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CHAPTER IV: THE STATE A DISHONEST MAN - Yves Guyot, Where and Why Public Ownership has Failed [1912]

Edition used:

Where and Why Public Ownership has Failed, trans. H.F. Baker (London: Macmillan, 1914).

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CHAPTER IV

THE STATE A DISHONEST MAN

  • 1. In Foreign Affairs Machiavelli Is Still Our Moral Guide.—In Domestic Affairs the End Justifies the Means for Socialists and Interventionalists.—The Sovereignty of the “End in View.”
  • 2. Bismarck, Ramsay Macdonald and the Railways.—MM. Pelletan and Waddington.
  • 3. Our Professors of Law, the Heirs of the Lawyers of Philippe Le Bel.—Partial Confiscation of the Railways.—Approval of the Principle by Paul Pic.
  • 4. The Agreements of 1883.—The Guaranty of Interest of the Orléans and Midi Railway Lines and M. Barthou.—Decree of the Council of State.—The Millerand Interpellation, 1895.—The Political Crisis.—Governmental Disregard of Judicial Decisions.—Last Resource of the Orléans Company.—The Confirmatory Decree of the Council of State of July 26, 1912.—Anarchistic Lack of Conscience.
  • 5. Giolitti and the Insurance Companies.—National and International Confiscation.—A Legal Excuse.—M. Jèze.—“An Administrative and Not a Fiscal Monopoly.”—A Legal Error.—Precedents for Confiscation. —Progress Condemns Precedents of Rapine and Violence.—Return to Confiscation a Proof of Retrogression.—Individual Ownership One of the Conditions of National and International Law.—An Error of Fact.—Profits of the Italian Monopoly.
  • 6. The Italian Law of 1903.—Repeal of Municipal Concessions.—The Congress of Municipal Undertakings.
  • 7. The Rambla Case.
  • 8. Equal Tolls on the Panama Canal.—Article 8 of the Clayton-Bulwer Treaty.—The Hay-Pauncefote Treaty.—Exemption of American Ships Engaged in Coast Trade.—The Lodge Bill.—Bad Faith.—A Lobbyist.—British Protests.—Mr. Taft.—Supreme Court of the United States.—Under the Circumstances There Can Be No Third Disinterested Party.
  • 9. The Discomfiture of the New York Street Railways.—Restrictive Legislation in New Jersey.—Police Power, Private Property, and Constitutional Guaranties.
  • 10. Examples of a Model Employer.

1. It is still generally understood that in matters of foreign policy the statesman should have no moral guide other than Machiavelli. In regard to domestic affairs the unanimity of opinion is scarcely so perfect. Nevertheless, statesmen who believe that every government ought to be “an honest man” are still the exception; and not alone Socialists, but also Interventionalists are characterized by utter unscrupulousness when the question arises of substituting collective for individual action. The end justifies the means. To objections made in the name of property rights and of respect for contracts, the end in view is declared sovereign. Let me cite a few characteristic facts in proof of such a statement.

2. Bismarck organized a campaign against the private railway companies, diverted traffic from them, bought their stock secretly, and molded public opinion into favoring the purchase he had planned.

The parliamentary chairman of the Labor party in Great Britain, J. Ramsay Macdonald, in a debate with Hilaire Belloc in Memorial Hall, said: “M. Belloc proposes to take £19,000,000 ($92,530,000) from the excise duties in order to purchase railways. Railway stock will immediately rise to a ruinous figure. It would be better to bring down the value of the stock by an attack upon their income.” 1

Bismarck and Ramsay Macdonald have the same moral code when it comes to government action.

In France Camille Pelletan has declared that “contracts must be turned topsy turvy”; and even moderates like Richard Waddington share his opinion. 2

3. Advocates can be found for any cause. It is therefore not strange that legal experts, descendants of the lawyers of Philippe Le Bel, maintain that the government can do anything since it creates the law. Legalists like R. Jay have even maintained the right of the state to expropriate private enterprises without indemnity.

