on the monthly installment plan and the loss of their jobs means the loss of their equities in these homes, as well as the loss of the money already paid.

The present excellent service could not possibly be maintained, as smaller units could not justify the employment of trained experts in the several departments necessary to the rendering of good service.

The smaller units could not afford to prospect for natural-gas reserves very necessary for the protection of the consumer, neither could they finance the construction of pipe lines to the new fields.

It has taken years of hard work, and millions of dollars to build up the present system to its present efficiency and ability to render satisfactory service, at a reasonable cost, all of which have been and are a very definite and substantial addition to the comfort and wealth of the territory in which it is operating.

It is an indisputable and incontrovertible fact that prior to the advent of the holding company, natural-gas service was irregular and undependable. Lack of supply reserves and facilities caused discomfort and inconvenience to consumers. While service complaints formerly were very frequent, under the consolidated system such complaints are negligible.

This measure substitutes nothing for the holding company plan nor anything demanded or desired by the consumer or the investor, but on the other hand, it seriously impairs the present excellent service now being given, substantially reduces employment in the operating, maintenance, and development personnel, as well as in the manufacturing and transportation of equipment, and destroys the investment of the security holder who invested his money in good faith in a legitimate and necessary industry.

Respectfully submitted.

ARKANSAS NATURAL GAS CORPORATION, By J. R. MUNCE, Vice President.

STATE RIGHTS-BRIEF SUBMITTED BY THE OHIO CHAMBER OF COMMERCE IN SUPPORT OF THE PRESENTATION MADE BY GEORGE B. CHANDLER, ITS SECRETARY

Madison's letter, No. XLV, treated wholly of the States and their rights, as well as the preservation of them, using very specious argument in favor of the adoption of the Constitution, stating in substance that the States remain as they were and only necessary powers to formulate and preserve a union were delegated to the Federal Government.

He said in part, and only excerpts illustrating the trend of his thought are here set forth:

"The State governments may be regarded as constituents and essential parts of the Federal Government; whilst the latter is nowise essential to operation or organization of the former.

* * *

"The powers delegated by the proposed Constitution to the Federal Government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects, in the ordinary course of affairs, concerning the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.

"The operations of the Federal Government will be most extensive in times of war and danger; those of the State governments, in times of peace and security.

* * *

"The regulation of commerce, it is true, is a new power; but that seems to be an addition which few oppose, and from which no apprehensions are entertained." In his next letter, no. XLVI, he further argues with the adversaries of the Constitution who were persistent in acclaiming that the States would be absorbed by the Federal Government, saying in part:

"The Federal and State Governments are in fact but different agents and trustees of the people, constituted with different powers, and designed for different purposes. * * *

"But ambitious encroachments of the Federal Government, on the authority of the State governments, would not excite the opposition of a single State, or of a few States only. They would be signals of general alarm. Every government would espouse the common cause. A correspondence would be opened. Plans of resistance would be concerted. One spirit would animate and conduct

the whole. The same combinations, in short, would result from an apprehension of the Federal, as was produced by the dread of a foreign yoke; and unless the projected innovations should be voluntarily renounced, the same appeal to trial by force would be made in one case as was made in the other. But what degree of madness could ever drive the Federal Government to such an extremity?

* * *

"That the people and the States should, for a sufficient period of time, elect an uninterrupted succession of men ready to betray both; that the traitors should, throughout this period, uniformly and systematically pursue some fixed plan for the extension of the military establishment, must appear to everyone more like the incoherent dreams of a delirious jealousy, or the misjudged exaggerations of a counterfeit zeal, than like the sober apprehensions of genuine patriotism.

* * *

Let us not insult the free and gallant citizens of America with the suspicion that they would be less able to defend the rights of which they would be in actual possession, than the debased subjects of arbitrary power would be to rescue theirs from the hands of the oppressors.

"Let us rather no longer insult them with the supposition that they can ever reduce themselves to the necessity of making the experiment by a blind and tame submission to the long train of insiduous measures which must precede and produce it. * * *

"On summing up the considerations stated in this and the last paper, they seem to amount to the most convincing evidence, that the powers proposed to be lodged in the Federal Government are as little formidable to those reserved to the individual States as they are indispensably necessary to accomplish the purposes of the Union; and that all these alarms which have been sounded, of a mediated and consequential annihilation of the State governments must, on the most favorable interpretation, be ascribed to the chimerical fears of the authors of them." The recent conduct and trend of events shows that those to whom Madison addressed his letters were right in their fears, that the time would come when the rights of the States would be so trampled upon that the States' governments, activities and their inhabitants would be controlled by the Federal Government, and the States virtually annihilated.

