On November 22, 1926, the United States Supreme Court in the case of Village of Euclid vs. Ambler Realty Company upheld the constitutionality of an Ordinance adopted by the Village Council of Euclid, Ohio, on November 13, 1922. This Ordinance established a comprehensive Zoning plan for regulating and restricting the location of trades, industries, apartment houses, two-family houses, single-family houses, etc., the lot area to be built upon and the size and height of buildings. It created six different classes of uses, and a portion of appellee's 68-acre tract of land was included in a two-family district, a portion in an apartment house district and a portion in an industrial district allowing all kinds of obnoxious factories.

The bill averred that the ordinance attempted to restrict and control the lawful uses of appellee's land so as to destroy a part of its value; that the ordinance constituted a cloud upon the land and had the effect of diverting the normal industrial, commercial and residential development thereof.

Mr. Justice Sutherland, who wrote the opinion, cites the fact that zoning has received much attention at the hands of experts and that their reports concur in the view that the segregation of resi dential, business and industrial buildings will make it easier to provide fire apparatus suitable for the character and intensity of the development in each section; that it will increase the safety and security of home life; greatly tend to prevent street accidents; decrease noise and other conditions which produce or intensify nervous disorders and provide a more favorable environment in which to rear children.

The Court concluded that the ordinance in its general scope and dominant features, so far as its provisions were involved in the case, was a valid exercise of authority. It was further held that the court could not pass upon the constitutionality of provisions of which specific complaint was not made in the bill.

Three justices entered their dissent to the opinion of the Court.

Pension systems have been tried and used from the very early days. We hear of them first in the Roman Era but we do not know how they were run or organized. Coming down a little later there are some pension systems in Europe which have been in existence for over one hundred years. However, these have not proven satisfactory, as is shown by the fact that in some of the largest cities in Europe the pension fund has run up to from thirty-one to forty-two per cent of the payrolls of those municipalities. This could have been avoided if the right principles had been adopted in the first place.

It is the inclination to start a pension system on guess work, and as the funds derived from contributions grow and it looks as if the fund were going to be able to take care of all future liabilities the tendency is to increase the pensions. This leads to disaster. The pension fund plans in a number of cities and states have had to be re-organized. That means that the people have found out that the amounts they have been saving for the pensions when due have been so far short of the required sum, that in order to meet the payments it has meant such an increase in tax that it is prohibitive. The only safe way to provide for a pension system is to determine first of all, what you intend to create and under what conditions. Then it is necessary to take the history of the employees of the municipality for which the system is to be adopted, for at least five or ten years previous to the time of starting the plan, ascertaining the ages at which the employees of the department were employed and the probable number of employees who will qualify to receive a pension. These statistics should be gone

over carefully to find out the true cost of the benefits to be provided.

Although some cities may have no definite pension system, to some extent they set out to meet this obligation, because every governmental authority does actually pension its employees in one form or another. You will find that in a city which has no rules for the retirement of its employees, and no means of keeping them in active service, they will be permanently carried as "dead heads" on the payroll. Instead of being discharged when they are unable to render full service, and when the weakness of old age has impaired their usefulness, they will be retained to perform what work they can. This is not good on account of the criticism it calls up in the minds of the taxpayers. One of the main objections is that all employees retained on the payroll should be able to give efficient service.

There are three plans of pensions usually followed, called the contributory, noncontributory and partial contributory. In the non-contributory plan the municipality provides all the expenses, in the contributory plan the employees provide all the premiums and in the partial contributory they share the expenses. Of these three plans the third has proven the most satisfactory, because the employees contribute their share of the expenses and the kind of benefits that should be provided will enter into the question. First of all an annuity allowance, or retirement allowance is usually made for the pensioner at his option when the employee is sixty or sixty-five years of age and is made compulsory when he reaches seventy or thereabouts. In New York the rates contributed by the employees are based on 1/140th of the average retire

ment salary which the employee will be drawing at the time of retirement, and the state contributes the same amount. The amount of the pension will be 1/70th of the final average salary received, multiplied by the years of actual service. The average salary is usually arrived at from the last five years of service.

