PENDING PROBLEMS IN PUBLIC FINANCE 193 



income, there has been a far larger growth in local expenditures and 

 incomes. And whereas formerly local taxation could be treated as 

 a relatively unimportant appendage to national taxation, it now 

 claims a distinct and separate place of its own. 



Side by side, however, with this localization of wealth there has 

 been a counter-movement in the direction of the nationalization of 

 wealth, in the sense of nationalization in the opportunities of 

 securing wealth. The economic activities of to-day have far out- 

 grown the swaddling-clothes of former times. Business enterprise 

 not only covers the whole country, but encircles the globe. Citizen- 

 ship in the various commonwealths of a federal state, like Germany, 

 Australia, Switzerland, or America, has become in great measure 

 meaningless because its economic basis has been so effectively 

 weakened. In all federal states, therefore, the problem of taxation 

 is complicated by the difficulty of correctly apportioning the burdens 

 among the constituent commonwealths. In every country, federal 

 or not, a similar difficulty exists as between the local government and 

 the state government. Problems of double taxation resting upon inter- 

 state and interlocal complications arise to confront us at every turn. 



The fifth and final point is that of modern social solidarity. In 

 former times the close relation subsisting between the various 

 branches of productive enterprise in the community was beclouded 

 by the predominant social and political influence secured by some 

 one factor. In an economy based upon slavery the only importance 

 of a slave is that of a working-tool; in an economy based upon the 

 predominance of the large landowner, the function of the moneyed 

 and commercial interests is apt to be overlooked. In the early stages 

 of the factory system, where the mass of the laborers are regarded 

 from the point of view of production rather than from that of con- 

 sumption, it is natural that the socialistic conception of class conflict 

 should emerge. A more careful study, however, of modern indus- 

 trial society has shown that while indeed there is no such thing as 

 a natural harmony of interest, there is a distinct and inevitable influ- 

 ence, sometimes for good, sometimes for evil, exerted by each factor 

 of production upon the other, and by each social class upon its 

 neighbor. Laborers and capitalists, landowners and traders, factory 

 owners and financiers, are pursuing their own interests, and in so 

 doing they necessarily react upon the interests of the others. 



The distinguishing mark of modern economic life in this respect 

 is the realization of these close economic interrelations. The 

 machinery of production has become so subtle and so complex that 

 the disarrangement of any one part throws the whole out of gear.' 

 The overburdening of any one class may have the most unlooked- 

 for consequences upon another. Taxation, as a weapon of retalia- 

 tion, often proves to be a boomerang. An undue pressure on a 