It was evident that those who originated that marvelous document-the Constitution-had no conception that ever in the history of this Nation would there be such inroads upon the rights and powers of the States as we are now contemplating. For as Madison said, that sort of thing is "a signal for a general alarm", and he asks this question, "But what degree of madness could ever drive the Federal Government to such an extremity?"

The great strength of this Government is its dual form-the States and the Nation. The States are the units of government charged with the domestic affairs, welfare, and prosperity of those residing within its confines. The Nation is but the combination of the States, existing only by the indissoluble compact of the Union cemented by the Constitution, which delegates only specific powers to the Federal Government, reserving to themselves all other rights and powers which they have not surrendered by this specific delegation.

It is not necessary to enumerate the powers of the Federal Government, and we will refer to only one, that is, to regulate commerce between the States, for it is under this power, which Madison did not view with "apprehension", which is now the one under which the Federal Government is endeavoring to "whittle away" more of the States' rights.

In these times, the Government has regimented industries, farmers, utilities, carriers, labor, and every line of endeavor, laying down rules and regulations for their conduct, taking away from the States rights which belong to them—namely the right to conserve the resources within its bounds, to incorporate its companies, to regulate its issues of stock, to regulate its own welfare, and promote prosperity within its borders.

Unquestionably by far the large majority of the people of this country undoubtedly believe in maintaining the American principles of individual opportunity and responsibility, and frown upon the foisting upon the people of this Nation an impractical system of Government which cannot lead other than to destruction. What is being done and proposed is by a minority bloc which has taken advantage of unrest and the economic depression.

General Washington stated:

"No man is a warmer advocate of proper restraints and wholesome checks than I am. The General Government is not invested with more powers than are indisputably necessary to perform the functions of good government, and consequently no objection should be made to the quantity of power delegated to it."

It is therefore certain that those who were best acquainted with the principles upon which the Constitution was founded laid great stress upon each and every one of the checks and balances contained in the Constitution.

If it should be said that the mass of the people are not interested in the drastic attempts to change our form of government, then it is necessary only to call attention to the Russian debacle and the words of Lenine when he said, "We pay no attention to the vast unconscious mass.'

John Stewart Mill in his work upon Liberty says:

"Thus a people may approve a free government, but if from indolence, or carelessness, or cowardice, or want of public spirit, they are unequal to the exertions necessary for preserving it, if they will not fight for it when it is directly attacked, if they can be deluded by artifices used to cheat them out of it, if by momentary discouragement, or temporary panic, or a fit of enthusiasm for an individual they can be induced to lay their liberties at the feet even of a great man, or invest him with powers which enable him to subvert their institutions, in all these cases they are more or less unfit for liberty."

The Wheeler-Rayburn bill certainly introverts to a most drastic extent the rights and powers of the States. It would give to the Federal Power Commission authority over operating plants in the various States producing 91 percent of the national output. This Federal Power Commission can order a company to make any additions or improvements regardless of whether the utility has the funds. It can order the utility to let others use its lines. It can order it to sell or purchase from, or transmit for any other company. Its approval is necessary for extensions, sales, leases and mortgages. It has power to determine business practices, methods of production and transmission, and all arrangements with regard to legal, engineering and financial services.

The Federal Government would have jurisdiction over all rights. It permits the use of the natural resources of one State for the benefit of another. It would have jurisdiction over accounting practices and the determination of proper depreciation allowances, and all forms of report.

In fact, it seems to remove from the States their control over the cost of intrastate commerce, and takes from the States the regulation of such utilities within its borders. In fact, it would permit the Federal Government to say what plants should be run, what should be built, what transmission lines would be built or abandoned, and there would not be much left for either the utility or the State government to do.

In order that there could be no question about the States' rights the tenth amendment was created, which reads: "The powers not delegated to the United States by the Constitution nor prohibited by it to the States, are reserved to the States respectively or to the people."

