CHAPTER IV:
THE REGULATION OF COMMERCE
29. The constitutional provisions.
30. The historical reason for the provisions.
31. Commerce defined.
32. Regulation of commerce defined.
33. The general principles defining the limits of national and
state regulation.
34. The internal commerce of a state.
35. Navigable waters and the soil under them.
36. Preferences of ports.
37. Duties upon exports.
38. Duties upon tonnage.
39. Port dues.
40. Pilotage.
41. Regulation of navigation.
42. Port regulations.
43. Quarantine.
44. Ferries.
45. Bridges and dams.
46. Improvements of navigation.
47. Wharves and piers.
48. State duties upon imports and exports.
49. State inspection laws.
50. Taxation discriminating against goods from other states.
51. The original package doctrine.
52. Transportation:
(a) State regulation in the exercise of the police power;
(b) Regulation by taxation;
(c) The Interstate Commerce Act.
53. The Anti-trust law.
54. Telegraphs.
55. Commerce with the Indian tribes.
The constitutional provisions.
29. The Constitution of the United States contains three clauses
which directly bear upon the regulation of commerce. Section 8
of Article I declares that "the Congress shall have power ... to
regulate commerce with foreign nations, and among the several
states, and with the Indian tribes." Section 9 of the same
article enumerates among the exceptions from the powers granted
to the United States, that "no tax or duty shall be laid on
articles exported from any state. No preference shall be given by
any regulation of commerce or revenue to the ports of one state
over those of another: nor shall vessels bound to, or from, one
state, be obliged to enter, clear, or pay duties in another."
Section 10 of the same article, in its enumeration of the
expressed restrictions upon the powers of the states, declares
that "no state shall, without the consent of the Congress, lay
any imposts or duties on imports or exports, except what may be
absolutely necessary for executing its inspection laws: and the
net produce of all duties and imposts, laid by any state on
imports or exports, shall be for the use of the treasury of the
United States; and all such laws shall be subject to the revision
and control of the Congress. No state shall, without the, consent
of Congress, lay any duty of tonnage." The constitutional
provisions are, in effect, first, a grant to Congress of the
power of regulating foreign and interstate commerce, with the
expressed restriction that the United States shall not lay any
tax or duty on articles exported from any state, nor give
preference by any regulation to the ports of one state over those
of another, nor oblige vessels bound to or from one state to
enter, clear, or pay duties in another; second, an implied
restraint upon state regulation of foreign or interstate
commerce; and third, an expressed prohibition of state duties on
imports, exports, or tonnage, save under certain defined
restrictions, the most material of which is the consent of
Congress. These constitutional provisions are not only in full
force and vigor today, but their application is wider and more
far reaching than the framers of the Constitution imagined to be
within the bounds of possibility. The only commerce that they
knew was the foreign and coastwise commerce that was carried in
ships. They little thought that the time would ever come when the
commerce so carried would be far exceeded in amount and in value
by the internal commerce of the country, yet that time has come.
In the one hundred and seventeen years that have passed since the
adoption of the Constitution, the country has made great strides.
Less than three millions of people have grown to be more than
seventy millions in number. Discoveries in science and inventions
in the arts have developed new subjects of trade, and have
created new agencies of commerce. Steam and electricity have been
made to do man's bidding. Sailing vessels have given way to
steamships, and railways have superseded turnpike roads,
Conestoga wagons and canals for the movement of intraterritorial
freight. Telegraphs and telephones have annihilated distance.
The growth of population, the creation of new subjects of trade,
and the improvements in the movement of traffic have necessarily
resulted in a vast enlargement in the volume of commerce. In view
of these great changes in the conditions of the problem, it is
more than ever important that the constitutional limits upon the
regulation of commerce should be clearly comprehended, and that
the line which separates the provinces of federal and of state
authority over this subject of national interest should be, so
far as is possible, accurately defined.
The historical reason for the provisions.
30. It is an historical fact that the Constitution was framed
and adopted mainly because all of the states had suffered under
the Confederation by reason of the selfish commercial policy of
England in closing her markets to goods of American manufacture,
and because some of the states had also suffered by reason of the
no less selfish commercial policy of other states in the
imposition of heavy duties on imported goods, and in the
enforcement of vexatious restrictions upon trade. There were
great differences of opinion as to other features of the
Constitution, yet, in the convention of 1787 and among the
people, there was practical unanimity as to the expediency of
vesting in the government of the United States the power of so
regulating commerce as to overcome the disintegrating forces
which threatened the loss of all that had been gained by the
success of the Revolution. (1) But if the framers of the
Constitution had ever imagined that the power of regulating
commerce would be expanded as it has been by judicial
construction, no such power would have been vested in Congress.
Commerce defined.
31. The term "commerce," as Marshall, C. J., construed it, (2)
means not only traffic, but also commercial intercourse in all
its branches, including transportation by sea and on land,
importation and exportation, and all that is necessarily incident
thereto. As the Constitution is a frame of government intended to
endure for all time, it follows that the term "commerce" must
receive a construction sufficiently elastic to comprehend not
only the subjects and instrumentalities of commerce known and
used when the Constitution was framed, but also all present and
future subjects of commerce and agencies of commercial
intercourse. (3) Yet everything that is connected with commerce
is not necessarily commerce. Bills of exchange may be given in
payment for goods to be imported, and yet such bills are mere
personal obligations, and are not in themselves subjects of
commerce. (4) Money assessed for state taxation is not by a
subsequent investment in a subject of commerce relieved from such
taxation. (5) So, also, a contract of insurance is not "an
instrumentality of commerce, but a mere incident of commercial
intercourse." (6) "A state may, therefore, prohibit foreign
insurance companies and their agents from effecting within its
territory contracts of insurance, marine, or otherwise, save upon
such conditions as the state may prescribe; (7) but a state
cannot prohibit its citizens from effecting in another state a
contract of insurance. (8) Acts of Congress (9) having
authorized the registration in the patent office of devices. in
the nature of trademarks, made the wrongful use thereof a cause
of action for damages, and punished by fine and imprisonment the
fraudulent use, sale, and counterfeiting thereof, it was held
(10) that the statutes in question were unconstitutional because
not limited in terms, or by the essential nature of their subject
matter, to the regulation of trademarks in their relation to
foreign and interstate commerce. A subsequent statute(11) has
provided for the registration and protection of trademarks used
in foreign and interstate commerce, and is not open to the
objection which invalidated the prior statutes. On the other
hand, bills of lading of goods sold and transported in the course
of interstate Commerce are, by reason of their representative
character, entitled to protection as commerce, (12) and the
transmission of ideas by telegraph is commerce, for the reason
that in the development of modern business methods the telegraph
has become indispensable as a means of intercommunication in
commercial intercourse. (13) Would not the same reasoning apply,
in the case of goods admittedly subjects of commerce, to the
trademarks on such goods, the bills of exchange drawn for the
price of the goods, and the policies of insurance against the
loss of the goods by fire or by the perils of navigation?
Insurance, commercial paper, and trademarks are certainly as
clearly related to, and as truly incidents of, commerce, as a
telegraphic inquiry as to the state of the market, or a
telegraphic order for the forwarding of the goods, though, unlike
the bill of lading, they do not represent the goods. Lottery
tickets are subjects of traffic, and the carriage of such tickets
by independent carriers from one state to another is interstate
commerce. (14) The transfer of shares of railway companies is
interstate commerce when such shares are transferred for the
purpose of vesting in a holding company a majority of the shares
of two competing railways engaged in interstate traffic. (15)
Regulation of commerce defined.
32. To regulate commerce is "to prescribe the rule by which
commerce is to be governed." (16) The power to regulate is
unrestrained, and it may, therefore, either control or prohibit.
Commerce may be directly regulated by legislation enacted in the
exercise of the police power and prescribing the manner in which
the operations of commerce are to be conducted, or it may be
indirectly regulated by the imposition of taxation upon its
instrumentalities or subjects. (17) Taxation has been defined
(18) as the compulsory exaction by a government, in the exercise
of its sovereignty, of a payment of money or surrender of
property by any person, natural or corporate, who, or whose
property so taxed, is subject to the sovereign power of that
government. (19) The police power may be defined to be that
function of government by the exercise of which all persons who
are subject to the sovereignty of the government exercising the
power are, for reasons of public policy, restrained in their use
or enjoyment of some right of person or of property. (20) The
police power may attain its end by absolutely prohibiting the
exercise of a particular right or by so regulating the exercise
of that right as to permit its use under conditions, and, if the
power exist, the extent to which it may be exercised in any case
is limited only by the legislation of the government in which the
power may be vested, unless farther restraint be imposed by the
Constitution of the United States or by the constitution of the
state. Congress cannot, in the exercise of the power to regulate,
tax commerce; (21) and while the states cannot regulate foreign
or interstate commerce, they are not prohibited from taxing
either its instrumentalities or subjects, provided that taxation
be imposed thereon as component parts of the mass of property in
the state, and provided also that that which is in form taxation
be not in substance a restriction upon, or a prohibition of,
foreign or interstate commerce. The essential difference between
taxation of property, and regulation of commerce in the guise of
taxation, is illustrated by every case in which the court has had
to determine whether any particular tax imposed under state
authority on an instrumentality or subject of foreign or
interstate commerce be, or be not, forbidden by the Constitution.
