hither side of legislation of the character of the Beveridge bill; if, on the other hand, the constitutionality of the Employers' Liability act is sustained by the Supreme Court, and if at any time in the near future such a bill as that of Senator Beveridge shall be passed by Congress, it would be impossible to assign any limits to the extension of Federal power, not simply under cover of those four pregnant words of the inter-State commerce clause, but under cover of any of a dozen other phrases in the Constitution.

In his opinion holding the Employers' Liability act unconstitutional, Judge Evans said:

A most patient consideration of the question in this instance has led to the conclusion—we think to the inevitable conclusion—that the act of June 11, 1906, only creates and imposes liability upon certain common carriers to their employees and in no way prescribes rules for carrying on traffic or commerce among the States, and consequently in no way regulates such commerce. If the operation of the act could in any way affect commerce among the States, it would do so in a manner so remote, incidental and contingent as in no proper sense to afford a factor of any value in determining the question now in contention.

The last sentence here quoted puts the crux of the matter in a nutshell. It is a matter of common sense and statesmanlike sagacity to decide just how far “incidental and contingent" effects are to be taken into account in interpreting Constitutional powers. It has been a wholesome, and even a necessary, practice on the part of our courts not to rule out such effects, and to give them a wide and reasonable consideration; but if they are to be regarded as forming a factor in the case no matter how re

motely and by how strained a construction they enter into it, the limitations of the Constitution might as well be wiped out altogether. It is all, to be sure, a question of degree; but when you ignore all limits in questions of degree you have, to all intents and purposes, made a difference in kind and not in degree.

Take, for example, such a proposition as that contained in the Beveridge bill. To prohibit the transportation, in inter-State commerce, of goods in the making of which child labor has entered is to use the power over inter-State commerce simply as a weapon of coercion in the regulation of conditions of industry in the several States. The purpose may be ever so laudable, but the point is that it is a purpose having none but the most accidental—incidental is not a strong enough word-and farfetched connection with inter-State commerce, or commerce of any kind. If the power to regulate inter-State commerce be held to justify an application so remote, what is to hinder its being used to prohibit the transportation of goods of any kind from a State in which child labor is allowed, or in which the sale of alcoholic liquors is permitted, or which does not maintain a State university? may be that between the Beveridge proposal and such fantastic propositions as we have here imagined there is a wide gulf; but the point is that unless it be recognized that the power to regulate inter-State commerce is to be construed as having such limitations as a reasonable attitude toward the meaning of written language would impose, we are landed in a situation in which the power of the

It

process of changing the Constitution by amendment is open to the nation. That cess is only a paper possibility, but is in out of the question, is a belief widely enterut it is in reality little better than a superIt is high time the question were being considered whether the unlimited stretchhe Constitution can be justified by the und assumption that legal amendment of that nt is an impossibility.

HIGH INTEREST RATES AND THE GOLD SUPPLY

(January 22, 1907)

Since the publication of Mr. J. J. Hill's recent letter to the Governor of Minnesota, pointing out the diminished rate of construction of new track by the railroad companies of this country, and declaring that more than five billion dollars ought to be expended on new track and terminals during the next five years, there has been a great deal of discussion as to the underlying causes of the present congestion in railroad facilities and of other analogous features of the economic situation. That the agitation directed toward a more severe regulation of railways has done something to diminish the amount of capital that would otherwise have gone into railroad construction can hardly be doubted, but, as we pointed out when Mr. Hill's letter appeared, it is impossible to accept this as an explanation, or the chief part of an explanation, of what has taken place, seeing that unprecedentedly large masses of capital have actually been put into other railroad improvements during the very years in which the trackage has undergone so little increase. But, without going into this particular question, the facts stand out prominently that the demands on railroad resources have been growing at a tremendous rate, and that the increase of their facilities for meeting them has not kept pace with the growth of the demands. There is in this, one would say, nothing astonishing; it is but a natural

part of the situation in all the leading lines of activity during the past few years, a "boom" period probably unparalleled in economic history. Still, in the case of railroads, the question of the possibility of raising money on securities at acceptable terms enters more seriously into the situation than in the case of ordinary industrial enterprises, and thus the problem is brought into connection with that of the long-prevailing tightness of money and the rise in the rate of interest, the world over.

There are doubtless many causes that contribute to the creation of an economic situation in which the leading features are an intense strain on industrial and transportation capacity, a sharp demand for money, and high interest rates. But there is one cause which, we feel sure, is more fundamental and pervading than any other—the increased supply of gold. It may seem at first blush absurd to assert that an increasing supply of the money metal causes the rate of interest to go up and makes it difficult for the supply of money to keep pace with the demand. But it must be remembered that the first effect of the increasing supply of gold is a rise of prices. The enormous output of the world's gold mines in the past few years has resulted in an extraordinary rise of prices from year to year. When prices are rising in this way, the men of enterprise, the great industrial producers, profit by it. Whatever they bought in the way of raw materials a year ago would cost decidedly more to replace now, and the price they can get for their finished product corresponds to the price of the raw material today, not the price of a year ago. If wages are rising,