In the case of Bucknor v. Findley, which had to do with the drawing of a bill of exchange in one State upon a person living in another State, which case is found in second Peters, page 584, the court said in part:

"For all national purposes embraced by the Federal Constitution, the States, and the citizens thereof are one, united under the same sovereign authority and governed by the same laws. In all other respects the States are necessarily foreign to and independent of each other."

This case is cited with approval in the case of Phillips v. Payne (92 U. S. 130). In the case of Farmers, etc., Bank v. Deering (91 U. S. 29), the court analyzes the powers of government and in the first one stated in its analysis on page 34 it names those which belong exclusively to the State.

In the case of Farrington v. Tennessee (95 U. S. 679), the court said on page 682:

"A compact lies at the foundation of all national life. Contracts mark the progress of communities in civilization and prosperity. They guard, as far as is possible, against the fluctuations of human affairs. They seek to give stability to the present and certainty to the future. They gage the confidence of man in the truthfulness and integrity of his fellowman. They are the springs of business, trade, and commerce. Without them, society could not go on. Spotless faith in their fulfillment honors alike communities and individuals. Where this is wanting in the boy politic, the process of descent has begun, and a lower plane will be speedily reached. To the extent to which the defect exists among individuals, there is decay and degeneracy. As are the integral parts, so is the aggregated mass. Under a monarchy or an aristocracy, order may be upheld and rights enforced by the strong arm of power. But a republican government can have no foundation other than the virtue of its citizens. When that is largely impaired, all is in peril. It is needless to lift the veil and contemplate the

future of such a people. (Trist v. Child, 21 Wall. 441; 1 Montesquieu's Spirit of Laws, 25.) History but repeats itslef. The trite old aphorism, that 'honesty is the best policy', is true like of individuals and communities. It is vital to the highest welfare."

And on page 685:

"Yet every State has a sphere of action where the authority of the National Government may not intrude. Within that domain the State is as if the Union were not. Such are the checks and balances in our complicated but wise system of State and national polity."

I cannot help but quote from Cooley's Constitutional Limitations, page 4, as follows:

"The sovereignty of a State commonly extends to all the subjects of Government within the territorial limits occupied by the associated people who compose it; and, except upon the high seas, which belong equally to all men, like the air, and no part of which can rightfully be appropriated by any nation, the dividing line between sovereignties is usually a territorial line. În American constitutional law, however, there is a division of the powers of sovereignty between the National and State Governments by subjects: the former being possessed of supreme, absolute, and uncontrollable power over certain subjects throughout all the States and Territories, while the States have the like complete power, within their respective territorial limits, over other subjects. In regard to certain other subjects, the States possess powers of regulation which are not sovereign powers, inasmuch as they are liable to be controlled, or for the time being to become altogether dormant, by the exercise of a superior power vested in the general government in respect to the same subjects.

"

McLean, J., in License cases (5 How. 504, 588, 12 L. ed. 256, 293). 'The powers of the General Government and of the State, although both exist and are exercised within the same territorial limits, are yet separate and distinct sovereignties acting separately and independently of each other, within their respective pheres.

"And the sphere of action appropriated to the United States is as far beyond the reach of the judicial process issued by a State judge or a state court, as if the line of division was traced by landmarks and monuments visible to the eye. (Taney, Ch. J., in Ableman v. Booth (21 How., 506, 516, 16 L. ed. 169, 173; See Tarble's case (13 Wall. 397, 20 L. ed. 596)). That the general visision of powers between the Federal and State Governments has not been disturbed by the new amendments to the Federal Constitution." (See United States v. Čruikshank, 92 U. S. 542, 23 L. ed. 588.)

Also page 385: "In the examination of American constitutional law, we shall not fail to notice the care taken and the means adopted to bring the agencies by which power is to be exercised as near as possible to the subjects upon which the power is to operate.

"În contradistinction to those governments where power is concentrated in one man, or one or more bodies of men, whose supervision and active control extends to all the objects of government within the territorial limits of the State, the American system is one of complete decentralization, the primary and vital idea of which is, that local affairs shall be managed by local authorities, and general affairs only by the central authority. It was under the control of this idea that a national Constitution was formed, under which the States, while yielding to the National Government complete and exclusive jurisdiction over external affairs, conferred upon it such powers only, in regard to matters of internal regulation, as seemed to be essential to national union, strength, and harmony, and without which the purpose in organizing the national authority might have been defeated."