(22) In the exercise of its power over commerce, Congress has,
in statutes too numerous to mention, imposed duties on imports
and even prohibited importations of certain goods (23) and
regulated, among other things, the registration and recording of
the titles of ships, (24) the clearance and entry of ships and
steamers, (25) the tonnage duties payable to the United States by
vessels, (26) navigation, including sailing rules, and the life-
saving service (27) the transportation of passengers and
merchandise by sea, (28) the shipping of sailors, (29) and their
pay and discharge, (30) the lighthouse service, (31) the coast
survey, (32) the building and use of bridges, (33) the
improvement of rivers and harbors (34) and telegraphs. (35) It
has authorized the transportation of government supplies, and
mails, and troops by railway, and the connection of railways of
different states so as to form a continuous line; (36) it has
permitted the states to regulate the storage and sale of original
packages of intoxicating liquors; (37) it has regulated the
interstate transportation of live stock; (38), it has provided
for arbitration between interstate railroad companies and their
employees; (39) it has required the use of automatic couplers on
interstate trains; (40) it has, by the Interstate Commerce Act
and its amendments, (41) regulated the interstate transportation
of passengers and freight by railways and constituted a
commission to carry the statute into effect; and it has
prohibited the making of contracts in restraint of interstate
commerce. (42) The states have facilitated foreign and
interstate commerce by the improvement of navigation, the
construction of railways, wharves, and bridges, and they have
incidentally affected it by the enactment of pilotage,
quarantine, and police laws. The states have also regulated their
internal commerce by taxation and by police legislation.
The general principles defining the limits of national and state
regulation.
33. Foreign commerce is, obviously, that which is carried on
between a foreign port, or a point in a foreign country, and a
port of, or a point in, the United States interstate commerce is
that which is carried on between ports, or points, in different
states; and certainly that commerce which begins, moves, and
ends, exclusively with in a state must be regarded as internal
commerce and as such subject to state taxation and regulation.
Where commerce begins within a state, passes beyond the territory
of that state and through part of another state, and ends in the
state of its origin, it is regarded as sufficiently internal
commerce to be subject to taxation in the state of its origin and
destination "in respect of receipts for the proportion of the
transportation within the state." (43) On the other hand,
transportation under such conditions is subject only to the
regulation of the United States and not to the regulation of the
state. (44) It has also been held that navigation on the high
seas between ports of the same state is subject to regulation by
the United States. (45) A commodity is not to be regarded as a
subject of foreign or interstate commerce until it has begun to
move in trade from one country or state to another (46) for,
until the commodity is actually shipped or started, "its
exportation is a matter altogether in fieri, and not at all a
fixed and certain thing. (47) The general distinction as to the
respective powers of the United States and the states over
commerce was clearly put by Marshall, C. J., (48) when he said,
"The genius and character of the whole government seems to be
that its action is to be applied to all the external concerns of
the nation, and to those internal concerns which affect the
states generally, but not to those which are completely within a
particular state, which do not affect other states, and with
which it is not necessary to interfere for the purpose of
executing some of the general powers of the government."
Therefore, the internal commerce of a state is exclusively a
subject of regulation by that state; and foreign and interstate
commerce are subjects of regulation by Congress. But, as Curtis,
J., said, the power to regulate foreign and interstate "commerce
embraces a vast field, containing not only many, but exceedingly
various, subjects, quite unlike in their nature; some
imperatively demanding a single uniform rule, operating equally
on the commerce of the United States in every port, and some ...
as imperatively demanding that diversity which alone can meet the
local necessities." (49) Therefore, where the subject is
national in its character and demands uniformity of regulation,
Congress alone can legislate, and, when Congress has not
legislated, it necessarily follows that that subject is to be
free from all legislation whatever. The so called "doctrine of
the silence of Congress" means this, and nothing more than this.
(50) On the other hand, where the subject is not national in its
character, and where local necessities require diversity of
regulation, the states may legislate, and their legislation will
be controlling and effective until, and only until, congressional
legislation shall supersede the state legislation. (51)
The internal commerce of a state.
34. As Chase, C.J., said, (52) referring to the internal
commerce of a static, "Over this commerce and trade Congress has
no power of regulation nor any direct control. This power belongs
exclusively to the states." The United States, therefore, may not
prohibit the sale within the territory of a state of illuminating
oil inflammable at less than a specified temperature; (53) nor
license the sale of liquor in violation of the laws of the state;
(54) nor does a License granted by the United States exempt the
licensee from state taxation on the business so conducted; (55)
nor do letters patent granted for an invention confer upon the
patentee the right of selling the patented article in violation
of the laws of the state. (56) The cases which illustrate the
power of the state over its internal commerce are hereinafter
referred to, and the rule deducible from them is that, while each
state did not, by the adoption of the Constitution, surrender its
ordinary local powers of self government operative upon all
persons and property which exist, or may come, within its
territory, and which merge in the mass of persons and property
subject to its jurisdiction, yet, nevertheless, the territorial
limits of each state's jurisdiction, the grant to the government
of the United States of powers conflicting with state
sovereignty, and a due regard to the rights of citizens of other
states, must be held to limit the exercise by each state of its
otherwise illimitable powers, by the restriction that those
powers are not to be so exercised as to interfere with the full
execution of the powers granted to the United States. Therefore,
persons or property brought within the territory of a state by
the exercise of any federal power, must be exempted from
obstructive state control until the federal power has ceased to
operate, and until the persons or property on which it acted have
merged in the mass of persons or property within the territory of
the state. (57) On the same principle, federal agencies are
exempted from any such state regulation as hinders the agent in
the full performance of his or its duty to the government of the
United States.
Navigable waters and the soil under them.
35. Before the Revolution, the title to navigable waters and to
the soil under them was vested in the crown, or in its grantees.
After the Revolution, the people became sovereign, and henceforth
the title to navigable waters within the jurisdiction of a
riparian state and to the soil under them became vested in that
state for the public use of its citizens. (58) After the
adoption of the Constitution, as before, the title to navigable
waters and to the soil under them and the right to fish therein
remained in the riparian state, its proprietary title extending
in the case of inland waters constituting its boundary (59) from
ordinary high water mark ad medium filae, and in the case of the
sea and its bays, to the distance that the international
jurisdiction of the United States extended; and by force of the
Constitution, the United States acquired only the right to
exercise over navigable waters its power of regulating
navigation, and states which were admitted to the union
subsequently to the adoption of the Constitution have, of course,
in this respect the same rights of sovereignty and jurisdiction
as the original thirteen states. (60) Therefore, a state may
rightfully regulate the exercise of the right of fishing in its
navigable waters, and enforce by judicial proceedings a
forfeiture of vessels whose navigators fail to conform to the
regulations so prescribed, and a license to navigate granted by
the United States confers no immunity from the operation of such
regulations. (61) The right of the people of a state to fish in
its navigable waters comes not from their citizenship alone, but
from their citizenship and property combined," (62) and it is,
therefore, a right which does not by force of the Constitution
vest in the citizens of other states. The power granted to the
United States of jurisdiction in admiralty does not carry with it
a cession of navigable waters, or of general jurisdiction over
them, and, therefore, a murder committed on a vessel of the navy
of the United States while at anchor in navigable waters within
the jurisdiction of a state is not cognizable in a court cf the
United States. (63)
Preferences of ports.
36. The Constitution declares that "no preference shall be,
given by any regulation of commerce or revenue to the ports of
one state over those of another." (64) This prohibition is
obviously intended to guard against favoritism in customs
regulations, and, therefore, does not apply to the diversion of
water from one navigable river to another in an improvement of
navigation, (65) nor to the legalization by an act of Congress of
a bridge over navigable waters, though indirectly obstructing the
commerce of a port. (66)
Duties upon exports.
37. The United States are expressly forbidden to tax exports.
(67) This prohibition applies to foreign, and does not apply to
interstate, commerce (68) nor to goods "imported from the United
States" into Puerto Rico. (69) Internal revenue stamps required
to be placed by the manufacturer upon articles for exportation do
not fall within the prohibition. (70) On the other hand, a
specific stamp duty imposed upon bills of lading covering goods
exported is a tax upon the articles covered by the bill of
lading, and, therefore, a tax upon exports. (71)
Duties upon tonnage.
38. The Constitution in express terms forbids the states to
impose duties on tonnage. Section 10 of Article I of the
Constitution declares that "no state shall, without the consent
of Congress, lay any duty on tonnage." The word "tonnage," as
applied to American shipping, means "their entire internal
capacity, expressed in tons of one hundred cubical feet each, as
estimated and ascertained by those rules of admeasurement and
computation (72) which are prescribed by the acts of Congress.
(73) The constitutional prohibition prevents state taxation of "
watercrafts plying in the navigable waters of the state ... at
the rate of $1 per ton of registered tonnage. (74) Nor can a
state require that every vessel arriving at a port of the state
shall pay to the port wardens a fixed sum whether the wardens be,
or be not, called on to perform any services for the vessel; (75)
nor compel every vessel arriving at any quarantine station on the
coast of the state to pay a fixed sum per ton; (76) nor require
every steamboat mooring in any port of the state to pay a sum
regulated by the tonnage of the boat; (77) nor require all
vessels entering a certain port to load or unload, or making fast
to any wharf therein, to pay a sum regulated by the registered
tonnage of the vessel. (78) In each one of these cases, the
taxation imposed by the state would have been void as an
attempted regulation of interstate commerce, had there been no,
express prohibition of state tonnage duties.
Port Dues.
39. Port dues, that is, charges imposed on vessels as
instruments of commerce, and payable by all vessels entering,
remaining in, or leaving a port, by reason of such entry, stay,
or departure, and without regard to services rendered to or
received by the vessel, are regulations of rightfully imposed
under commerce, and as such cannot be state authority. (79)
Under this rule, as expounded in Steamship Co. v. Port Wardens,
(80) a charge of $5 per vessel payable to the wardens "whether
called on to perform any service or not, for every vessel
arriving in" the port of New Orleans, was held to be a wrongful
imposition. So also, under pretence of making port regulations, a
state (cannot rightfully vest in the master and wardens of a
port, or in his deputies, a monopoly of the survey of the hatches
of seagoing vessels coming to the port, or of damaged goods on
such vessels, for such a monopoly is a burden upon, and therefore
a regulation of, foreign and interstate commerce. (81) The
prohibition of state duties on tonnages (82) forbids the
imposition by a state of port dues in the form of a tax of $5 for
the first hundred tons and 1 1/2 cents for each additional ton
payable by vessels owned in another state and entering a harbor
of the taxing state in the pursuit of commerce, (83) and also of
a tax similarly proportioned on "all steamboats which shall moor
or land in any part of" a state port. (84)
Pilotage.