As long as ministers respected the phrase, “an honest government,” and were resolved to hold to the contracts by which they were bound to private companies, they took little interest in the labor question. The control, organization and remuneration of employees was regarded as the affair of the companies concerned, and not of the minister.

But in 1897 the Chamber of Deputies passed the Berteaux-Rabier-Joures bill, modifying the labor conditions of employees and giving to them a legal right to the customary pension after 20 years of service. From that moment the government found itself defenseless. Since then railway employees have learned to go to their deputies with their demands. The deputy in his turn will bring all possible influence to bear upon the government, which, under this pressure, will tamper with the existing contracts. Yet, despite the cracks in them, the contracts still hold. Up to the present the government has not been able to impose upon private companies the reinstatements of discharged employees to which the state system has been obliged to submit. This has been the government's punishment for its lack of respect for a contract.

The rights of the existing private railways in France have been directly threatened by a bill introduced by M. Augagneur at the beginning of November, 1912, and thus worded:

“Article 1.—Nomination of each of the following railway officials shall be submitted for ratification to the minister of Public Works by the chairman of the board of directors:

  • “a. Directors, assistant directors.
  • “b. Chiefs of the administrative, transportation and supply departments of the road.

“The same rule shall apply to employees carrying on for the time being the duties of the above-named officials for a period of not less than three months.

“Nominations shall be made for a period of six years and shall be renewable.

“Article 2.—All modifications of the administrative organization of the roads and all changes in the duties of the employees mentioned in Article I shall be subject to the ratification of the minister of Public Works.

“Article 3.—If, after a delay of three months from the date of the promulgation of the present law, or from the date of a vacancy in one of the positions mentioned in Article 1, the minister has not been able to ratify the names proposed by the companies, he shall proceed with the duty of nomination himself.

“The same rule shall hold if the ratification of the names proposed by the companies has not been made within three months preceding the normal end of the term of office of the employees mentioned in Article 1.

“Article 4.—After a delay of six months from the date of the promulgation of the present law, the companies shall present for the approval of the minister of Public Works:

  • “1. The regulations governing the administrative organization of each line;
  • “2. The regulations governing the methods of recruiting and promotion, as well as the salary list, of employees;
  • “3. The regulations governing organization and methods of procedure of the councils of discipline and the commissions on reforms.

“All modifications of the regulations so approved must likewise be ratified.

“In any case where the ratification above provided for is accorded only after reservations involving modifications or additions not accepted by the company, the question shall be decided by a decree of the Council of State.

“Infractions of the present law shall be prosecuted and punished in conformity with the provisions of Section III of the Ordinance of November 15, 1846.”

The above plan of partial confiscation is a bold violation of the contracts between the government and the companies. Nevertheless, Paul Pic, professor of industrial law at Lyon, does not hesitate to declare that “this measure is in itself perfectly justifiable.” As, however, “it would run the risk of leading us into a precipitate purchase of all the lines, as well as on account of the strenuous resistance of the companies,” he advises a delay. 1

4. Few ministers have any desire to adhere loyally to the contracts of 1883 with the railway companies. In 1894 M. Barthou, then minister of Public Works, on the occasion of a bond issue by the Orléans line, ordered the company to add to the notices relative to the guaranty of interest an announcement that this guaranty would expire in 1914. The company referred the question to the Council of State, holding that the government had granted this guaranty not only up to 1914, but to the expiration of its franchise, in 1956. By a decree of January 11, 1895, based on opinions rendered by M. Mayliel and M. Jagerschmidt, the council of state handed down a decision in favor of the company.

We give the final summing up and the provisions of this decree of 1895:

“Under the circumstances, it must be acknowledged that the guaranty of the railway company from Paris to Orléans has a period to run equal to that of its franchise, and that, by requesting the company to specify upon its bonds that this guaranty will end on December 31, 1914, the minister of Public Works has misinterpreted the rights of the company arising from the contract of June 28, 1883. It is decided, therefore, that the order of the minister directing the company to add to its notices relative to the guaranty of bonds an announcement that this guaranty will expire December 31, 1914, be annulled.”