Unquestionably the States have the right of sovereignty, the same that the Original Thirteen States possessed before the adoption of the Constitution, and which they had not parted from by that instrument, and any legislation by Congress beyond the limits of the powers delegated would be trespassing upon the rights of the States, or the people, and would not be the supreme law of the land, but null and void (Gordin v. U. S., 117 U. S., 697–705).

All powers not specifically delegated to the general government are reserved to the people. (U. S. v. Williams, 194 U. S., 295.)

It is the rule that the sovereign powers vested in the State governments by the respective constitutions remain unaltered and unimpaired, excepting so far as they were granted to the Government of the United States. The Government of the United States can claim no powers which are not granted to it by the Constitution, and the powers actually granted would be such as are expressly

given or necessarily implied. The General Government and the States, although both exist within the territorial limits, are separate and distinct sovereignties acting separately and independently of each other within their respective spheres. The powers not granted to the Federal Government are as independent of the General Government as that Government within its sphere is independent of the States. (Buffington v. Day, 11 Wall. 124.)

Article 10 was intended as declaratory of the preexisting intent of the Constitution. (State v. Davis, 12 South Carolina, 528; reversed on other grounds, 107 U. S. 597.)

Legislation of Congress beyond the delegated powers is an infraction of State rights. (Matter of Pacific Railroad Commission, 32 Fed. 241-254.)

Reference is also made to the child labor case (Hammer v. Egenhart, 240 U. S. 252), where State rights were further discussed.

The people of the several States are absolutely and undoubtedly sovereign within their respective territories, with the exception of the powers surrendered by the Constitution of the United States. (Ohio Life Insurance Co. v. Deboll, 16 How. 428.)

The State has authority to tax its corporations and all their property and credit such tax, and this cannot be regarded as conflicting with any constitutional power of Congress. (Delaware Railroad Tax, 18 Wall. 232; see also U. S. v. B. & O. Railroad, 17 Wall, 327.)

If the ideas of Professor Elliott of Harvard obtain, then the States will become absolutely nonentities, excepting as mere geographical subdivisions, and the fears of the adversaries of the Constitution will prove to be well founded.

The people do not realize the gravity of the situation, else they would have spoken. In fact, so much of misleading character has been propounded that the mass of the people is confounded and know not which way to turn. If the people are informed honestly and correctly, they are able to and will form their own judgments and act intelligently, otherwise there will be nothing but continued chaos.

The States are a balance wheel to prevent usurpation of power and if they are destroyed, or their efficiency throttled, the way is paved for the appearance of the man on horseback. The dual form of government and all freedom and liberty will be destroyed. So far we have the right to our respective opinions and to express them, notwithstanding the threats of retaliation of Federal authorities, if these opinions do not agree with that of those authorities, who by the way are the servants of the people, instead of the "bosses."

The Wheeler-Rayburn bill is the most drastic encroachment upon the rights and powers of the States proposed, and is also a far step in the direction of paternalism and tyranny.

The Federal Government is the servant of the people, not their master, and to place within the grasping power of the Federal Government the right to override the States merely means such concentration of power will unquestionably be used that the mainstay of American freedom will be annihilated.

To again quote from Mill:

*

"Every kind and degree of evil of which mankind are susceptible may be inflicted upon them by their government; and none of the good which social existence is capable of, can be any further realized than as the Constitution of the Government is compatible with, and allows the scope for its attainment. Leaving things to the Government, like leaving them to Providence, is synonymous with caring nothing about them, and accepting their results, when disagreeable, as visitations of nature."

Hon. BURTON K. WHEELER,

UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, March 19, 1935.

Chairman Committee on Interstate Commerce,

United States Senate.

MY DEAR MR. CHAIRMAN: Attention is invited to enclosed letter addressed to me by Attorney John D. Harris, St. Petersburg, Fla., having reference to provi sions of the Public Utility Holding Company Act of 1935.

Please direct that this letter be incorporated in the record of hearings before the committee, and oblige,

Very truly yours,

DUNCAN U. FLETCHER.