40. As the thirteen original states were, before the
ratification of the Constitution, existing governments, they had,
with the obvious exception of New Hampshire, enacted laws
regulating pilotage. The first Congress (81) declared that "all
pilots ... shall continue to be regulated in conformity with the
existing laws of the states respectively wherein such pilots may
be, or with such laws as the states may respectively hereafter
enact for the purpose, until further legislative provision shall
be made by Congress. It has been held that, pilotage being a
subject of local concern, the states may regulate it so long as,
and to the extent that, Congress does not legislate with regard
to it. (86) A state may impose upon a vessel refusing to take an
offered pilot the forfeiture of half pilotage fees, and it may
exempt from such forfeiture vessels engaged in a particular
trade. (87) The forfeiture of half pilotage fees being, not in
the nature of a penalty, but of compensation under an implied
contract, (88) those fees must be paid though the pilot's
services were tendered and refused before the vessel had come
within the jurisdiction of the state, (89) and though the statute
authorizing the recovery was repealed after the services of the
pilot were tendered and refused, but before the action was
brought to recover therefor. (90) Such statute may impose a
compulsory obligation on foreign vessels. (91) But a state may
not discriminate in its pilotage regulations, as by requiring
vessels of some states to pay half pilotage fees and exempting
vessels of other states from that requirement; nor can a vessel
under the control of a pilot licensed under the laws of the
United States be required to take a pilot under the laws of a
state. (92)
Regulation of navigation.
41. The power to regulate foreign and interstate commerce
includes the control of navigation in the prosecution of such
commerce. The United States may, therefore, license vessels
navigating waters within the territorial jurisdiction of a state
and plying between ports of different states, and a state may not
create a monopoly interfering with the freedom of such
navigation. (93) The United States may require, under a penalty,
the inspection and licensing of a steam vessel (94) engaged in
the transportation on a state's internal waters of goods from, or
destined to, points in other states. (95) A state may not
require vessels licensed by the United States to carry on the
coasting trade and plying between a port in that state and ports
in other states, (96) or vessels also licensed by the United
States and employed as lighters and towboats in a port of a state
in aid of vessels engaged in commerce, either foreign or
coastwise, (97) to make return to the local authorities of the
names, places of residence, and respective interests of the
owners of such vessel state may not require "those engaged in the
transportation of passengers among the states to give to all
persons traveling within that state, upon vessels employed in
such business, equal rights and privileges in all parts of the
vessel without distinction on account of race or color, "for such
a statute acts directly upon the business, as it comes into the
state from without, or goes out from within. (99) On the other
hand, a state may grant an exclusive monopoly of the navigation
of an internal waterway which, by reason of a lack of outlet or
other connection with any possible system of interstate or
foreign transportation, is available only for the internal
commerce of the state, and on such a waterway an United States
coasting enrollment and license is inoperative. (100)
Port regulations.
42. A state may establish port regulations, prescribing where a
vessel may lie in harbor, how long she may remain there, and what
lights she must show at night; thus in The James Gray v. The John
Fraser, (101) an admiralty cause of damage resulting from a
collision of the two vessels in Charleston harbor, that one was
held to be in fault, which had, by its failure to display lights
in conformity with the regulations of the port imposed under
authority of the state, been the cause of the collision. Taney,
C. J., said (102), "Regulations of this kind are necessary and
indispensable in every commercial port, for the convenience and
safety of commerce, and the local authorities have a right to
prescribe at what wharf a vessel may lie, and how long she may
remain there, where she may unload or take on board particular
cargoes, where she may anchor in the harbor, and for what time,
and what description of light she shall display at night to warn
the passing vessels of her position, and that she is at anchor
and not under sail. They are like to the local usages of
navigation in different ports, and every vessel, from whatever
part of the world she may come, is bound to take notice of them
and conform to them. And there is nothing in the regulations
referred to in the port of Charleston, which is in conflict with
any law of Congress regulating commerce, or with the general
admiralty jurisdiction conferred on the courts of the United
States." Ostensibly on the same principle, it was held in New
York v. Miln, (103) that a state may require under a penalty the
master of every passenger carrying vessel on arriving at any port
within the state to report to the state authorities the name,
place of birth, last legal settlement, age, and occupation of
every passenger, the statute under consideration being one
enacted by New York in 1824, and the court affirming its
validity, on the ground that it was a regulation, not of
commerce, but police, and as such falling within the reserved
powers of the state. The authority of the case is, however, much
shaken by the admirably reasoned dissenting judgment of Story,
J., with whose conclusions Marshall, C. J., concurred (104) and
the result reached by the court is clearly inconsistent with the
later cases of Sinnot v. Davenport, (105) Foster v. Davenport,
(106) and the yet later cases, which hold that a state cannot,
directly or indirectly, tax the transportation of passengers
coming from foreign countries. (107)
Quarantine.
43. As Brown, J., said in Bartlett v. Lockwood, (108) "While,
under its power to regulate foreign and interstate commerce, the
authority of Congress to establish quarantine regulations, and to
protect the country as respects its commerce from contagious and
infectious diseases, has never in recent years been questioned,
such power has been allowed to remain in abeyance; and Congress,
doubtless in view of the different requirements of different
climates and localities, and of the difficulty of framing a
general law upon the subject, has elected to permit the several
states to regulate the matter of protecting the public health as
to themselves seemed best. "A state may, therefore, prohibit the
entry into its territory of physically infected persons or goods,
and it may provide for an examination of all persons or goods
coming into its territory in order to determine whether or not
they be physically infected, and to defray the expenses of such
sanitary examinations it may collect charges, provided that such
charges be not in the form of duties on tonnage and that they do
not unnecessarily interfere with foreign or interstate commerce.
A state may, therefore, require all vessels coming into its ports
to stop at designated quarantine stations, submit to a sanitary
examination, and pay therefore fees rated in amount in proportion
to the maritime class to which the vessel may belong and equal in
amount for all vessels of the same class. (109) On the other
hand, a state cannot, for the purpose of defraying the expenses
of enforcing her quarantine regulations, impose on vessels
entering her harbors in the prosecution of commerce, taxes based
upon the tonnage of the vessel. (110) A state may enact statutes
declaring that persons transporting, or having in their
possession, diseased animals are to be held liable for any damage
caused by the spread of disease by such animals, (111) and a
state may authorize its sanitary authorities to exclude from its
territory animals imported from localities in other states
wherein those sanitary authorities may determine epidemic
diseases among such animals to exist; (112) but a state may not,
under the pretext of quarantine laws, regulate interstate
commerce, as by prohibiting the driving or conveyance of Texan,
Mexican, and Indian cattle into the state between the 1st of
March and the 1st of November in any year, (113) or by
prohibiting the sale of meat which has not been inspected on the
hoof within the state. (114) The test is, as stated by, McKenna,
J., "... whether the police power of the state has been exercised
beyond its province, exerted to regulate interstate commerce,
exerted to exclude without discrimination the good and the bad,
the healthy and the diseased, and to an extent beyond what is
necessary for any proper quarantine .... The prevention of
disease is the essence of a quarantine law. Such a law is
directed not only to the actually diseased, but to what has
become exposed to disease." (115)
Ferries.
44. A ferry is "a franchise grantable by the state, to be
exercised within such limits and under such regulations as may be
required for the safety, comfort, and convenience of the public,"
(116) and such a franchise confers the right of embarking and
landing passengers and freight at designated points on a water
bank. (117) Such a franchise is necessarily exclusive. (118)
The state which grants the franchise may annex conditions to its
exercise, and may, therefore, tax the ferry and its appliances.
It may also tax the boats and other personal property of the
owner of the ferry, if that owner be by residence subject to its
jurisdiction. (119) On the other hand, a state cannot tax ferry
boats which only come within its jurisdiction in the movement of
interstate commerce. (120)
Bridges and dams.
45. Navigability in fact is the test of navigability in law. If
a lake, river, or stream "be capable in its natural state of
being used for purposes of commerce, no matter in what mode the
commerce be conducted, it is navigable in fact, and becomes in
law a public river or highway." (121) As navigable waters are no
longer the sole, nor, indeed, the main channels of commerce, and
as that volume of trade which is carried over such waters by
bridges or viaducts is in many cases entitled, by reason of its
magnitude, to greater consideration than that which is moved in
boats upon the water, it must be determined in the case of any
bridge, or other obstruction, whose erection or the method of
whose construction is called into question, whether or not the
public interest will be promoted by its erection or by its
construction in the particular manner, and such a matter is
primarily one for the decision of the legislature, rather than of
any court. As the subject is that of possible obstruction of
highways of foreign or interstate commerce, final jurisdiction is
necessarily vested in Congress, (122) which may forbid, or permit
upon conditions, the erection of a bridge under state authority,
(123) or may legalize a bridge already erected, pending a suit to
enjoin its construction, (124) or even after the Supreme Court of
the United States has entered a final decree declaring the bridge
as constructed to be an unlawful obstruction; (125) or may
reserve for future congressional action the approval of the
construction of any bridge under an act of the legislature of any
state over or in any "stream or other navigable water not wholly
within the limits of such state," and in any delegate to the
Secretary of War the power of approving bridges and other
obstructions in navigable waters wholly within the Limits of any
one state, and may prohibit all obstructions not so approved.
