rength; and in this particular case it is a necessary source, not
merely of weakness, but of corruption. The less the state governments
have to do with private corporations whose income is greater than their
own, the better it will be for their morals, and the more effectively
are they likely to perform their own proper and legitimate functions.
Several generations may well elapse before the American public opinion
will learn this lesson; and even after it is well learned there will be
enormous and peculiar obstacles to be removed before they can turn their
instruction to good account. But in the end the American Federal
Constitution, like all the Federal Constitutions framed during the past
century, will have to dispense with the distinction between state and
inter-state commerce; and the national authority will prevail, not
because there is any peculiar virtue in the action of the central
government, but because there is a peculiar vice in asking the state
governments to regulate matters beyond their effective jurisdiction.

II

THE RECOGNITION OF INDUSTRIAL ORGANIZATION

The central government in its policy toward the large corporations must
adopt one of two courses. Either it must discriminate in their favor or
it must discriminate against them. The third alternative--that of being
what is called "impartial"--has no real existence; and it is essential
that the illusory nature of a policy of impartiality should in the
beginning be clearly understood.

A policy of impartiality is supposed to consist in recognizing the
existence of the huge industrial and railroad organizations, while at
the same time forbidding them the enjoyment of any of those little
devices whereby they have obtained an unfair advantage over competitors.
It would consist, that is, of a policy of recognition tempered by
regulation; and a policy of this kind is the one favored by the majority
of conservative and fair-minded reformers. Such a policy has
unquestionably a great deal to recommend it as a transitional means of
dealing with the problem of corporate aggrandizement, but let there be
no mistake: it is not really a policy of strict neutrality between the
small and the large industrial agent. Any recognition of the large
corporations, any successful attempt to give them a legal standing as
authentic as their economic efficiency, amounts substantially to a
discrimination in their favor.

The whole official programme of regulation does not