The estimates usually also provide for a death benefit or insurance, and in some cases this is contributed partly by the employees.

There is a very serious matter to be taken into consideration by a municipality starting a new system, and that is to provide means to meet pensions of those already in the service and who will be qualified for pensions before they have paid their share toward any retirement allowance. This obligation has been met by the city entirely.

I am trying to bring out a few points that are serious questions in the case of the City of Santa Monica. A little over a year ago Santa Monica passed a charter amendment which provided that the commissioners should adopt an ordinance to establish a Relief and Pension Fund. It stated that the police and fire departments must come under that plan, and the employees of any other department might be included, and provided further that the ordinance should state what benefits were to be conferred and the terms of service that would be required. Another of the terms was that the city should provide annually an amount not in excess of 1% of the general tax levy towards the pension fund.

Many of the employees in Santa Monica have served the city over ten years, a good many over fifteen and some over twenty. The charter amendment has a requirement that they shall not receive pensions until they have served twenty years. It is provided in most systems now in use that the city provide the expenses of those employees who have already been in the service for a

greater or less length of time prior to the installation of the system, up to that date. However, in the City of Santa Monica, this represents a very difficult point, because of the limit to the amount of contributions, in the charter amendment which authorizes its establishment.

The plan in New York bases the rate of contribution on the age of the employee at the time of entering the service. An employee entering the service at the age of twenty, if a laborer will pay a little less than 3%. In Baltimore for the same age he pays just a little over 3% and the rate varies from 32% to over 7% in the case of those entering the service at the age of 59 or over. The rate contributed at the time of entering the service is not changed during the whole length of the service of the employee, except in those cases where arrangement is made for a re-adjustment of rates according to actual expenses when computed under later actuarial investigations.

In New York the Comptroller of the State has charge of the pension fund and there is a pension board which contains representatives of the state and of the employees and in that way works for harmony where any question arises, because the employees are represented on the board. That is a very wise provision to make because you will get the cooperation of your employees to aid you in carrying out the policies.

I would like to repeat the great danger of changing the amount of benefits because you think your fund is growing very fast, so that the ordinary person will think that it will be easy to increase the pension allowances, because the amount of the fund looks very imposing. A pension fund should grow, and must establish a reserve so that it can take care of its pensions when they become due; and the spectacular period of its growth is during its early years, while the reserve is being provided, and before many pensions have become due.

This subject is on the program of this convention by the vote of City Officials. It seems that others, besides myself, have found the subject beset with difficulties. Yet the general principles involved are well understood and readily applied. The old familiar landmarks are plainly erected to guide us aright. What's the difficulty?

If I should ask you the purposes of business licenses you could answer in three words, "Regulation and revenue." The answer is correct and complete. The trouble is that we try to use business licenses for purposes other than regulation and revenue.

Let me illustrate: A flock of used cars are brought into town to be sold. An out of town plumber or painter or electrician gets a contract in our town. Somebody starts an auction or bankrupt sale. A man starts down the street peddling melons. A tent show drops in. At once the local representatives of the calling affected send out an S. O. S. They turn for relief to the police, the marshal, the City Manager and Trustees.

And the purpose that actuates the suppliants is neither revenue nor regulation. Their object is to set up safeguards against damaging competition, to establish a kind of protective tariff.

And here, in my judgment, lies the most fruitful source of our difficulties. We are urged to use for local protection a power confined by law to revenue and regulation. The law has given us a two horse team-regulation and revenue. It has marked out a road just wide enough for that team. Now a third horse, called "Protection," has been hitched up with Regulation and Revenue. And we are.

expected to drive the three-horse team on a road built for two.