(126) This congressional legislation does not deprive the states
of authority to bridge or otherwise obstruct intraterritorial
streams, but only creates "an additional and cumulative remedy to
prevent such structure although lawfully authorized, from
interfering with commerce," (127) nor does it vest in the
Secretary of War" the right to determine when and where a bridge
may be built." (128) Therefore, subject to the paramount
authority of the United States, as exercised by Congress, or,
under the legislation now in force, as delegated to the Secretary
of War, a state may partially obstruct by bridges, or wholly
obstruct by dams, navigable waters which are wholly within its
limits. (129) The power of bridging their navigable waters is
not affected in the states carved out of the Northwest Territory
by the provision in the ordinance of 1787 for the free navigation
of the Mississippi and the St. Lawrence "without any tax, duty,
or impost therefor," (130) nor in the states of California,
Louisiana, or Oregon by the provisions of the acts of Congress
admitting them to the union and declaring their navigable waters
to be forever free. (131) A state cannot lawfully appropriate
water for its non-navigable streams to such an extent as to
impair the navigation of its navigable streams. (132) In the
case of the bridge spanning the Ohio river and connecting the
city of Cincinnati, in the state of Ohio, with the town of
Covington, in the state of Kentucky, it was held by the majority
of the court (133) that the traffic across the river was
interstate commerce, that the bridge was an instrument of that
commerce, and that Congress possesses the power to fix the
charges for the traffic over the bridge, the authority of the
state being limited to fixing tolls exclusively within its
territory; but the minority of the court held that, as Congress
had made no provisions as to the tolls, it had thereby manifested
its intention that the rates of toll should be as established by
the two states. It has also been held that a state may tax so
much of an interstate bridge as is within its territory, (134)
and that a state may tax the capital stock of an interstate
bridge company incorporated by it. (135)
Improvements of navigation.
46. The United States may, in the discretion of Congress,
authorize or prohibit improvements in the water ways of foreign
or interstate commerce. It may change the established channels of
rivers, (136) and dredge harbors, (137) and the action of the
United States is exclusive of any right to the contrary asserted
under state authority. On the other hand, a state may exercise
exclusive control over such waterways as are wholly within its
territory, and are not used in movement of foreign or interstate
commerce. (138) The principle controlling the cases on this
subject is nowhere more clearly stated than by Field, J., who
said, in County of Mobile v. Kimball, (139) " The uniformity of
commercial regulations, which the grant to Congress was designed
to secure against conflicting state provisions, was necessarily
intended only for cases where such uniformity is practicable.
Where from the nature of the subject or the sphere of its
operations the case is local and limited, special regulations
adapted to the immediate locality could only have been
contemplated. State action upon such subjects can constitute no
interference with the commercial power of Congress, for when that
acts the state authority is superseded. Inaction of Congress upon
these subjects of a local nature or operation, unlike its
inaction upon matters affecting all the states and requiring
uniformity of regulation, is not to be taken as a declaration
that nothing shall be done with respect to them, but it is rather
to be deemed a declaration that for the time being, and until it
sees fit to act, they may be regulated by state authority. The
improvement of harbors, bays, and navigable rivers within the
states falls within this last category of cases. The control of
Congress over them is to insure freedom in their navigation, so
far as that is essential to the exercise of its commercial power.
Such freedom is not encroached upon by the removal of
obstructions to their navigability or by other legitimate
improvements. The states have as full control over their purely
internal commerce as Congress has over commerce among the several
states and with foreign nations; and to promote the growth of
that internal commerce and insure, its safety they have an
undoubted right to remove obstructions from their harbors and
rivers, deepen their channels, and improve them generally, if
they do not impair their free navigation as permitted under the
laws of the United States, or defeat any system for the
improvement of their navigation provided by the general
government. A state may, therefore, if Congress does not
otherwise direct, deepen and widen the harbors on its coast,
(140) Construct dams and locks in navigable rivers, and levy
tolls upon shipping using the improved waterway, (141) but a
state may not levy charges for an improved waterway upon vessels
whose draught is so light that the improvement has been of no
benefit to such vessel's. (142)
Wharves and piers.
47. A state may build wharves on navigable waters and collect
reasonable tolls for the use thereof, (143) for such tolls, not
being impositions by virtue of sovereignty, are not taxes but are
charges for services rendered or for conveniences provided, and
they are claimed in right of proprietorship. Whether wharfage
tolls be, or be not, in fact reasonable is not a question of
federal law, nor as such cognizable in a court of the United
States in cases other than those in which the federal court has
acquired jurisdiction by reason of the citizenship of the
parties. (144) Nevertheless, the right of a state to build
wharves and charge tolls therefor cannot be so exercised as to
discriminate in favour of the products of its own territory and
against those of other states. (145)
State duties upon imports and exports.
48. "Imports" are goods brought into a state from a foreign
country, and goods brought from one state into another are not
"imports". (146) As the power vested in the United States to
regulate commerce with foreign nations includes the power to
impose duties on the importation of foreign goods, and to
license, on the payment of those duties, the sale of the imported
goods within any state, and as there is an express constitutional
prohibition of state duties on imports and exports, excepting
such duties as may be absolutely necessary for executing the
inspection laws of the state, it follows that a state cannot
require under a penalty importers of foreign goods by the bale or
package, and vendors of the same by wholesale, to take out a
license as a prerequisite to the sale of such imported goods in
the original form and package in which they are imported, and
before they become incorporated with the mass of property in the
state. (147) On the same principle, a state cannot impose an ad
valorem tax upon imported goods remaining in their original cases
in the hands of the importer, even though a similar tax be
imposed on all merchandise in the state; (148) and a state cannot
tax an auctioneer's sales of imported goods in their original
cases and for the account of the importers thereof. (149) Yet
separately wrapped packages of foreign dry goods brought into a
state in wooden eases are subject to state taxation upon their
being taken from their cases. (150) Merchandise brought from a
foreign country and which by the terms of the contract of
purchase is not to be at the risk of the purchaser until
delivered to him in the port of entry, does not come within the
constitutional meaning of the term "imports," and such goods,
though in their original packages, may be taxed by the state in
whose port their purchase is completed by delivery. (151)
State inspection laws.
49. The object of inspection laws is to improve the quality of
articles produced by the labour of a country, to fit them for
exportation, or, it may be, for domestic use. They act upon the
subject before it becomes an article of foreign commerce, or of
commerce among the states, and prepare it for that purpose. (152)
Such laws prescribe some or all of certain requisites, such as
the quality of the article, the form, capacity, dimensions,
weight, or marking of the package, and, to enforce compliance
with their requirements, they provide for supervision by public
officers. (153) Therefore, a state may prohibit under a penalty
the exportation, without inspection, of articles produced in the
state, such as tobacco, (154) and may require the official
measurement of coal, (155) and lumber, (156) and the inspection
of fertilizers. (157) The words "inspection laws," "imports,"
and "exports," as used in the Constitution, leaving exclusive
reference to property, as distinguished from persons, (158) a
state per capita tax on immigrants cannot be sustained as a means
of executing the inspection laws of a state. (159) But a state
may not, under the pretence of an inspection law, regulate
interstate commerce, as by requiring an inspection by a public
officer, upon payment of fees, of all meat slaughtered more than
one hundred miles from the place of sale, when there is no such
requirement with regard to meat slaughtered at a less distance
from the place of sale; (160) or by requiring an inspection of
all flour ground without the state, when there is no such
requirement as to flour ground within the state; (161) or by
prohibiting the sale of meat which has not been inspected on the
hoof within the state; (162) or by requiring, as a prerequisite
to the shipment of alcoholic liquors into the state, an analysis
by the state chemist of a sample thereof. (163)
Taxation discriminating against goods from other states.
50. A state may tax goods brought in from another state, though
in the hands of the consignee and in the original packages; (164)
but a state cannot by taxation discriminate against either the
natural products of, or the goods manufactured in, other states,
whether by requiring of every nonresident trader as a
prerequisite to his sales of other than agricultural products of
or articles manufactured in the state, a higher license fee than
is required of traders in domestic goods; (165) or by requiring
payment of a license fee by vendors of merchandise "not the
growth, produce, or manufacture" of the state, no license fee
being required of vendors of domestic merchandise; (166) or by
charging vessels laden with the products of other states for the
use of public wharves, when vessels laden with the products of
the state are permitted to use such wharves without charge; (167)
or by requiring a non-resident merchant desiring to sell by
sample in the state to pay for a license to do that business a
sum to be ascertained by the amount of his stock in trade in the
state where he resides, and in which he has his principal place
of business; (168) or by imposing a tax on each selling agent of
a foreign dealer while not imposing a tax upon the selling agents
of a domestic dealer; (169) or by imposing a license tax upon
wholesale dealers in brewed or malt liquors but exempting from
such tax all dealers paying a lesser tax for the privilege of
manufacturing liquors within the state; (170) or by statutes
under the guise of inspection laws imposing discriminating taxes
upon products of other states, as, for instance, by, requiring
that no meat slaughtered one hundred miles or more from the place
of sale should be offered for sale unless previously inspected by
a local official and a fee paid therefor, while requiring no
inspection to be made of meat slaughtered within one hundred
miles of the place of sale; (171) or by requiring flour brought
into the state and offered for sale therein to be inspected by a
state official and a fee paid therefor, while requiring no
inspection to be made of flour produced within the state. (172)
Nor can a state, under the act, (173) Which was passed to
legislatively overrule the Original Package Case (174) establish,
so far as regards the sale of intoxicating liquors, a system
which would in effect discriminate between interstate and
domestic commerce in commodities whose manufacture and use are
permitted by the state. (175) There is no unlawful
discrimination in requiring prepayment of the tax by vendors of
the products of other states, while vendors of domestic goods are
permitted to pay the same tax on returns from time to time. (176)
On the other hand, non-discriminating taxation may lawfully be
imposed by a state, as where a state levies a tax upon all
peddlers of sewing machines without regard to their place of
manufacture, (177) or by taxing the gross yearly commissions of
all general agents selling on commissions. (178) A state which
taxes the traffic in any intoxicating liquors at any place other
than the place of manufacture does not impose a discriminating
tax upon a dealer in liquors manufactured in another state. (179)
Of course, one who claims under these cases exemption from the
burden of state taxation must prove his right and must show a
discrimination in taxation as against goods brought in from
another state. (180) The cases that have been cited forbid only
that state taxation which discriminates in favour of the products
of the taxing state and against goods brought in from another
state, but there are other cases which rest upon the broad
principle that a state cannot impose any tax or other restriction
"upon the citizens or inhabitants of other states for selling, or
seeking to sell, their goods in such state before they are
introduced therein, (181) the ground of decision being, that such
a tax does not subject to taxation goods brought from another
state in common with the mass of property in the taxing state,
but that, on the other hand, such a tax stands as a barrier in
the way of the manufacturer or merchant of another state and
hinders him in the introduction of his goods into the taxing
state. (182) It is no answer to this to say, as White, C. J.,
and Field and Gray, JJ., said (183) that if citizens of other
states cannot be taxed in the same way for the same business,
there will be discrimination against the inhabitants of the
taxing state and in favour of those of other states, for the
conclusive reply is that while a state may without discrimination
tax its domestic trade, it cannot, with or without
discrimination, tax or otherwise regulate that interstate
commerce which has not been terminated by the merging of its
subject in the mass of property within the jurisdiction of the
taxing state. It must be remembered that, as Bradley, J., said
(184) to carry on interstate commerce is not a franchise or a
privilege granted by the state; it is a right which every citizen
of the United States is entitled to exercise under the
Constitution and laws of the United States."