Instead of submitting gracefully to this decree, M. Barthou handed in his resignation as minister of Public Works. On January 14, M. Millerand called Minister Dupuy to account as having failed in his duty in not enforcing the ministerial order, and ultimately the Dupuy ministry fell because it refused to disobey the decree of the Council of State even at the urgent demand of its party. Thus the Council of State overthrew a minister and afterward a ministry, while the affair led further to the resignation of Casimir Perier, President of the Republic.

The Chamber of Deputies, in order to appear to be doing something, appointed a commission charged with discovering whether there was any cause for the prosecution of M. Raynal, who, as minister of Public Works in 1883, had signed the original railway contracts, for high crimes and misdemeanors committed during his term of public office. In conformity with the unanimous opinion of the members of the commission, M. Raynal was not prosecuted.

Despite the definite character of the decree of 1895, the ministry of Public Works, in an official publication of the Statistique des Chemins de Fer Français, subdivision 9, bearing the title, Conditions Principales des Concessions, has continued to declare that the guaranty period of the Orléans and the Midi companies would expire December 31, 1914.

On March 16, in the Chamber, Maurice Sibille having referred to the claim of the government that the guaranty would expire December 31, 1914, the minister of Finance exclaimed: “There is no question about it.” Thus we see the ministry testifying to its exalted respect for the decision of the Council of State.

In the belief, however, that the question had been settled by the decree of 1895, but wishing to avoid any misunderstanding as to its credit, the Orléans company demanded from the minister authority to publish upon its bonds a notice indicating that the guaranty would expire only with the franchise in 1956. Upon the refusal of the minister, the case went back again to the Council of State, which, by a decree rendered July 26, 1912, decided, as in its previous decree of 1895, in favor of the company.

The position finally taken by the ministry was that litigation could not be considered as existing in fact until 1914, the year which, according to the government, would see the end of the guaranty.

5. In Italy, as we have already seen, 1 M. Giolitti was anxious to follow the example of Germany, France and Great Britain in establishing old-age pensions. But where should he find the resources? Nothing simpler. The insurance companies were earning dividends. The state must force them out and substitute itself for them.

While shrewd Socialists were disputing whether the various phases of expropriation should be brought about with or without indemnity, M. Giolitti decided the question: No indemnity for existing insurance companies. The Italian companies were forced to bow before the “mightier than thou” of the government.

But it was quite another matter in the case of the foreign insurance companies. The Italian government, however, remained deaf to the protests of the English, French and German governments.

This abuse of power, as a preliminary to the insurance law, inspires no great confidence in the government's respect for acquired rights. Moreover, why should this respect be any greater with regard to those who insure themselves with the state? The seizure by the French government of the funds of the “Invalides” 1 is notorious. Undoubtedly the major part of the returns from the monopoly will go into the coffers of the Italian government.

The Italian government refused all compensation to foreign companies, judging—and rightly—that their several governments would not go to war over so small a question and that, consequently, it need take no account of protests nor admit of any international jurisdiction. Thus its Socialist character is given the final touch and proof is given thereby that expropriation without indemnity may be not only national but international.

According to M. Jèze, professor of financial law in the University of Paris, if the affair had been brought before the tribunal at The Hague, Italy “could claim that the monopoly so constituted is an administrative, and not a fiscal monopoly, as an excuse for not having paid an indemnity.”

I respect M. Jèze's opinion. But from the point of view of the wrong done me by the state, what difference does it make what excuse the state offers me? According to the premise of M. Jèze, the state would have the right to confiscate anything from which it could draw a profit. The state could seize my meadow to set up target practice without paying me anything. Article 545 of the Civil Code says:“No one can be compelled to give up his property except in behalf of the public interest after a just compensation has been paid.” Business, the foundation of commerce, constitutes property as certainly as real estate. The state has no more right to confiscate the one than the other under any system which rests on respect for private property.

