limits to state activity, for states differ greatly in their ability to carry on enterprises and regulate social relations. If we hold that the state should undertake everything which it can do better than private individuals; or if we put it negatively and say that individuals should be allowed to carry on all enterprises which they can perform better than the state, we are still far from a solution of the problem, for each state must through experimentation ascertain which enterprises it can carry on profitably and which it may most advantageously leave to individual initiative. Two conditions should however be taken into account whenever the undertaking of a new enterprise by the state is contemplated: first, the inclination of private individuals to carry on the enterprise in the interests of the people as a whole; and, secondly, the ability of the state to carry on the enterprise honestly and efficiently. If private enterprise serves the public interest adequately, there is little need for the state to appropriate the industry. And, if a state is wasteful and inefficient in its administration, caution should be shown in extending its activities, even though the people are not well served by private enterprise. But if the state is generally efficient, and private enterprise is arrogant and grasping, the extension of state activity may be hastened.

Individuals, of course, carry on economic enterprises for their own profit, and private gain may or may not coincide with the public welfare. Usually maximum profits will conflict with the interests of society in proportion to the degree of dependence of individuals, either upon individual producers, or upon the products themselves. If dependence is considerable producers can enjoy large profits with little regard for the interests of the consumers. If dependence is slight producers must cater to the needs of consumers in order to make sales. An example of dependence on the product is found in the case of a food famine where the urgent needs of the population afford the opportunity for large profits which are at variance with the interests of society, for high prices then coincide with economic depression and low incomes. Ordinary monopolies afford examples of dependence upon individual producers. When the monopoly covers a necessity, the dependence is twofold, being both upon an individual and upon a product; and the consumer is helpless. If the article monopolized is a luxury, or if it has an available substitute, the dependence of the consumer is less extreme and the producer is usually more solicitous of his welfare. A monopoly in diamonds is less serious socially than a corner in wheat. On the other hand, if commodities are plentiful and marketed under competitive conditions, profits will be small because purchasers are practically independent of any particular dealer. Under modern conditions of production dependence tends to increase as population grows and division of labor is perfected; and, moreover, as specialization progresses, combinations and monopolies are more easily formed. Hence it seems probable that individual enterprise is destined to become increasingly at variance with social welfare; and the need for state regulation, or state ownership, will therefore increase as social life becomes more intense.

Although private industry may serve the public interest less effectively as population grows denser, it is not necessarily true, on the other hand, that public control becomes increasingly efficient.

Successful operation of industry by the state may encounter two sets of difficulties: first, the personal problem of attracting men of probity and ability into the public service; and, second, the administrative problem of conducting large and complicated industries efficiently. Evidently the means of overcoming these obstacles will vary greatly under different circumstances, and no simple set of principles can be given for their solution. It seems certain however that under present conditions the moral factor, the sense of duty, cannot be relied upon to attract a sufficient number of first class men into the public service; and adequate personal reward must be offered equivalent to that which may be obtained in private enterprise. Perhaps greater equalization of the returns between public service and private industry may be brought about by limiting gradually the range of private profits; but the direct reward for efficient public service must also be increased. The rewards need not necessarily be wholly material, but where incomes are small they must be supplemented by honors and social position.

The difficulty of administering large industries satisfactorily will continue, and even increase, as public needs become more varied and exacting. While the administration of some kinds of industries may become simplified, as social service rather than maximum profit comes to be the end in view, simplification for all cannot be expected. It must not be forgotten that private industry is often more efficient than public, because its profits vary directly with efficiency of administration. In the long run the solution of the administrative problem depends upon the attraction, by one means or another, of capable citizens into the service of the state. Public service should in time be made an honorable profession requiring careful and specialized training. This sort of training is coming to be more and more essential if the modern state is to be as competent as public welfare demands.

