When we come to the problem raised by the present position and claims of Trade Unions, differentiation of functions is less satisfactory. Let us first look at the problem as it confronts us to-day. There was a time when the state was doubtful whether it should allow trade unions to exist. The Political Economy prevalent in the earlier part of the nineteenth century taught that trade unions were either unnecessary or useless--unnecessary in so far as economic relations, if unhindered by regulations from the state or from combinations, were regarded by economic optimism as themselves producing satisfactory social conditions; useless where Political Economy had substituted for optimism a belief in 'iron laws' whose results no combination or government regulation could affect. We now see that economic relations, just because they are possible between men who have no common purpose, need regulation inspired by a common purpose, and can be affected by such regulation. The growth of governmental interference with industry and of trade unionism are part of the same movement to control the working of economic relations with a view to maintaining the conditions of the good life. Trade unions have grown and are still steadily growing in size and importance. For a large portion of the nation loyalty to a trade union has become the most obvious form of collective loyalty or general will. This has been accompanied by an inevitable decrease in what we may call territorial loyalty. The result of the increase in means of communication and the growth of large towns has been that men's common interests as members of the same trade or as employees in the same workshop are coming to mean more and to constitute a greater common bond between men than their common interests as dwellers in the same locality. The trade union has often a more live and real general will than the Parliamentary constituency. Men's aspirations and ideals for their common life are being expressed more truly through trade union organizations than through Parliament. The growth in the prestige of organized labour is therefore coincident with a decay in the prestige of Parliament. Parliament, however, based on a local sub-division of the nation, is at present the only political organization of the nation. Trade union organization, as a political organization, has no constitutional authority, and all the general will which it represents can find no regular national expression. The result is that it either uses the territorial organization by getting men who really represent their Trade Union elected as members for Parliamentary local constituencies, to the detriment of both the territorial and the trade union organization, or acts as an _imperium in imperio_ by making demands on and issuing ultimata to Parliament. We seem to be approaching a crisis where the trade unions are asking whether they will allow the state to exist.