M. Jèze relies for a precedent on the prohibition of the use of white lead, which resulted from a serious agitation on the part of a number of competitors conducted by a member of the Labor Confederation. The whole matter proved nothing but the shameful cowardice of the French Parliament. 1 The prohibition of the use of white phosphorus in the manufacture of matches is based on a foolish prejudice contradicted by the facts. As for the prohibition of the sale of absinthe, it must be acknowledged that that one act on the part of the state does constitute a precedent in favor of the arguments of M. Jèze; but human progress in all the epochs of history condemns precedents of rapine and violence committed by governments against individuals. A return to the mediæval customs of confiscation can indicate nothing but retrogression.

M. Jèze is right in thinking that the limitation of hours and working days, as well as the minimum wage, are partial confiscation. But he is also presenting a formidable argument against all legislation called social, which is, in fact, only a step toward the suppression of individual property and the introduction of Socialism. Our codes are still founded on respect for personal property, however, and he acknowledges that such respect is one of the indispensable conditions of international law.

Therefore the Italian government has been guilty of an abuse of power in confiscating the business of life insurance companies; and, in the case of the foreign companies, at least, it owes them some reparation.

The argument that the Italian government did not expect to draw any profit from the insurance monopoly is inaccurate. If there had been no hope of reaping any profit the monopoly would never have been created.

Article 14 of the law provides that there shall be taken out of the net annual profits: (a) A sum of at least 1 per cent., which shall be devoted to the ordinary reserve; (b) a sum to be applied, in conformity with the statutes, to the guaranty reserve and any other contingent reserve; (c) a sum to be assigned to the administrative, technical, and soliciting staff of the Fund. This sum shall be less than 5 per cent. The remainder of the profits will be paid into the National Insurance reserve for invalid and aged workingmen. The profits of the National Fund are to be exempt from the income tax.

Thus the law indicates in every line that the monopoly is expected to be profitable. Not only does it dispose of these profits but it exempts them from taxation.

In the Bulletin de l'Institute International d'Agriculture, edited in part under the direction of the ministry of Agriculture, I find an article which proclaims the new law to the world in the following phrases:

“The ultimate purpose of the new law is to create another source of revenue for the government by the monopoly on life insurance.” (May, 1912, page 51.)

In the light of these excerpts, what becomes of the argument of M. Jèze, based on the disinterested aims of the life insurance monopoly?

The same article also contains the statement that the law is designed “especially to devote the profits arising from this monopoly” to the insurance fund for pensions.

M. Jèze has set down an error of fact in order to justify a legal theory based on nothing but a casuist's distinction.

6. The law of March 29, 1903, gives to the Italian local governments authority to buy up franchises whatever may be the time they have still to run. M. Giolitti, the author of the law, said: “This is not a question of expropriation, nor of lease, but a question of the repeal of a franchise in the public interest: and this difference permits us to be more liberal toward the municipality which makes use of its full right of appeal.”

What is this right of appeal, except the breaking of a contract by one of the parties to it? And because it suits the convenience of this party to break the contract, it is necessary “to be very liberal with it.” What are the guaranties of the other party?

Article 21 declares that the right of repeal exists after a third of the period of the full duration of the franchise may have elapsed; in any case, after 20 years, but never before. The article adds that municipalities must pay an equitable indemnity in which the following items shall be taken into account:

First: The value of the installation and its equipment. Second: Advances and subsidies paid on premiums by the municipality. Third: Loss of profits reduced to the present value (at the legal rate of interest) of annual sums equal to the average of the profits for the five years last past for as many years as the concession has still to run, the number of years, nevertheless, not to be more than twenty—the amount of these annual sums to be based on the average of the net revenues reported in the personal property tax declarations, omitting the years of maximum and minimum profits and deducting interest on capital.

