depends primarily upon the character of its business.1 Politics has to do with the formulation of popular will into law; and every important law affects business - private rights in property. It would be difficult to imagine a single great political issue which does not in some way or another involve business interests. Protective tariff, control of corporations, ship subsidies, labor legislation, tenement-house laws, taxation - all these matters and a hundred more of almost equal importance are in politics and will remain in politics as long as the interests back of them remain in the nation. Manufacturers will favor a protective tariff; the working class will insist on better wages, hours, and conditions of labor; the dwellers in tenement houses will demand more light and better sanitary arrangements; and so on throughout all the various groups into which a nation is divided.

The industries of a nation and economic groups which they create determine fundamentally the nature of the government and the issues which the government must consider. This was fully recognized by the framers of the federal Constitution but has been almost completely lost sight of in the vapid political theorizing that characterized the nineteenth century. "The most common and durable source of factions," said Madison, "has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society. Those who are creditors and those who are debtors fall under a like discrimination. A

1 See E. Jenks, Short History of Politics; and A. Menger, Neue Staatslehre; A. Bentley, The Process of Government.

2 Goodnow, Politics and Administration.

landed interest, a manufacturing interest, a mercantile interest, a moneyed interest with many lesser interests, grow up of necessity in civilized nations and divide them into different classes actuated by different sentiments and views. The regulation of these various and interfering interests forms the principal task of modern legislation and involves the spirit of party and faction in the necessary and ordinary operations of government." 1

The Doctrine of Laissez Faire-No Government Interference The United States began its career as an independent nation before the steam engine and machinery had revolutionized western civilization. When the Declaration of Independence was issued, the majority of the people of the United States earned their livelihood by farming or in the few scattered industries in which the simplest of tools were used. There were no great factories filled with complicated machinery, no railways, no large cities with their countless thousands of workingmen dependent for a livelihood upon mills and mines. There were no vast accumulations of capital invested in gigantic enterprises, and consequently no need for government interference and regulation.

Most manufactured articles that were not imported from Europe were made by hand in small workshops where the workman was both master and employee. Indeed, many men hoped that the United States would never become a manufacturing nation. "While we have land to labor," said Jefferson, "let us never wish to see our citizens occupied at a workshop or twirling a distaff. . . . Let our workshops remain in Europe. It is better to carry provisions and materials to workmen there than to bring them to the provisions and materials and with their manners and principles. . . The mobs of great cities add just so much to the support of pure government as sores do to the strength of the human body." 2

This primitive economic system, resting upon agriculture, handicraft industries, and small business undertakings, had its own justification in political philosophy and jurisprudence. The government should interfere as little as possible with the right of the individual to buy and sell labor and commodities under 1 For the remainder of this profound paper, see Readings, p. 50. 2 Quoted in Ford, Rise and Growth of American Politics, p. 104.