which the adoption of conflicting principles in different cases will inevitably lead. Certain expedients, however, are clearly better than others. "Makeshift" arrangements, as in the case of the Federal Board for Vocational Education, will generally prove unsatisfactory. More promising are the results to be expected from the creation of a budget bureau and the establishment of a sound practice with respect to the preparation of the departmental estimates. A permanent budget bureau, equipped with an adequate information service, could do much to prevent the duplication of activities by different agencies and to coördinate the activities of different agencies employing similar processes, or rendering the same kind of service, or serving the same class of people. The friction which is inevitable in any administrative machine assembled from logically incompatible parts would be reduced to a minimum. The establishment of a centralized purchasing agency or bureau of supplies in place of the present General Supply Committee, which merely adopts standard specifications and arranges uniform prices for supplies procured by the agencies in Washington, would also improve present conditions.

Such improvements, however, would not remove the need for some redistribution of existing agencies among the departments. Several more or less comprehensive plans of redistribution have been worked out. The best of them is a Proposal for Government Reorganization recently published by the National Budget Committee.

ADVANTAGES OF REDISTRIBUTION

In general the economies resulting from the redistribution of administrative agencies among the executive departments are likely to be exaggerated. A glance at the published state

ments of appropriations suggests that the possible savings to be obtained by a more economical arrangement of the administrative agencies outside the military and naval establishments can not exceed a fraction of one per cent of the total annual expenditures. Greater savings can not be obtained except by a reduction in the service rendered. Public opinion probably would not sanction any further curtailment of the services rendered to the people by the civil branches of the national administration. Greater efficiency rather than further drastic economies is what is needed. A well-devised plan for the redistribution of certain bureaus would undoubtedly do much to secure an increase of efficiency. The only field for any substantial saving is in the military and naval establishments. The expenditures upon the national defense can be greatly reduced by a policy of retrenchment in the army and the navy. But that is not a problem in administration. It is a political problem.

Probably, too, the greatest advantages to be expected from any redistribution of administrative agencies will be political rather than administrative. Consider, for example, the case for a new department of social welfare, or, as it might better be termed, of education and social welfare. Such a new department would result from the bringing together under a single cabinet secretary of the Bureau of Education and other existing educational agencies, the Public Health Service, the Bureau of War Risk Insurance, the Pension Office, the United States Employes Compensation Commission, the Children's Bureau, the Office of Indian Affairs, etc. Its organization would give these scattered agencies a common head who would have no other responsibility than that of promoting their interests. It would

greatly improve their position with respect to the dominating influences in the government, the President and the Congress. It would bring them larger appropriations, enable them to expand their services, and establish them more securely in the good opinion of the people of the country.

THE INDEPENDENT DEPARTMENTS

More important than the redistribution of administrative agencies within the departments is the reorganization of the independent executive establishments. In recent years there has been a pronounced tendency toward the multiplication of administrative agencies outside the organized executive departments. At the close of the Roosevelt administration there were only three such agencies of note, the Court of Claims, created in 1855, the Civil Service Commission, created in 1883, and the Interstate Commerce Commission, created in 1887. The Taft administration created several similar agencies, notably the Tariff Commission, the Court of Customs Appeals, the Commerce Court, and the Commission on Economy and Efficiency. The succeeding administration pursued a similar policy. During President Wilson's first term the Federal Reserve Board, the Federal Trade Commission, the United States Shipping Board, the Employes Compensation Commission, and the Federal Board for Vocational Education were the most noteworthy additions to the list. The Federal Farm Loan Board, nominally a part of the Treasury Department, is operated as independently as the Federal Reserve Board. The Tariff Commission, which had been allowed to lapse, was recreated. Only the Commerce Court was destroyed. During the war the creation of independent executive agencies was the outstanding feature of the adminis

trative policy of the government. Several of these independent war agencies have survived, notably the Alien Property Custodian and the War Finance Corporation.