The original package doctrine.
51. In Brown v. Maryland, (185) a statute of Maryland requiring,
inter alia, all importers of foreign articles, "by bale or
package," to take out a license, was held to conflict with the
prohibition of state duties upon imports, as well as with the
federal power of regulating commerce, Marshall, C. J., saying
(186) that "when the importer has so acted upon the thing
imported, that it has become incorporated and mixed up with the
mass of property in the country, it has, perhaps, lost its
distinctive character as an import, and has become subject to the
taxing power of the state; but while remaining the property of
the importer, in his warehouse, in the original form or package
in which it was imported, a tax upon it is too plainly a duty
upon imports to escape the prohibition in the Constitution."
Marshall, C. J., also said (187) that "Congress has a right, not
only to authorize importation, but also to authorize the importer
to sell," but he qualifies this (188) by his concession that the
police power "remains, and ought to remain, with the states." It
was subsequently held that the prohibition of duties upon imports
and exports had no reference to interstate commerce; (189) and
the congressional right of authorization of importation and the
consequent right of authorization of the sale of imported
articles have no relevancy to state taxation or to state police
control of interstate commerce, and, therefore, a state tax upon
sales at auction was held to be applicable to products of other
states, even though the articles were sold in their original and
unbroken packages. (190) It was also held that coal brought from
another state by vessel, and unladen, was subject to state
taxation in its port of destination. (191) On the other hand, it
was held that a state cannot forbid a common carrier to bring
liquors into the state, and that such legislation does not
release the carrier from liability in damages for his refusal to
carry the liquor. (192) It was also held that beer brought from
another state in barrels and in cases was not subject to seizure
under a state statute prohibiting the sale of intoxicating
liquors, (193) the ground of decision being that beer is an
article of lawful commerce, and, as such, entitled, under the
commerce clause, to be brought into every state, and, so long as
it remains in its original package, to be free from state
control. The doctrine of this case was obviously applicable to
all importation and transportation of intoxicating liquors, and
it necessarily was a cause of irritation to those people who
conscientiously believe it to be the duty of every government to
prohibit all traffic in, or use of, such liquors. There
naturally followed an act of Congress, (194) providing "that all
fermented ... liquors ... transported into any state or territory
or remaining therein for use, consumption, or sale or storage
therein, shall upon arrival in such state or territory be subject
to the operation and effect of the laws of such state or
territory enacted in the exercise of its police powers, to the
same extent and in the same manner as though such liquids or
liquors had been produced in such state or territory, and shall
not be exempt therefrom by reason of being introduced therein in
original packages or otherwise." As the court's ruling in Leisy
v. Hardin was based upon an affirmation of the constitutional
exemption of articles of interstate commerce from the exercise of
the state's police power, there was some ground for supposing
that an act of Congress could not confer upon the states any
power in the premises, for, as Taney, C. J., had said, (195) it
will hardly be contended that an act of Congress can alter the
Constitution, and confer upon a state a power which the
Constitution declares it shall not possess. And if the grant of
power to the United States to make regulations of commerce is a
prohibition to the states to make any regulation upon the
subject, Congress could no more restore to the states the power
of which they were thus deprived, than it could authorize them to
coin money or make paper money a tender in the payment of debts,
or to do any other act forbidden to them by the Constitution.
"Nevertheless, the court held (196) that the act was
constitutional because it was in effect a national regulation of
interstate commerce in liquors, and because it imparted no power
to the states not then possessed and simply removed an impediment
created by the absence of a specific utterance on the part of
Congress. (197) It has since been held that under this act a
state cannot establish a system discriminating "between
interstate and domestic commerce in commodities whose manufacture
and use are not prohibited by its laws." (198) It has also been
held that a state may prohibit the sale of oleo margarine in
imitation of butter, and that the act of Congress (199) defining
butter and imposing a tax upon oleo margarine does not authorize
transportation and sale in violation of such a statute, (100) the
ground of decision being that the doctrine of Loisy v. Hardin
does not justify the broad contention that the states are
powerless to prevent the sale of subjects of commerce, if their
sale may cheat the people into purchasing something which is
wholly different from that which its condition and appearance
import. On the other hand, it has been held (201) that oleo
margarine, being an article of food and commerce, a state statute
cannot prohibit its transportation from another state and its
sale in an original ten-pound package. It has also been held
(202) that a state may prohibit the sale of cigarettes brought in
from another state, when the size of the original package is such
as to indicate an intention to sell at retail that which the
state in its exercise of the police power has forbidden to be
sold, Brown, J., saying, (203) "The whole theory of the exemption
of the original package from the operation of state laws is based
upon the idea that the property is imported in the ordinary form
in which from time to time immemorial foreign goods have been
brought into the country."
Transportation:
(a) State regulation in the exercise of the police power.
52. The construction of railways and the consequent development
of systems of through transportation have required the court to
consider in many cases the respective powers of the United States
and of the states in regard to transportation. Before railways
came into use the then ordinary appliances of internal
transportation, canals and turnpike roads, were regarded as
"component parts" of "that immense mass of legislation which
embraces everything within the territory of a state not
surrendered to the general government." (204) It was
subsequently held that a state through which the Cumberland road
passed could not tax coaches carrying the mail or persons
traveling on the coach in the service of the United States, but
the exemption from taxation was, in the several judgments of the
court, based exclusively upon the terms of the contracts between
the United States and the several states through which that road
ran, as made by the statutes of those states authorizing the
construction of the road. (205)
Under the later cases a state may, in the exercise of its police
power, regulate transportation so far as may be necessary for the
protection, safety, and comfort of its citizens, but it may not
by such regulations unnecessarily impede or obstruct interstate
transportation. A state could, before the passage of the
Interstate Commerce Act, require under a penalty all railroads to
fix and post their rates of fare and freight and not to charge in
excess therefor. (206) A state may regulate the charges of a
private warehouse for the storage of grain, although that grain
be stored in the course of interstate transportation. (207) A
state may fix and enforce maximum rates of fare and freight for
intrastate transportation on all railways within the state, even
though the people in other states may be indirectly affected
thereby. (208) A state may forbid discrimination in
transportation within its territory, and constitute a commission
to revise railway tariffs and to enforce the statute, for it is
not to be assumed that the commission will interfere with
interstate transportation. (209) A state may forbid railways to
employ in a position requiring the use, or discrimination of the
form or color, of signals "any person not having received from a
state board a certificate of freedom from color blindness." (210)
A state may require railways to provide separate accommodations
for white and colored persons traveling between points within the
state. (211) A state may prohibit the running of freight trains
on Sunday on any railway in the state (212). A state may require
railways to place guard posts in the prolongation of the line of
bridge trusses so that in case of derailment the posts, and not
the bridge trusses, shall receive the blow of the derailed
locomotive or car, (213) and a state may prohibit the heating of
passenger cars, other than dining cars, "by any stove or furnace
kept inside the ear or suspended therefrom." (214) A state may
require all regular passenger trains running wholly within the
state to stop at all county seats long enough to take on and
discharge passengers. (215) A state may forbid a common carrier
of passengers to limit its liability by contract. (216) A state
may forbid a common carrier to limit its liability save by an
agreement in writing signed by the owner of the goods, for such a
requirement is the establishment of a rule of evidence, and not a
regulation of contracts as to interstate transportation. (217) A
state may require all railways within the state to stop certain
of their trains running each way daily, at stations in towns
containing a specified number of inhabitants and to stop for a
time sufficient to receive and let off passengers. (218) A state
may require railways receiving freight for transportation to a
point on a connecting line to be liable for damages caused on the
connecting line, for the railway may lawfully limit its contract
of transportation to its own line. (219) A state may authorize a
municipality to prohibit by ordinance the running of any trains
within its limits at a speed greater than that fixed in the
ordinance. (220) A state may require intersecting railways to
provide facilities for transferring cars used in the regular
business of their respective lines. (221) A state may provide
that all railways doing business within the state shall be liable
in damages to their employees for any negligence of the railway's
servants. (222) A state may require railways to construct and
maintain cattle guards and fences under a penalty of double
damages. (223) A state may authorize the recovery from railways
of double damages for cattle killed or injured at a point where
the railway might, but did not, fence. (224) A state may
authorize its railroad commission to require a railway to erect
and maintain stations at designated villages. (225) A state may
prohibit or restrain the sale of wines or liquors imported from
foreign countries or brought within its territory from another
state, though introduced in an original package or otherwise, or
manufactured in the state. (226) A state may prohibit the sale
of an adulterated food product, even though it is brought from a
foreign country. (227) A state may so regulate the operation of
drawbridges over navigable waters that the traffic on the water
and the traffic on the land shall be so conducted as to interfere
as little as possible with each other. (228) A state may grant
and control the exercise of ferry licenses. (229) A state may
establish port regulations for its harbors. (230) A state may
authorize a municipality to forbid the use of steam power by
railways within the municipal limits (231) on the other hand, a
state, by its police regulations, could not, before the passage
of the Interstate Commerce Act, enforce with respect to
interstate transportation, a prohibition of a charge of the same,
or a greater, toll for a shorter than for a longer distance in
the same direction. (232) After the passage of the Interstate
Commerce Act such a regulation was a fortiori beyond the power of
the state. (233) A state may not require all trains carrying
interstate passengers to stop at a station where other adequate
accommodations were furnished by the railway, especially where
the stoppage of through trains at that station requires them to
run over a branch line taking them several miles out of their
direct course. (234) A state may not require a railway to stop
at all county seats, a sufficient time to take on or let off
passengers, such express trains as are run only for the
transportation through the state of passengers between two points
in other states, especially when by other trains adequate
accommodations are provided for all local and through
transportation to and from each county seat. (235) A state may
not require, under a penalty, a report to the state authorities
of the name and occupation of every passenger. (236) A state
cannot forbid a common carrier to bring into the state
intoxicating liquors. (237) A state may not regulate rates of
transportation over a line connecting two points within the state
but passing in part through another state. (238)
While a state has, unless restrained by contract, or unless
it thereby regulates foreign or interstate commerce, the power to
fix by legislation transportation charges within its
jurisdiction, and while the presumption is always in favour of
the validity of a governmental regulation under legislative
authority, (238a) it nevertheless cannot require a railway to
carry without reward, nor can it so fix charges as to take
private property without just compensation, nor without due
process of law. (238b) A state cannot under pretence of
regulating rates require railways to carry specified classes of
people at rates lower than those fixed by law for all classes.