At the first congress of Italian municipal undertakings a lawyer, David Ferrari, protested in a long report against the third paragraph of the article above quoted, which he declared opposed to the spirit of the law. The profit arises from the concession. When the concession ceases so does the profit. Therefore, the “basis of the accumulation of surplus profits by reason of the duration of the concession” ought to be struck out. Another lawyer, Mario Cattaneo, was astonished “that on the sole ground that one of the parties was a public body such an attack could be made on the doctrine of the inviolability of private property.” He demanded, therefore, that “respect be shown in the case of existing contracts to all the rules of private law,” and that the bill be applied to future contracts only. The congress adopted unanimously the conclusion of the Ferrari report, demanding that “the basis of the accumulation of surplus profit by reason of the duration of the franchise” be omitted.

During the second congress, held in Rome in June, 1911, Giovanni Montemartini, attached to the mayoralty of Rome, insisted upon the necessity of still further modifying the law of 1903.

7. Here we have a new example of government morale:

The president of Uruguay, M. Battle y Ordonez, a partisan of the extension of state activities, desired to establish a national bank. Then, in order to give his bank the credit indispensable to institutions of similar character, he proceeded to teach everybody what fools they would be to trust to contracts entered into with Uruguay by giving them an object lesson in the so-called “Rambla affair.”

Now a tyrant can do many things—anything he may choose, if you will. But a state, however tyrannical it may be in spirit, may come in contact with one insurmountable obstacle. Confidence cannot be forced.

The trouble which has arisen between the Rambla Company and the government of Uruguay has served to prove that the latter has either never heard of or never pondered the precept of M. Thiers: “The state must act like an honest man.”

In June, 1913, the Matin published an account of the Rambla affair, which I summarize:

In 1910 an Anglo-French association, known as the Rambla Company, had renewed a franchise and a contract dating from 1899. Its object was the acquisition of 145 hectares (358 acres) close to the sea for the construction of a public promenade (Rambla).

Of the 42,500,000 francs which the work was to require, 35,000,000 francs was guaranteed, capital and interest, by the state of Uruguay.

There appeared to be entire harmony among the parties to the affair; yet, at the last moment, the Uruguayan government refused to sign the contract unless an article (No. 3), containing an acknowledgment on the part of the company of the right of the state to introduce such modifications into the plans as it should deem fitting were inserted.

That the company was imprudent enough to consent to this clause has never been denied; but it had this excuse at least. It trusted the state to act like an honest man.

The utter lack of any basis for such confidence was almost immediately proved when the state issued a decree adding to the specifications the taking over by the company of 137 hectares (338 acres) facing the sea, 80 hectares (198 acres) of which it put up for sale. The minister of Public Works called this a slight modification.

The company has determined to resist the demands of the government of Uruguay, and has claimed the intervention of the English and French governments. These governments can, of course, enter remonstrances, but it would be a mistake to hope for much effect from them.

The party most interested in not violating its contract would seem to be Uruguay, for the principal guaranty that foreign creditors or parties to contracts with the state have is the self-interest of every government in not ruining its own credit.

8. The United States has always considered that a canal between the Atlantic and Pacific oceans was among the probabilities of the future. In 1835 the Senate ordered the President to open negotiations with the governments of other nations, and more especially with those of Central America and New Granada, with the object of giving efficient protection to the promoters of such a canal.

A similar resolution was adopted by the House of Representatives, in 1839, following a petition from the merchants of New York and Philadelphia. In 1849 ratifications of a treaty between the United States and the Republic of New Granada, subsequently and successively known as the United States of Colombia and the Republic of Colombia, were exchanged, of which the principal provision was the guaranty of the neutrality of the Panama Canal.

April 19, 1850, John M. Clayton, secretary of state, and Sir Henry Bulwer-Lytton, British minister to Washington, signed the treaty relative to the canal that an American company had undertaken to construct by making use of the St. John River of Nicaragua. This treaty specified that the United States should act as a trustee for the other nations, but that all the nations should have the same privileges in the use of the canal. In transmitting this treaty to the Senate President Polk emphasized the provision for equal rights, assured by Article 8 of the treaty.

