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such control only those trusts which are engaged in interstate commerce ; but the only ones which need national control are these. The only local monopolies which need regulation in the interest of the public are those which hold public franchises, and these may easily be controlled by a rational system of franchise management. If others should arise, the system of national control could be adapted to state needs, just as many of the states have already adopted the essential features of bank super- vision from the national banking laws. All of the great trusts are engaged in interstate commerce, and most of them would find it impossible to break up into numerous state concerns for the supply of local demand. If they did, they would be brought under the regulation of competition again, or would be controlled by the state laws modeled after the national system.
To enact such legislation the "interstate" and "general wel- fare " clauses of the constitution would not have to be stretched any more than they already have been. The decision against the last income-taxation law would probably have no bearing upon this question. If careful consideration should reveal con- stitutional difficulties in the way — which I do not now see — it would be easier to carry a constitutional amendment granting Congress power to inaugurate such a policy than it is to beat around as we have been doing and subject business to all kinds of uncertainties, in the hope that we may some time find a way to deal with the trusts. A tax upon the plants of the trusts would increase the cost of production ; but a tax upon surplus earnings, preferably a graduated tax, would secure for the public every kind of control of the trusts that is in any way desirable, and at the same time would leave a wide margin for freedom of individual initiative and insure progressive improvements in the interest of economical production. The honest investor, mean- while, will be protected from dishonest manipulators by the supervision by government inspectors, which would be a necessary part of the plan. The small investors, among whom many of the producers themselves should be found, will receive moderate profits ; managerial talent can still be properly compensated ;