(238c) As the power of fixing rates is administrative, it must
be exercised by the legislature (238d) and not by the courts
(238e) but it is within the judicial power, and it is the
judicial duty, to restrain that which in the form of regulation
operates to deny to the owners of property invested in the
conduct of transportation the equal protection of the laws.
(238f) The courts must, therefore, when a proper case is
presented, determine whether transportation charges as fixed by
legislative regulation are, or are not, so unreasonably low as to
deprive the carrier of his property without just compensation.
Yet a railway may not fix its rates solely with a view to its own
interest and ignoring the rights of the public, nor may it fix
its rates upon any basis other than that of the fair value of the
property used and the fair value of the services rendered, or, in
other words, a fair return upon the capital invested. (238g) In
this connection Harlan, J., said: (238h) The basis of all
calculations as to the reasonableness of the rates to be charged
by a corporation maintaining a highway under legislative sanction
must be the fair value of the property being used by it for the
convenience of the public. And in order to ascertain that value,
the original cost of construction, the amount expended in
permanent improvements, the amount and market value of its bonds
and stock, the present as compared with the original cost of
construction, the probable earning capacity of the property under
particular rates prescribed by statute, and the sums required to
meet operating expenses, are all matters for consideration and
are to be given such weight as may be just and right in each
case. We do not say that there may not be other matters to be
regarded in estimating the value of the property. What the
company is entitled to ask is a fair return upon the value of
that which it employ's for the public convenience. On the other
hand, what the public is entitled to demand is that no more be
exacted from it for the use of the public highway than the
services rendered by it are reasonably worth." (238i)
Much misapprehension with regard to the proper limits of the
exercise of governmental power over the railways has resulted
from reasoning by analogy, for the logical value of that method
of reasoning is dependent upon an exact similarity in all points
between the subjects of comparison. It is a truism that railways
are public highways, and yet it is clear that they are not
highways in the sense that navigable rivers and roads, whether
common or improved, are highways. Railways differ from those
other highways in three important respects, which deprive the
analogy of much of its value. In the first place, the railways
have in the United States been constructed, in almost every
instance, not by public officers expending the public funds, but
by private persons under corporate organizations expending
private funds realized from the sale of corporate bonds or
shares, the investors taking all the risks, and relying upon the
financial results of operation under the corporate franchises for
income and reimbursement of outlay. In the second place, the
railway is not only an artificial highway, but also it can only
be used as a highway in connection with artificial means of
transportation which the railway must itself supply and operate.
The earlier railways in England and in this country were
chartered upon the theory that the company would provide the road
and the customers find their several modes of transportation, but
it was soon discovered that the magnitude, complexity, and
dangers of the business were too great to admit of its conduct in
that manner. In the third place, every railway is a common
carrier, and, as such is bound to carry at reasonable rates and
without unjust discrimination all freight and all passengers that
may be offered to the extent of its facilities.
If transportation rates could be treated, without reference
to the public interest as subjects of private bargain between the
railway and its customers, it would be lawful for the railway on
the one hand to demand whatever sum, however exorbitant, that the
necessities of its customer would compel him to pay, and for the
customer, on the other hand, to have his goods carried as nearly
free as possible. But that duty to the public which requires the
railway to carry all freight at a reasonable rate defines as
reasonable that rate which not only adequately remunerates the
railway for the transportation of the particular freight, but
also enables it to carry that freight without prejudice to its
performance of its duty of transporting other classes of freight.
In other words, neither the customer, nor the railway can be
permitted to ignore the fact that the railway is not a private,
but a common carrier, and that, therefore, its charges must be
fixed with reference to its performance of duties to others as
well as to the particular customer.
Local freight costs the railways more than through freight.
By reason of the fluctuation in its demand upon the terminal
facilities, rolling stock, and labour it involves a large outlay
in capital and in cost of administration, with uncertainty as to
the amount of return in any given period. It necessitates the
frequent transportation of light loads, and a consequent loss of
income from unused facilities and unemployed labour. Its
necessary sidings, switches, and frogs increase the perils of
operation. On the other hand, through freight can be transported
in full loaded cars, and with the minimum of labour, by reason of
certainty as to the duration of the trip and the demands upon
that labour.
All freight is not of equal bulk or value, nor is it
necessarily received, carried, or delivered in precisely the same
manner. It may be received and delivered at the station and
loaded and unloaded by the railway employees; it maybe received
and delivered at the railway sidings, but loaded and unloaded by
the consignor or consignee; it may be received from and delivered
to sidings on private premises, and loaded or unloaded there by
the consignor or consignee; or it may be received in one of these
ways and delivered in another. So also the stipulated speed of
transportation may vary. A railway also has to deal both with
retail and wholesale customers, that is, with those who at their
option make occasional use of its transportation facilities, and
with others who make a prearranged regular and constant use of
these facilities.
It is to the interest of both the public and the railways
that rates should be sufficiently large to yield an adequate
return for the capital invested, to maintain the plant in a
condition of efficiency, and to permit the railway to avail
itself of such improvements as may be, from time to time, made
in machinery and appliances. The railway plant includes not
merely the roadbed and main tracks, but also the terminal
facilities, the way stations, the sidings necessary therefor, the
rolling stock, and the skilled labour upon which devolves the
maintenance and operation of the road. The traffic must be steady
in order that there may be no loss from unused machinery and
unemployed labour. Return freight must be provided in order to
avoid as far as possible the transportation of empty cars. The
cost of moving freight varies upon different lines and upon
different parts of the same line, in accordance with the grades,
the more or less expensive character of the tunnels, bridges,
viaducts, and other engineering appliances that have been
provided to overcome natural obstacles, and the cost to the
railway of its machinery, fuel, and labour. The railway manager
has, therefore, in fixing a rate to determine the cost of moving
a given quantity of freight of the particular kind over the
designated distance in the desired manner, and to that end he
must consider several elements, to each of which due weight must
be given: first, the extent to which the company's way or
terminal facilities and labour will be used in handling the
motive power and rolling stock, and the possibility of obtaining
a full return freight; third, the length of the haul and the
favorable or unfavorable character of the grades; fourth the
degree of expedition required, and the consequent accommodation
to, or disturbance of, the general traffic arrangements of the
road; fifth, the constant, or fluctuating, character of the
demands of the particular freight upon the road's facilities;
and, sixth, the relative bulk and value of the freight and the
degree of the carrier's responsibility for its safe
transportation. Railways have not been chartered, nor has capital
been invested in their construction, upon the theory that they
are to do business for less than cost and a reasonable profit
upon the investment. The railway manager musts therefore, in
order that dividends maybe earned, and, after determining the
cost of moving and handling the particular freight, such a sum
for profit as will, in addition to the company's profits from
other sources, furnish an adequate return for the Capital
invested.
When, therefore, government officers undertake to fix
transportation rates, it is only fair and just that they should
take into consideration the elements of the problem as it would
present itself to the mind of an experienced and intelligent
railway manager. And when the courts are called upon to determine
the validity of governmental regulations as to rates they may
properly give weight to the same considerations.
It is true that the sum of the par of the share and debt
capital of every railway line does not always accurately express
the exact amount of capital invested in the line. In some cases,
more, or less, of the share capital is only water, and even more
or less of the debt capital may have been issued at a discount.
In other cases, and this is certainly true of the great trunk
lines, the sum of the par of the share and debt capital is, by
reason of past expenditure of income in betterments, and, in some
cases and to large amounts, by reason of issues of additional
share capital at a premium, very much less than the amount
actually invested in the line.
Transportation:
(b) Regulation by taxation.