This Article 8 was again expressly endorsed in the declaration preceding the Hay-Pauncefote treaty, concluded on November 18, 1901, when the American government took over the completion of the Panama Canal. Moreover, it had been previously confirmed by the declaration of President Cleveland, in his message of 1885:

“Any passage of communication between the two oceans ought to redound to the advantage of the entire world for the benefit of humanity. It ought to be removed from all risks of domination by a single power. It ought never to become an occasion for hostility or the prize of warring ambitions.”

Nowhere, in the various diplomatic acts of the United States can there be found any reserve in favor of special advantages for certain ships of certain nations. Nevertheless, in the House of Representatives and in the Senate of the United States, in the summer of 1912, various proposals were discussed looking to the exemption of American ships from the tolls which must be paid by the ships of other nations.

Finally the House of Representatives adopted a resolution declaring that no toll should be levied upon American ships engaged in the coasting trade. Later another clause was introduced into the bill providing “that no toll shall be levied upon American ships, which, while engaged in the transport of merchandise, can be requisitioned by the President, with the consent of the owners, in case of war or public need.” Senator Lodge, in the month of December, 1911, had suggested even more skilful tactics: American ships passing through the canal should indeed pay duties; thus the Hay-Pauncefote treaty would be respected to the letter. But the United States should reimburse these ships at the public expense. For a long time the protectionists had been demanding subsidies for the United States merchant marine. The occasion was, therefore, too good to be lost. The other nations could scarcely protest against a granting of subsidies to her merchant marine by the United States.

“All these schemes to escape the obligations of the treaty,” says the New York Journal of Commerce, “will be considered as acts of bad faith. The campaign for the violation of the Hay-Pauncefote treaty has been engineered by a lobbyist, who receives a salary of $25,000 a year, and unlimited credit with the members of Congress.”

In order to justify them appeal has been made to the Monroe Doctrine, but Monroe never dreamed that the doctrine bearing his name would ever be given such a broad construction.

The bill, as finally passed by the House of Representatives, extended that provision of the Interstate Commerce Act which forbids any railway company to have an interest in “any method of water transportation” which “is or can be a competitor.” However, the Senate justly decided that there was no analogy, and therefore substituted for that particular clause the following provision: “No ship possessed or controlled by a railway, or in which a railway may have any interest, will be admitted into the canal, if it is engaged in the United States coast trade.”

On the strength of the Hay-Pauncefote treaty Great Britain addressed a protest to the United States government. The Secretary of State, Mr. Knox, transmitted it to the senate:

“According to the document in question, the government of his Britannic Majesty is of opinion that the act exempting the American merchant marine from the payment of duty would constitute an infraction of the Treaty, and that, if the duties were only collected in order to be immediately refunded, the principle would be the same as though these duties were altogether abolished.

“The opinion is also expressed in this document that to collect duties in order to refund them immediately, although not contrary to the letter of the Treaty, would be in opposition to its spirit. It is admitted that there is nothing in the Hay-Pauncefote Treaty which prevents the United States from subsidizing its merchant marine, but it is claimed that a great difference exists between a general subsidy of the entire merchant marine and that of a part only, engaged in a special branch of the service, and a proportional subsidy reckoned according to the frequency of the passages through the canal of the ships so subsidized.

“Such a subsidy could not, in the opinion of the government of his Britannic Majesty, be in conformity with the obligations of the Treaty.

“In so far as the bill exempting the ships engaged in the coasting trade is concerned, the document declares that no objection would be made if navigation were organized in such fashion that only those ships actually devoted to the coasting trade reserved for American ships would benefit by this exemption. It appears, nevertheless, that the government of his Majesty considers as impossible the establishment of regulations tending to discriminate between coastwise and other American ships; consequently this exemption would be an infraction of the Treaty.”

The United States Senate voted, by a large majority, August 8, 1912, in favor of the clause exempting the ships of the United States engaged in the coasting trade from all tolls.

Moreover, the majority which voted for the violation of the Hay-Pauncefote Treaty declared that it would refuse to submit the question of treaty violation to arbitration. Its members declared that “this question is not a diplomatic one,” under the pretext that the exemption concerned only American ships engaged in the coasting trade; and that it was, therefore, a question of a domestic nature, of no interest to any foreign power, and, consequently, does not come under the jurisdiction of The Hague tribunal. It is easy to understand why the majority of the senators waived arbitration in this connection. The United States would have found itself alone on the one side and all the rest of the world on the other.

