desires, and his abandonment as much as possible of rational and, as he conceives, artificial plan. The State cannot observe an absolute neutrality if it would. Non-intervention is only a particular kind of intervention. There must be laws of property, succession, and the like, and the influence of these spreads over the whole industrial system, and affects both the character of its production and the incidence of its distribution of wealth. But, second, by calling their method the _ethical_ method, the historical school desire to repudiate the idea that in dealing with economic phenomena they are dealing with things which are morally indifferent, like the phenomena of physics, and that science has nothing to do with them but to explain them. They have certainly reason to complain that the operation of the laws of political economy is sometimes represented as if it were morally as neutral as the operation of the law of gravitation, and it is in this conception that they think the materialism of the dominant economic school to be practically most offensively exhibited. Economic phenomena are not morally indifferent; they are ethical in their very being, and ought to be treated as such. Take, for example, the labour contract. To treat it as a simple exchange between equals is absurd. The labourer must sell his labour or starve, and may be obliged to take such terms for it as leave him without the means of enjoying the rights which society awards him, and discharging the duties which society claims from him. Look on him as a ware, if you will, but remember he is a ware that has life, that has connections, responsibilities, expectations, domestic, social, political. To get his bread he might sell his freedom, but society will not permit him; he may sell his health, he may sell his character, for society permits that; he may go to sea in rotten ships, and be sent to work in unwholesome workshops; he may be herded in farm bothies where the commonest decencies of life cannot be observed; and he may suck the strength out of posterity by putting his children to premature toil to eke out his precarious living. Transactions which have such direct bearings on freedom, on health, on morals, on the permanent well-being of the nation, can never be morally indifferent. They are necessarily within the sphere of ends and ideals. Their ethical side is one of their most important ones, and the science that deals with them is therefore ethical. For the same reason they come within the province of the State, which is the normal guardian of the general and permanent interests, moral and economic, of the community. The State does not stand to industry like a watchman who guards from the outside property in which he has himself no personal concern. It has a positive industrial office. It is, says Schmoller, the great educational institute of the human race, and there is no sense in suspiciously seeking to reduce its action in industrial affairs to a minimum.