The pressure for protective licenses is great. It arises, apparently, from the feeling on the part of the individual business man that he's not getting a square deal; that he is burdened to the limit at best, and that "unfair competition" is the last straw. It may be that he is up against an economic law that is working toward the elimination of independent individual enterprise. I am not discussing the justice of his cause. We have to take him as he is. We have to deal with an individual business man who thinks he is doomed unless the Board of Trustees grants relief from unfair competition.

When there is any hope of modifying any particular kind of damaging competition, we tition, we are expected to draw an ordinance to meet the case as best we can. The result is a host of ordinances entirely or partly designed to protect the local man. For many of these the last sad rites have been said. Some have not been tested and some have been sustained. Prominent among this last named class are ordinances regulating peddling.

PEDDLERS

Peddling, soliciting and hawking may be considered together. All are subject to regulation, and all are so defined as not to include the merchant who has a fixed place of business. fixed place of business. (13 Cal. Jur. 287-289.)

Ordinances fixing reasonably high licenses for peddlers are generally upheld, upon the recognized powers of regulation and revenue. The "third horse" is kept in the background. It is not good form

to recognize his existence. When the third horse gets out of control the license. tax goes too high. Then the ordinance is invalid, because license taxes must be reasonable. (19 Cal. Jur. 197.)

How high a peddler's license tax may be placed and be valid is very uncertain. The test is reasonableness. And the character of the goods and various other facts enter into the question of reasonableness. (37 Corpus Juris 194.)

Much depends on the character of the goods peddled. Useful occupations receive a larger measure of consideration, and inherently harmful and dangerous ones may be subjected to such high licenses as to discourage or even prohibit. (37 Corpus Juris 187.) But decisions vary greatly. An ordinance was sustained in Walla Walla v. Ferndon, 57 Pac. 796, where the license tax for traveling vendors of medicines was placed at $50.00 a day; while in People v. Wilson, 35 L. R. A. N. S. 1074, an ordinance placing the license tax at $100 per month was held to be unconstitutional as tending to deprive vendors of liberty and property without due process of law, and as tending to create a monopoly in those engaged in the drug business with a permanent location. Other significant cases are cited in notes in Annotated Cases 1914 D 938, and 1916 A 1238. The Walla Walla case is decidedly extreme. License taxes approved by the courts are almost universally but a small fraction of $50 a day. Yet they are substantially higher than those of resident merchants. Thus regulation, revenue and protection are well served.

The most serious defect with the usual peddler's license is that it does not take in all the peddlers. Certain war veterans are exempt and interstate commerce cannot be reached.

Honorably discharged war veterans who are physically unable to obtain a livelihood by manual labor are allowed.

to peddle without licenses. (3366 Pol. Code.) This is not objectionable. The only difficulty is to determine what persons come within the terms of the exemption.

The serious obstacle is the commerce clause of the national constitution, Article I, Section 8. When the title to the goods peddled is in a person or corporation outside of the state, the transaction is interstate, and cannot be burdened with local license taxes. Mr. Fred J. Goble, City Attorney of Santa Maria, was requested to address this convention on the subject of peddlers, but could not be present. At this point I shall take the liberty of drawing somewhat from his ideas: The 14th Amendment guarantees equal protection of the laws. The failure to allow peddlers' license ordinances to operate equally between manufacturers in and out of the state is a discrimination foreign. to the spirit of the 14th Amendment. This is wrong in principle. It should be changed. This convention should start a movement urging Congress to pass a law to the following effect:

"Persons engaged in interstate commerce shall be subject to the same business licenses, whether local, municipal or state, as shall be applicable to other persons engaged in the class of business in which such persons are engaged, and they shall likewise be subject to all reasonable local, municipal, or state police regulations which are not in conflict with the laws of Congress."

Up to the present the most noteworthy attempt to fix a license tax upon the interstate peddler was made in Portland, Oregon, in 1923. The ordinance provides that every person who goes from place to place taking orders for goods for future delivery, and who receives payment or a deposit in advance, shall secure a license and file a bond. The license tax was $12.50 per quarter, and $25 when a vehicle was used. The bond was $500 and con