The whole situation has been summed up in the clearest possible manner by Senators Root of New York, Burton of Ohio, and McCumber of North Dakota, all of whom made the antithesis perfectly clear: After having accepted every advantage of the Hay-Pauncefote treaty, the United States refuses to accept any of its responsibilities.

But Senators Cummins, Works, and Chamberlain answered without the smallest attempt at a hypocritical softening of their argument:—“The Hay-Pauncefote treaty has done nothing for us, and, as it is in our way, there is nothing to do but to break it.”

The Evening Post, of New York, was entirely right in saying: “The vote of the Senate does a greater injury to the United States than that which would have resulted from a naval defeat in the waters of Colombia.” It is true that it is only a moral defeat; and unscrupulous Machiavellis will never be able to understand the harm that a defeat of this nature can bring to their country because, as a general rule, the consequences are not felt until a long time afterward.

This was the time for Mr. Taft to show himself a great statesman. But the dispatches immediately announced that, if the Senate and the House of Representatives were in accord, he would sign the bill while recognizing the right of foreign states to appeal to the Supreme Court of the United States.

It is now announced that Mr. Wilson will not follow the example of his predecessor. We must give him credit for that.

I have the utmost respect for the Supreme Court, 1 but this Supreme Court is composed of nine American judges, sitting in America, and, in this particular case, its judgment must necessarily be tinged, and very strongly, with an excusable bias. It forms a part of one of the parties to the issue, and it cannot be considered as a disinterested third party.

It is true, and this is the weakness of The Hague tribunal in regard to this question, that there is no disinterested third party, because all the nations have an interest opposed to that of the United States. And we must admit also that, from the point of view of domestic policy, the political bodies of the various states have not always shown themselves more scrupulous.

9. In a protest, addressed to a committee of the State Senate, Frank Bergen, general counsel for the Public Service Corporation of New Jersey, accuses the partisans of the municipalization of the street railways of New York “of being delighted with their (viz., the Public Service Corporation's) discomfiture” brought about by laws passed to obtain just such a result. Private enterprises having developed to an enormous proportion the state property of New Jersey, from 1870 to 1906, members of the State Senate felt that the moment had come to confiscate them. Toward this end Senator Hunderton proposed Amendment 64 to the Crimes Act, drawn up in such a manner “that innocence no longer constitutes a defense against a criminal accusation.” 1

Justice Brewer, of the Supreme Court of the United States, has declared:

“The police power has become the refuge of every serious attack against private property. Every unjustifiable charge from the point of view of eminent domain, or from the fiscal point of view, shelters itself behind the excuse of police power; but the police power cannot escape from the constitutional guaranties of private property.”

Hygiene, sanitation, “the conservation of the race,” etc., are only new forms of the cry of salus populi which has served to justify all the tyrannies of the ages.

10. The “model employer” furnishes some very bad examples. Those who speak in its name can preach economy to individuals; but they cannot hold it up as a model, because it is wasteful and runs into debt. Its partisans can preach economic morality to individuals; but they cannot illustrate their texts by appealing to state morality, because the state too often “acts like a dishonest man,” not only in foreign affairs, but even in domestic affairs.

[1]Labour Leader, May 12, 1911.

[2]See Yves Guyot, Les Chemins de Fer et la Grève.

[1]Les Grandes Régies d'État, by Paul Pic, Revue d'Économie Politique, July-August, 1912.

[1]See above, Book I, Chapter 23.

[1]A navy relief fund.

[1]Yves Guyot, La Céruse et la Méthode Expérimentale. Brochure, Paris, F. Alcan.

[1]See Les Principes de ’89 et le Socialisme. La Democratie Individualiste.

[1]Annals of the American Academy of Political and Social Science, May, 1908. Legislative Restriction in New York, page 134.