¹ The economic criticisms of the use of interstate compacts apply a fortiori to efforts on part of individual states to solve problems for which compacts are advocated. For a defense of uniform action by states, see Graves, W. B., Uniform State Action (Chapel Hill, 1934)Google Scholar.

² Critics have urged: (1) that we have proof of the limited applicability of interstate compacts in the fact that nearly all of the compacts approved by Congress (24 in 1789–1918, 13 in 1918–31) have dealt with boundary disputes, engineering projects, and river and harbor traffic between adjacent states; (2) that the formation of significant compacts either has proved impossible or has been attended by years of delay; (3) that national administration and control is much more effective than regional administration and control.

³ While finished goods and factors of production should always be priced, as the mathematical economists have shown, in accordance with their relative scarcity, allocations of income per se need not be based solely upon productivity. The objectives of collectivism are identical with those of competitivism: (a) given a certain income distribution, to maximize the advantages securable from the available supply of the factors of production; (b) to establish such a system for the selection of leaders and such a system of communal controls as will at all times make available the largest technologically possible supply of productive resources.

⁴ A compact designed to establish control of certain prices, or of working conditions in certain industries, involves control of certain aspects of production and/or distribution.

⁵ In the real world, certain compacts may affect other states in the United States through the medium of international economic relations.

⁶ We shall argue below that any economic control which reduces the total economic income of certain states for certain periods of time must be justified on one of two grounds: (a) that the achievement of alleged national objectives is being furthered; (b) that fascism or communism is being checked thereby. Ground (b) is a special case under (a). The restriction of economic control to control by compact, if adopted as a national policy under (a), would necessarily constitute a rejection, on ethical grounds, of the objections advanced in this paper. See, however, below.

⁷ See University of Pennsylvania Law Rev., Vol. 30, pp. 5–16 (November, 1931)Google Scholar; Annals of Amer. Acad., Vol. 160, pp. 82–83 (January, 1932)Google Scholar.

⁸ The same economic criticism may be directed against the A.A.A. program. However, this program may be defended on the ground that its objective was national, not regional, in scope.

⁹ See Ohlin, B., Interregional and International Trade (Cambridge, 1933)Google Scholar, and Taussig, F. W., International Trade (New York, 1927)Google Scholar, for treatment of the problem of securing the most economical geographical distribution of industry.

¹⁰ If, as a result of the establishment of a compact, production within the compacting states were carried on more in accord with the laws of comparative and absolute advantage, the non-compacting states would tend automatically to gain. For even though the price of certain commodities sold by the compacting states would rise, others would fall as a result of the shift of factors of production to other types of production. Hence, assuming that the non-compacting states purchased from the compacting states more than one type of goods, the non-compacting states would, on the balance, get a larger volume of goods in exchange for things shipped to the compacting states. The problem involved must be analyzed in terms of international trade theory as of a given moment of time, or, postulating increasing returns as Marshall does, over a designated period of time. See Harrod, R. F., International Economics (New York, 1933), Chaps. 2–3Google Scholar.

¹¹ See note 3 above.

¹² By “beneficial results” I mean results deemed beneficial by the compacting states, and hence sought by them through control by compact.

¹³ We assume, of course, that the achievement of such an objective is economically possible.

¹⁴ The analysis in the above paragraph has run in terms of migration and counter-migration of factors. If there were no such factor migration, and if, as a consequence, the relative proportions in which factors are supplied in certain regions were altered, the effect of this alteration would be transmitted to other states through the medium of interstate commerce.

¹⁵ “Whatever subjects of this power are in their nature national, or admit only of one uniform system, or plan of regulation, may justly be said to be of such a nature as to require exclusive legislation by Congress.” Cooley v. Board of Wardens (1851), 12 Howard 299.

¹⁶ E. S. Corwin has observed that “production for the interstate market … knows no state lines.” In view of the above analysis, not only production for the interstate market, but a large proportion of the production intended for the intrastate market, has effects which transcend state lines or the boundaries of the area within which production originally takes place. See Corwin, E. S., in Cornell Law Quarterly, Vol. 23 (1932–1933), p. 502Google Scholar.

¹⁷ The distinction here made is one of degree, not of kind.

¹⁸ See Commons', John R. interesting analysis of this problem in the Amer. Econ. Rev., Vol. 25 (June, 1935), pp. 212–223Google Scholar; and cf. his Institutional Economics (New York, 1934)Google Scholar.

¹⁹ Clues as to the possibility and probability of altering the status quo to achieve new objectives lie in the prevailing culture complex, in the matrix of history. The means of alteration lie in the comparative strength and capacity of pressure groups arising out of cultural situations. The function of social science consists in the interpretation of these trends, in the development of such a system of selecting economic and political leaders and methods as will most effectively enable the achievement of the ethical objectives which are implicit in the contemporary cultural development. See article by the writer in the Internat. Jour. of Ethics, Vol. 44 (April, 1934)Google Scholar. See also further articles in same journal by Frank Knight (Vol. 45, 1932, pp. 200–300) and C. E. Ayres (Vol. 44, pp. 452–454; and Vol. 45, pp. 170–199, 356–358).

²⁰ Max Ascoli suggests, however, that too great a flexibility of the legal and constitutional structure is dangerous. “The fight for a greater and more indeterminate legal freedom does not allow the crystallization of traditions and of prestige around new constitutions. What we call constitutional democracy is only a very thin crust offering the basis for the development of our legal freedoms and protecting us from the underlying primeval world of sheer violence. Fighting for a freer legality, we run the danger of falling into a pre-legal world. … What is a constitution If not an attempt of human ingenuity to build up an artificial mechanical dynasty? This shell of laws was molded upon the personal power of the kings, as an instrument of legal engineering for accomplishing part of their functions and at the same time for limiting them. This shell can be filled with a constitutional king or with a president; it does not matter very much. But what does matter is that if the shell is broken, a form of personal power is bound to come back.” See Social Research, Vol. 1 (May, 1934), pp. 183–184Google Scholar.

²¹ Frankfurter and Landis imply that the use of compacts will not make for an increase in the inflexibility of the nation's legal and regulative structure. “Congress does not surrender any of its powers; it merely finds no occasion for its present exercise of them. There is, therefore, no ‘delegation’ of its power in any legally significant use of the term. But Congress does not foreclose the future. If and when circumstances which now call for solution through compact change, Congress is wholly free to assume control.” See Yale Law Rev., Vol. 34 (May, 1925), pp. 726–727Google Scholar.

²² We may illustrate the need for truly representative control as against incomplete control through reference to a recent proposal of Dr. T. J. Woofter to the effect that the federal government subsidize the schools in parts of the South where families are large and the capacity to provide either education or economic support is meagre. Dr. Woofter justifies this proposal on the ground that the children educated at federal expense, i.e., at the expense of other states, migrate to other states and employ their acquired capacities there. While this argument seems valid as far as it goes, it ought also to be stipulated that the population be moved out of these poverty-stricken regions, that population growth in these regions be controlled, and that the school curricula be fixed by the federal government to meet the real potential needs of the students and of the other states to which such students will migrate. In brief, no grant of funds is defensible unless the providers of such funds control the effects of their expenditure. Spending by Congress does not, however, per se assure a representative, responsible, and economic use of funds and resources. For, as Corwin suggests, the spending power, which has eluded all constitutional snares and which has been employed and is being employed to attain indirectly the very objectives that Congress has been and is constitutionally prohibited from achieving directly, is “constantly exposed when left to itself to be overridden by corrupt amalgamation of thievish interests.” See Corwin, E. S., The Twilight of The Supreme Court (New Haven, 1934), pp. 178–179Google Scholar.