Aside from the question of the ability of a state to carry on an industry, a factor of importance is the attitude of the public towards state ownership. If the operation of an industry by the state is to be effective, there must be a general sentiment in favor of such operation and cordial coöperation on the part of all citizens to ensure its success. If private individuals regard state activity as an encroachment on their rights, rather than as a service, its success will be doubtful. The attitude of the public is determined partly by immediate needs and partly by past training and experience. A people may accustom themselves to supervision and authority, so that submission becomes a natural trait. Then extension of state activity encounters little resistance. If, however, a people are accustomed to a régime of individualism, so that independence and initiative have become dominant traits, they will oppose the extension of state activities; and success will be doubtful. On the whole the extent, as well as the success, of state activity will depend both upon the efficiency of state organization and upon the degree of socialization of the people; and both may be expected to grow with increasing density of population and greater intensity of social life.

The Survival of States: External Dangers. Turning now to the problems of political organization, the first to be considered concerns conditions which favor the survival and development of states; and the second concerns the factors and forces which stimulate the evolution of states. Dangers from within and without threaten the existence of states, and survival and progress depend upon overcoming perils from both sources. External dangers, being more evident, are therefore more likely to be recognized and resisted. The chief menace of this sort is that of conquest or absorption by another state.

One of the greatest guarantees of self-preservation is size. The conditions of evolution have favored larger and larger political units. States which originally possessed an advantage have by conquest or by peaceful federation grown into large and powerful organizations. This expansion is likely to continue at least until it finds a natural limit in physical boundaries. Small states find it impossible to resist this process of integration; and, unless other forces compensate for their lack of size, they are inevitably absorbed by larger groups.

Next to size, and sometimes of even greater importance, is efficiency of organization. The advantage of size lies not so much in expanse of territory as in the possession of numbers and resources; but, if these factors are not developed and made available through intelligent organization, a large state may be helpless before a much smaller one, -as is the case with

a India, and with China, at the present time. Two forms of defensive organization may be distinguished: one in which the units are under compulsory training for their particular places in the social system, and the whole state is a permanent military organization; and the other in which the units, though not continuously organized on a military basis, are so trained that they may be speedily transformed into a machine for defence. The first form is advantageous if immediate action is likely to be required, for it takes time to mobilize the best trained social groups. But permanent military organization is usually most essential where the average intelligence of the population is low, for the unintelligent are not easily adaptable to new conditions, and they must be constantly trained for their positions if they are to be of service in time of need. The second form of organization is superior wherever it can be utilized, since it permits a freer development along other than military lines; and superior scientific or economic attainments may prove to be the determining factor in the struggle of states for survival. A high degree of intelligence in the general population is therefore one of the greatest assets of the state, for it permits the maximum flexibility of organization, thus making possible the most effective utilization of the individual units.

Location, or the character of the physical environment, is another important factor in preserving the independence of states. Natural barriers retard the expansion of states, though they do not prevent it absolutely. A state bounded by the mountains or by the sea has an advantage in defence, and at the same time its barriers check the spread of its own population. States thus favorably situated, therefore, are likely to possess a more concentrated and homogeneous people; and this in itself is a source of strength. Switzerland is an excellent example of a state which has been able to retain its independence through superior location even though its barriers are not so situated as to make the population racially homogeneous. Finally, if a natural barrier does protect a state for a long time, fear of attack gradually subsides, social sentiments become more friendly, and the expense of perpetual measures of defence is avoided. The principle involved is well illustrated in the case of France. A natural barrier separates France and Spain, but no such barrier exists between France and Germany.

Finally, a state may retain its independence through no merit of its own, but merely because of the mutual jealouses of other states. In order that no rival state may gain possession of its valuable territory, its independence may be guaranteed by larger states. A small state may of course avoid annexation by a definite alliance or understanding with a stronger neighbor, but in so doing it is likely to find its sovereignty somewhat impaired.

Although the preservation of a state's existence is evidently a prerequisite to its well-being, it does not necessarily ensure development. Independent existence and progress are by no means identical. A state may maintain independence at such an expenditure of energy that it has no reserve force left with which to develop. The normal evolution of a political unit may be accelerated when the difficulties of defence decrease.