The United States may, in the exercise of the power to
regulate commerce, impose a duty payable by shipping companies in
respect of passengers, not citizens of the United States, coming
from a foreign port into a port of the United States, (239) and
such a duty, being an incident of the regulation of commerce and
not a tax, is not subject to the constitution requirement of
uniformity, and "it operates, with the same force and effect in
every place where the subject of it is found." (240) A state may
require a railway, incorporated by it to construct a line between
a point in the state and a point without the state, to transport
passengers for a charge not exceeding a fixed sum, and to pay to
the state a percentage of the whole amount which may be received
for the transportation of passengers; the court holding that the
payment to the state is not a tax upon interstate transportation
but a charge for the use of improved facilities of transportation
which the state, by its agent, the railway, has constructed and
for whose use, it has a right to charge. (241) A state may
impose a tax upon the actual cash value of every share of the
capital stock of a railway incorporated by it even though the
railway does interstate business. (242) A state may impose on
every railway operating within the state a franchise tax, to be
determined in amount by multiplying the average gross receipts
per mile by the number of miles operated within the state, the
ground of decision being that the state which grants the
franchise may annex conditions to its exercise, and may measure
the value of the franchise by the gross receipts earned by
operation under that franchise. (243) A state may tax the tolls
received by a railway chartered by another state, but owning a
line within the taxing state, for the use of such line by another
railway. (244) A state may tax the capital stock, of a car
company in the proportion that the number of miles run by its
cars within the state bears to the whole number of miles run by
its cars in that and other states. (245) A state may require a
company doing both a domestic and an interstate business to take
out a license. (246) A state may tax the capital stock of a
consolidated corporation chartered by it, and one of whose
constituent corporations is a foreign corporation. (247) A state
may tax transportation between two points within the state but
passing in part through another state, the tax being "determined
in respect of receipts for the proportion of transportation
within the state." (248) A state may impose a privilege tax on
the business of a railway company in transporting passengers in
cabs to and from a station within the state. (249) A state may
impose a tax upon sales at auction of goods which are the product
of other states, and which are sold in their original and
unbroken packages, the tax having a uniform application to sales
at auction within a specified territory, and not discriminating
as against sales at auction of the products of other states.
(250) A state may tax coal consigned by a resident of another
state for sale and afloat in a port of the taxing state in the
vessel in which it had been transported. (251) And a state may
tax timber cut in its forests, though owned by a resident of
another state and deposited at a place from whence it is to be
shipped to another state. (252)
A state may not impose a capitation tax on persons leaving
the state by railroad, stage coach, or otherwise. (253)
Curiously enough, this case is referred to in the later judgments
as if it had been decided on the ground taken in the dissenting
judgment(254) that the tax was void because it imposed "a burden
upon commerce among the several states," whereas the judgment of
the court was put(255) on the ground that a state tax on the
interstate transportation of passengers is void because it is an
interference with the freedom of transit of citizens to the seat
of government and is consequently an infringement upon the
federal supremacy. A state may not impose, as affecting
interstate commerce, a tax on freight. (256) A state may not
impose a privilege tax at a fixed rate per car on all cars run by
railways not owning the cars, so far as affects cars used in the
transportation of passengers into, through, or out of, the state.
(257) A state may not, so far as affects interstate commerce,
tax the gross receipts of corporations engaged in the business of
running cars over any of the railways of the state. (258) A
state may not tax the gross receipts of the transportation of
passengers or goods in interstate commerce. (259) A state may
not require a railway company, being a link in a through line of
interstate transportation, to pay a license fee for maintaining
an office for the sale of tickets. (260) A state may not require
an agent of an interstate transportation line to pay a license
fee for soliciting passenger traffic between points in other
states; (261) nor require agents of foreign express companies to
take out licenses, and satisfy the state authorities that the
company has an actual capital to the amount fixed in the taxing
(262) statute. A state may not, directly or indirectly, tax the
importation of passengers. (263) A state may not impose a stamp
duty upon bills of lading for the transportation of goods from a
port in one state to a port in another. (264) While a state may
tax the property of those persons, natural or corporate, who may
be by residence subject to its jurisdiction, even if that
property be invested in ships, (265) yet a state may not tax
property invested in shipping, whose owners are not personally
subject to its jurisdiction, and which come into its ports in the
pursuit of commerce, (266) and this exemption is not adversely
affected by a temporary enrollment of a ship in a port of the
taxing state. (267) Nor can a state tax shipping as such, when
engaged in foreign or interstate commerce, though its owners be
subject to its jurisdiction, (268) for taxation so imposed
amounts to a regulation of commerce. (269)
Transportation:
(c) The Interstate Commerce Act.
In the years preceding 1870, the people, recognizing the
fact that the development of the Middle and Western states
required, as speedily as possible, improved means of
communication, facilitated by legislation, and by prodigal grants
of state and county aid, the organization and construction of
railway lines; but, in the years following 1870, some of the
railways having come to regard themselves as mere corporations
for private gain, and, as such, entitled to conduct their
business without regard to the public interest, popular feeling
was excited, a reaction came, and some of the states, and
afterwards the United States, undertook by legislation to correct
the abuses, and enforce correct principles, of railway
administration. Hence the Interstate Commerce Act and its
amendments, (270) which apply to all interstate common carriers,
by railroad or partly by railroad and partly by water, "under a
common control, management, or arrangement for a continuous
carriage;" require all charges to be reasonable and just; forbid
unjust and unreasonable charges; prohibit the receipt from any
person of "a greater or less compensation for any service
rendered ... than that received from any other person for a like
and contemporaneous service in the transportation of a like kind
of traffic under substantially similar circumstance and
conditions;" forbid undue or unreasonable preferences or
discriminations, either personal or local; require reasonable,
proper, and equal facilities for the interchange of traffic with
other lines, and forbid discrimination in rates as between
connecting lines; forbid the receipt of as great, or "greater
compensation in the aggregate . . . under substantially similar
circumstances and conditions for a shorter than for a longer
distance over the same line in the same direction, the shorter
being included within the longer distance," provided, however,
that the commission may prescribe the extent to which a
designated carrier may be relieved from the operation of this
prohibition; forbid the pooling of freights, or division of
earnings, by competing lines; require publication of foreign and
interstate rates; forbid any advance in rates except after ten
days' public notice; permit reductions in rates after three days'
public notice; forbid all departures from the published rates;
require schedules of rates to be filed with the commission;
forbid combinations to prevent continuous carriage; declare
carriers to be liable for noncompliance with the acts to any
person injured thereby in the full amount of damages, together
with a reasonable counsel or attorney's fee; authorize complaint
to the commission, or action at law in the federal courts by any
person injured by a carrier's noncompliance with the acts;
provide that no person shall be excused from attending and
testifying or from producing books, etc., on the ground that the
testimony, or evidence, documentary or otherwise, required of him
may tend to incriminate him, but that no person shall be
prosecuted, or subjected to any penalty or forfeiture, on account
of any transaction, concerning which he may testify, or produce
evidence, in any such proceeding; subject to punishment by fine
the corporation and all directors, officers, or employees
violating the act; create a commission of five members, holding
office for a limited term, not more than three of the members to
be appointed from the same political party; authorize the
commission to inquire into the management and operation of
carriers, with power to require the attendance and testimony of
witnesses and the production of papers, and to that end to invoke
the aid of the courts of the United States; vest jurisdiction in
the commission to examine and to take testimony upon complaint
made by any person, natural or corporate; authorize the
commission to investigate of its own motion; forbid the dismissal
of a complaint " because of the absence of direct damages to the
complainant;" make the findings of the commission prima facie
evidence in all judicial proceedings; require the commission, and
authorize any party interested, in case of the carrier's refusal
or neglect to obey any lawful order of the commission, to apply
in a summary way by petition to the courts of the United States
for relief, and vest jurisdiction thereof in such courts, and
authorize the court to enter a decree and issue process with
right of appeal to the appropriate federal appellate tribunal;
authorize the commission to make rules; fix the principal office
of the commission in the city of Washington, but authorize it to
hold special sessions, and prosecute inquiries, in any part of
the United States; authorize the commission to require reports
from carriers as to share and debt capital, rates,
administration, and accidents to passengers or employees; require
the commission to make annual reports to the Secretary of the
Interior for transmission to Congress; and provide that carriers
may carry free, or at reduced rates, goods for the United States,
and municipal governments, or for charitable purposes, or for
exhibition at fairs, etc., and may issue mileage, excursion, or
commutation passenger tickets, or give reduced rates to ministers
of religion, municipal governments for the transportation of
indigent persons, inmates of soldiers' and sailors' homes,
officers and employees of their own line, and may exchange passes
and tickets with other lines. Under the act and its amendments,
it has been decided that the Interstate Commerce Commission is a
body corporate, with power to sue, and to be sued, in the federal
courts. (271) It is not a court, because its members do not hold
their offices by the tenure of good behavior, and because the
duties imposed upon it are not judicial in their nature. It is,
however, a "subordinate administrative, or executive, tribunal,"
(272) and, as such, it cannot exercise the legislative power of
fixing rates in futuro; (273) nor can it indirectly fix rates by
determining what would be a reasonable rate, and then obtaining
from the courts an order restraining a carrier from making in
futuro a charge in excess of such rates. (274) In actions to
enforce the orders of the commission an appeal from a circuit
court now goes, not to the Supreme Court, but to the circuit
court of appeals. (275) The provision in section 12 of the act
that the commission may "invoke the aid of any court of the
United States in requiring the attendance and testimony of
witnesses and the production of books, etc., " is not open to
constitutional objection upon the theory that it imposes upon a
judicial tribunal duties which are not in their nature judicial.
(276) The commission cannot compel obedience to its orders by
entering a judgment subjecting any person to fine or
imprisonment, for the power to impose such penalties, in order to
compel performances of a legal duty imposed by the act, can only
be exercised by a competent judicial tribunal. (277) A witness
in any inquiry by or on behalf of the commission could not,
before the passage of the Act of 11th February, 1893, (278) be
required to answer questions when he stated that his answers
might tend to incriminate him; (279) but, as that act provided
that "no person shall be prosecuted or subjected to any penalty
or forfeiture for or on account of any transaction ... concerning
which he may testify or produce evidence ... before said
commission ... in any such case or proceeding" he can now be
compelled to answer notwithstanding the protection afforded by
the V Amendment. (280) There is a continuous carriage of goods
within the meaning of the act when goods shipped under a through
bill of lading from a point in one state to a point in another
state are received in transit and carried exclusively within a
state by a carrier under a pro rata division of the rate, and
such intrastate carrier thereby subjects itself to the
jurisdiction of the commission so far as regards such
transportation. (281) The pro rata share of a through rate may,
without unlawful discrimination or undue preference, be less than
a local rate. (282) Party rate tickets, sold at reduced prices
for parties of ten or more in number, do not constitute undue, or
unreasonable, preferences in favour of the purchasers thereof,
nor unjust, or unreasonable, discriminations as against
purchasers of single tickets. (283) In the absence of a general
regulation that free cartage from a railway station to the
premises of a consignee shall be regarded as a part of a terminal
service, railway transportation must be held to end at the
railway station, and the furnishing of free cartage to consignees
in one town, but not in another town, does not constitute unjust
local discrimination; (284) but a rebate allowed to a consignee
to compensate for the cost of cartage from the railway station to
his premises, when a similar rebate is not allowed to another
consignee in the same locality, is an unjust personal
discrimination. (285) That an unlawful discriminating rate was
allowed, or a rebate paid, in violation of the act, does not
prevent liability on the part of the carrier for the freight
received and covered by insurance in the custody of the carrier's
agents. (286) The act does not in terms authorize competing
carriers to enter into contracts to maintain even reasonable
rates. (287) The right of recovery given by the statute for an
excess of payment over a rate charged to another shipper under
similar conditions is in the nature of a penalty, and the
plaintiff must produce full proof thereof, and must show a
pecuniary injury to himself resulting from such discrimination.