The late Congress, under Republican leadership, continued this policy. The Interstate Commerce Commission and the Shipping Board were enlarged, and a new railroad Labor Board was substituted for the United States Mediation and Conciliation Commission, originally created in 1913. Furthermore, the Federal Power Commission, nominally an independent executive agency, created by the Water Power Act of 1920, is in substance a sub-committee of the Cabinet, consisting of the Secretaries of War, the Interior, and Agriculture. The principal precedents for this type of agency are the Council of National Defense, created in 1916, consisting of six members of the Cabinet, and the Insecticide and Fungicide Board, created in 1910, consisting of three members of the Cabinet. In each case a subordinate executive officer is in active charge of the work of the agency.

The organization of so many independent executive establishments tends to produce a condition of administrative disintegration like that which existed generally in the states a few years ago. New York, for example, possessed over one hundred and fifty separate administrative agencies, and several states possessed over a hundred. The Federal Government has not yet approached such a condition of administrative disintegration as existed in these states, but it is launched upon a course which leads in that direction. In the larger states the process of administrative reorganization in recent years has brought these independent agencies together, more or less effectively, within a comparatively few executive departments. Administra

tive reorganization in the Federal Government, however, has been generally understood hitherto as the redistribution of existing bureaus among the departments, and has not comprehended the inclusion of independent establishments within the departmental scheme of organization.

President Taft was deeply interested in the principles of governmental administration, and displayed a more profound insight than many administrative reformers. His policy seems to have been founded upon a distinction between three types of administrative action, that which is quasi-legislative in character, that which is purely executive, and that which is quasi-judicial. The first type was represented by the Tariff Commission, whose task it was to ascertain the facts which should be the basis of wise legislative action. The second type was represented by the Commission on Economy and Efficiency, whose task it was to improve the methods of administrative action. As is well known, President Taft was working towards the creation of permanent agencies by means of which there could be effective central control of purely executive action. The third type was represented by the Court of Customs Appeals and the Commerce Court, whose work, as the names indicate, was intended to be assimilated to that of the ordinary courts of justice.

In constituting an agency of the first type, therefore, the Taft plan contemplated the deliberate representation of the major political parties. The Tariff Commission was actually so organized as to give the dominant party a majority. Agencies of the second type were not designed to be either bi-partisan or non-partisan. They were to be agents of the President, subject to his direction and control. Agencies of the third type were intended to be non

partisan, hence their members were to receive the rank and tenure of judges. Unfortunately President Taft's most ambitious venture in the field of administrative reorganization, the Commerce Court, failed to fulfil his expectations, and, partly in consequence of an unwise appointment, fell a victim to adverse political conditions.

President Wilson showed by his conduct of the war, especially by his handling of the administrative problems growing out of the control of food, fuel, and the war industries, an appreciation of sound principles of administration, but he did not seem disposed to act upon those principles during his first term. He sanctioned the destruction of the Commerce Court, and the creation of powerful administrative agencies, such as the Federal Reserve Board, Federal Trade Commission, and Shipping Board, without regard to the principles to which subsequently he scrupulously adhered in the organization of the Food and Fuel Administrations, and the War Industries Board, the most powerful (in fact, if not in law) of the special war agencies. Perhaps the explanation may be found in the fact that he enjoyed practically a free hand in the organization of those war agencies, despite the strong fight made in Congress in behalf of the commission plan for food and fuel control, while he was constrained to accommodate himself to certain democratic preconceptions in matters of administration when pushing through Congress the Federal Reserve, Federal Trade, and Shipping Acts.

Be that as it may, the agencies charged with the administration of those great statutes are endowed with a combination of powers without a parallel in the history of the national administration with the exception of the Interstate Commerce Commission during the period 1906-1910 and since

1913. They may investigate, ascertain facts, determine policies, institute prosecutions, try the accused, impose judgment, and execute their decisions.

Moreover, they have been deliberately organized upon partisan lines. The principle upon which they have been constituted is that adopted by the Taft administration for quasilegislative agencies, such as the Tariff Commission, which deals with matters of public policy wherein partisanship finds its proper place. The principle appropriate for an agency exercising quasi-judicial functions, exemplified in the ill-starred Commerce Court, has

been lost from view. These boards exercise quasi-legislative powers, to be sure, most conspicuously in the case of the Federal Trade Commission with its campaign for regulation of the packing industry. But their quasi-judicial functions are too important to be so lightly disregarded. This is not the reign of law, as that term was formerly understood. It is the reign of men, exercising what comes dangerously near to arbitrary powers over their fellow men in some of their most vital activities.

