A fact little appreciated by American political scientists is the relatively early emergence of federalism as a working concept of political theory in the Holy Roman Empire of the seventeenth century. But although these federal theories run ahead of corresponding theories elsewhere, it must be pointed out that political and legal conditions peculiar to the medieval Empire retarded an even earlier appearance. For centuries, the constitution of the Empire had retained its feudalistic structure. Many conspicuous changes, however, had taken place in the course of its development and had filled that structure with an entirely different content. The main result of the Empire's constitutional evolution had been its gradual transformation from an originally fairly unitary state into a federalistic organization of de facto sovereign states. It might be supposed, therefore, that the highly articulated territorial organization of the Empire would have easily served as fertile soil on which contemporary political theorists and jurists might have founded an elaborate theory of federalism.

It is a truism that the response of government to the manifold necessities of modern society has made the state today an organization providing services for the community. In particular, government is regarded as an agency to help alleviate economic disparity and maladjustment. This present development does not mean that the functions of regulation and protection, the traditional concomitants of the police state of the nineteenth century, have ceased to be important. On the contrary, they have increased in magnitude and importance as means of communication and as technical knowledge have increased. Thus the regulation and licensing of the practice of medicine, for example, assume greater importance as medical knowledge increases and as the health problems of the community grow. But the new emphasis of government is indeed on assistance and service to those in need of aid, such as the unemployed, the aged, and the blind.

The new functions of government are in some ways only developments of the old, and the line between regulatory and service developments is not a division between absolutely watertight compartments. In general, a regulatory function is one in which government either directs by regulations of one sort or another the way in which private individuals shall conduct themselves, or else licenses them to carry on certain activities, as found in statutes forbidding industrial homework in certain industries and requiring licenses in others.

The increase in judicial restraint noted a year ago has again been in evidence during the period under review. State courts, in following the lead of the United States Supreme Court, have construed police power liberally and have spoken out in defense of civil rights. Noteworthy, as well, has been the practice of these courts to construe strictly the power of the governor in this period of expanding administrative authority. The tendency of state courts to uphold experimental legislation, in line with the doctrine established by Nebbia v. New York rather than founded on liberty of contract and separation of powers precepts, has not been uniform. Federal decisions which recently have been greatly weakened but not expressly overruled still serve as guide-posts for some appellate courts.

Important changes in the regulations governing receipts and expenditures of party committees, enacted in the summer of 1940, make a study of the financing of the presidential election of that year particularly interesting and significant. “Hatch Act II,” designed primarily to extend to certain state and local employees limitations upon political activities already imposed upon federal office-holders by “Hatch Act I,” introduced a number of radical changes in the rules governing the collection of campaign funds.

The state and county governments in the Tennessee Valley area, particularly in Tennessee, completed 1940 with one of their most pressing financial problems solved or well on the way to solution. The threatened loss of taxes to governmental units, resulting from the program of public ownership of power and the purchase by the Tennessee Valley Authority and the municipalities of the properties of private electrical power companies, had been serious to many counties facing bankruptcy, curtailment of services, or exorbitant taxes. Besides the financial effects, the situation strikingly demonstrated the need for reforms in local government, mainly the consolidation of counties and the introduction of better budgeting and accounting practices. Moreover, the problem has also been significant because of certain issues resulting from the venture into public ownership. Should proprietary agencies of the national government engaged in competition with private business and acquiring existing taxable facilities be responsible for the taxes thereby displaced and replace them as a matter of policy? Are proprietary functions of the national government subject to state and local taxing authority? These issues have demanded widespread consideration not only in the Tennessee Valley area but also in other sections where public power programs are being tried on a large scale. A bill was introduced into Congress on September 30, 1940, to provide for payments to governmental units affected by displacement of taxes arising from the Bonneville Power Project, and a more recent bill applies to the proposed Arkansas Valley Authority Project. The passage of the Norris-Sparkman amendment by Congress in June, 1940, whereby payments in lieu of taxes are being made by the T.V.A., has answered these questions and relieved the pressing financial aspects of the situation. The tax replacement provision has now been in operation more than six months, and an analysis of the period affords an interesting insight into its effects on the various governments concerned.

International law has assumed that states are independent and free to vary their national cultures and institutions at will. It permits them to organize their domestic economy, culture, opinion, and polity in a totalitarian way if they see fit. In fact, however, international law developed among states which had many cultural characteristics in common. It was originally the law governing the relations of the Christian states of Europe, all with a tradition reaching back into medieval Christendom and classical antiquity, and united by practices of maritime trade, and by commercial, religious, and educational institutions. The potential totalitarianism which the law allowed was not in fact realized because of moral and practical inhibitions. Governments wished to observe the universal mores, and even if they had not, they lacked the technical, administrative, and political means which modern despots have utilized so effectively to override these mores in the interests of concentrated power.