Charles E. Hughes, speaking on this subject last year at the centennial celebration of the Harvard Law School Association, was reported to have said:

Disregarding the lessons of history, there has been a disposition to revert to the methods of tyranny in order to meet the problems of democracy. Intent on some immediate exigency, and with slight consideration of larger issues, we create autocratic power by giving administrative officials who can threaten indictment the opportunities of criminal statutes without any appropriate definition of crime.

Ignoring the distinctions prized by the Fathers, and excusing the violation of tradition by easily made phrases, we unite legislative, executive, and judicial powers in an administrative agency, with large spheres of uncontrolled discretion, which

may investigate and lay complaint, and then try and determine facts upon which the complaint rests, their findings of fact, where there is any dispute in the evidence, being made for many purposes conclusive.

Useful as are these instrumentalities of administration, they represent to a striking degree a prevalent desire to do without law. There is thus recourse to the most primitive method in dealing with the most difficult problems of the twentieth century.

In reorganizing the Interstate Commerce Commission and the Shipping Board by the Transportation and Merchant Marine Acts of 1920, the late Congress showed no appreciation of the dangers to which the present Secretary of State has so forcefully directed our attention. By the new constitution of members are all to be partisans, four the Shipping Board, for example, its from one and three from the other of the two major parties. Their terms are fairly long and expire in series, but the various shipping interests of the they must be so chosen as to represent country. This is proper in the case of a board with quasi-legislative powers, but wholly improper in that of one with important quasi-judicial powers. The Federal Trade Commission has

always functioned as a quasi-legislative rather than a quasi-judicial body, though its powers of the latter description are of high importance. The Interstate Commerce Commission is apparently destined to function in a similar manner. The present administration has a better tradition, so far as these matters are concerned, bequeathed to it by the Taft administration. Its members can not plead ignorance of the principles of sound administration. It is to be hoped that when it deals with the task of administrative reorganization in the Federal Government, it will not fail to act upon the wisdom which it possesses.

Certain of the independent establishments should be incorporated into existing or new departments. Others must remain wholly or in part outside the framework of departmental organization, but, where necessary, should be resolved into their several elements. Quasi-legislative functions should be assigned to agencies organized for the performance of such functions. Quasijudicial functions should be assigned to agencies organized for the performance of such functions. The Interstate Commerce Commission, for example, and the Federal Trade Commission, perform certain duties which might not improperly be transferred to the Department of Justice. Others may be vested in any suitable partisan or administrative agency. The purely executive duties of the Interstate Commerce Commission alone would furnish ample employment for a large bureau in the Department of Commerce. Still other duties ought to be transferred to agencies whose non

partisanship can never fail to be above suspicion.

These changes in administrative organization would probably save the Federal Government little, if any, money. On the other hand, they would certainly improve the efficiency of the services concerned. But most important of all, they would greatly strengthen the government in the confidence of the people. For the moment, public opinion seems disposed to make fewer demands upon the government for the increase of administrative activities than for a long time past. The opportunity should be seized to introduce sound methods of administration, to strengthen the administrative machinery, and to accumulate a stock of public confidence in the administrative capacity of the government which will stand it in good stead when opinion presently demands the assumption of new responsibilities towards the public, and heavier burdens again fall upon our administrative system.

HE division of income into two

Tbroad categories denominated re

spectively as "earned" and "unearned" finds little or no sanction in standard texts on economics, but nevertheless, this classification is treated by many semi-scientific publicists as an accepted form of differentiation, and a considerable number of economists show a tendency either to use it in their writings or tacitly to admit its validity. Since, then, the usage of this terminology is becoming increasingly common, it seems worth while to inquire whether or not there exists a type of income which may justly be designated as

"unearned" and which, at the same time, possesses characteristics that make it desirable or necessary to place it in a separate category and perhaps to measure its importance or volume.

If there really is such a thing as "unearned "income, where may it be found? The Single Taxer will assure us that it consists wholly, or at least principally, of rent of land or of profits made through speculation in land. The Marxian will insist that it is made up of interest and the unreasonable gains of "profiteers." The view, however, which seems to find most general acceptance is that all income arising