(288) Substantial similarity, or dissimilarity, of circumstances
and conditions is a question of fact, to be proved by evidence
and finding of the commission thereon is only prima facie, and is
subject to review by the court. (289) Reduced through rates from
a port of entry to a point within the country on goods from
abroad, which, except for such reduced rate, would not have come
through that port of entry, do not constitute an unjust
discrimination as against traffic originating at that port of
entry. (290) The commission may administratively determine the
circumstances and conditions affecting competitive rates,
considering to that end the legitimate interests of the carrier
as well as of the shippers, and the legitimate interests of the
locality to which the goods are to be carried as well as of the
locality from which the goods are shipped. (291) A substantial
competition, that is a competition producing a substantial and
real effect upon traffic and rate making, is one of the
circumstances constituting substantial dissimilarity under the
long and short haul clause in sections 3 and 4 of the act, (292)
and which may justify a carrier in charging a greater
compensation for a shorter than for a longer haul.
It was held, before the passage of the Interstate Commerce
Act, that a state could require under a penalty all railroads to
fix and post their rates of fare and freight and not to charge in
excess therefor, (293) but it was held also that a state could
not by a police regulation enforce, with respect to interstate
transportation, a prohibition of a charge of the same, or a
greater, toll for a shorter than for a longer distance in the
same direction, (294) and, after the passage of the Interstate
Commerce Act, it was held that such a regulation was a fortiori
beyond the power of the state, (295) for Congress having enacted
its long and short haul clause, it was, of course, not lawful for
a state to legislate on the same subject. When a company owned by
a railway corporation buys coal at the mines under an arrangement
alleged to secure preferential rates for the vendors, the
Interstate Commerce Commission may, in a proper proceeding in the
circuit court, compel the testimony of witnesses and the
production of contracts. (296)
The cases in the Supreme Court and the reports of the
Interstate Commerce Commission show that the act of 1887 has
invited much costly and fruitless litigation. Nevertheless, the
legislation is of value in that it has strengthened the hands of
those broadminded railway managers who believe that the interests
of their shareholders are best served by fair dealing with
customers and with competitors.
The Antitrust law.
53. The so-called "trusts" are combinations of corporations and
properties made, in some cases, by the merger and consolidation
of existing associations, and, in other cases, by the
organization of corporations to acquire and hold the properties
to be consolidated, or the controlling interest in the shares of
the corporations to be combined.
The "trusts" are a necessary result of the growth of the
country, and of the development of isolated and sparsely settled
states into a nation whose territory is covered by a network of
railways, whose trade is that of an empire and not that of a
village, and whose markets have ceased to be local and have
become worldwide. "Trusts" are formed to obtain capital by the
sale of bonds and shares, to save the waste of competition, to
secure in production, transportation, and distribution the
maximum of efficiency at the minimum of cost to expand trade by
reducing the price to the consumer, and by economical operation
to increase the net profit to the producer and the carrier.
It is not surprising that the capitalization of our railways, the
number of our industrial organizations, and the magnitude of
their operations should arouse the public interest, and should
cause on the part of unintelligent people more or less fear as to
possible consequences. Every great industrial development has
excited such fears. The steam engine, the railways, and all forms
of labour saving appliances, from the spinning jenny to the
typesetting machine, have seemed, in their turn, to threaten
large additions to the ranks of the unemployed, and heavy losses
to different classes of people; and yet in each case the result
has been the opening of new avenues to employment, and a
substantial advance in civilization. So today, no one who is
accurately informed as to present industrial conditions can doubt
that, because of American financial skill in securing combination
of resources and concert of action, and because of increased
railway efficiency, the products of industry have been brought to
a higher standard than ever before, the labour which produces
them is better paid, the market is wider and is better supplied,
and the consumer buys upon relatively more favorable terms.
In any legislative regulation of corporations, great or
small, by the United States, there are only four classes of
people to be considered. There are, first, the investors in the
bonds and shares issued by the corporations, that is, those who
desire to become partners therein, and to participate in their
profits, and who, therefore, in so far as they may properly be
regarded as beneficiaries of legislation, can only be aided by
the requirement of publicity, that is, by compelling the
corporation, under proper penalties, to furnish such information
as to its capital, earnings, and disbursements as will enable
intending purchasers and owners to determine whether its
financial condition be such as to render the purchase or holding
of its securities a prudent investment. But the federal law can
have nothing to do with the organization of corporations for
purposes not directly connected with the exercise by the United
States of some power of government, nor can the United States
constitutionally regulate the issue, sale, or transfer of the
bonds or shares of such corporations, or protect investments
therein. There are, secondly, the business rivals or competitors
of the trading "trusts." On their behalf complaint is made that
those "trusts," in order to destroy competition, discriminate in
their prices. But competition is industrial warfare. You cannot
have a real competition that does not compete to the limit. When
competition is actively conducted, the seller attains his ends,
not only by underselling in order to effect a particular sale,
but also by carrying his underselling to the extreme limit of
driving his competitors out of business and securing for himself
complete control of the market. This is done, as Lord Justice
Bowen said, (297) from "the instinct of self-advancement and
self-protection, which is the very incentive of all trade. . To
say that a man is to trade freely, but that he is to stop short
at any act which is designed to attract business to his own shop,
would be a strange and impossible counsel of perfection," and to
attempt to prohibit it "would probably be as hopeless an endeavor
as the experiment of King Canute." Is it proposed that there
shall be a general legislative regulation of prices, and, if so,
what would that amount to ? There are, thirdly, the consumers of
the goods manufactured or sold by the corporations. So far as
they are concerned, it is clear that no act of legislation can
effectively prescribe the price at which the products of the
corporations are to be sold, for the simple reason that market
prices always have been, and always will be, regulated by the
operation of the law of supply and demand. Successful commerce
buys in the cheapest, and sells in the dearest, market. The
seller rightfully seeks the highest price that he can obtain; the
buyer, as rightfully, pays as little as he possibly can. There
are, fourthly, those who or whose goods are carried by common
carriers, and their rights have been adequately regulated and
protected by the law.
It is said that the "trusts" have "a tendency to monopoly.
"The fact is that, except in the cases of patents and copyrights,
and of those who control the sole and exclusive source of supply
of a natural produce it is not possible in this day of the
world's history to maintain and enforce, more than temporarily,
extortionate prices, for the reason that there is always
available a large amount of uninvested capital seeking profitable
employment and keenly watching for opportunities of remunerative
investment. Therefore, intelligent managers of a successful
business do not advance prices to the point at which destructive
competition will be invited. Prices of commodities are
automatically regulated by the law of supply and demand. When, by
reason of an apparent permanence of demand and a present
inadequacy of the means of supply, prices rise to a level that
gives a reasonable assurance of profit to producers, the surplus
capital of the world can always be relied upon to augment the
means of supply.
Attempts to regulate trade by legislation are not of new
invention. Whenever and wherever there has been an absolute
government there have always been attempted restrictions upon
trade. In medieval times it was the theory and the practice that
it was the "duty and the right of the state to fix hours of
labour, rates of wages, prices, times and places of sale, and
quantities to be sold." (298) The selfish commercial policy of
England, intelligently directed to the restraint of colonial
trade and manufactures, was the great cause of the War of
Independence. When the successful revolution had substituted the
sovereignty of the people for the supremacy of the Crown, there
was naturally a jealousy of governmental power and a
determination to guard individual liberty against oppression. The
framers of the Constitution of the United States, therefore,
founded the government, not only upon the supremacy of the
government in the exercise of the powers granted to it, but also
and equally upon the independence of the states and the freedom
of the citizen. They foresaw the evil effects of an unrestrained
exercise of the popular will. They endeavored to establish and
make perpetual the reign of law. They crystallized into the
Constitution the great principles of free government, and they
made it impossible to hastily change that organic law. They
declared in express terms the supremacy of the Constitution and
the laws made in pursuance thereof; and they created a Supreme
Court whose judgments should give effect to that declaration.
They united the states into a nation, with full powers of
government, and they reserved to the individual citizen as much
freedom as is consistent with the enforcement of law and the
maintenance of order. Under the Constitution, there is no warrant
for paternalism in congressional legislation.
It is to the states, and not to the United States, that we
ought to look for the legislative and administrative regulation
of the industrial organizations of the present and the future.
The power of the state is ample. A state may create corporations,
with or without conditions, and it may authorize a corporation to
do any business which an individual may lawfully do. A state may
forbid a foreign corporation to do business within its territory;
it may permit that business on conditions; and it may, with or
without reason, revoke a permission theretofore granted. It may,
therefore, enforce with regard to foreign corporations all, and
more than all, the restrictions which it enforces with regard to
corporations of its own creation. On the other hand, the United
States, save as the domestic government of the District of
Columbia and the territories, cannot even grant a charter of
incorporation, except as a means incidental to the exercise by
the United States of a power of government, and it can control
the operations of a corporation chartered by a state only under
the power of regulating foreign and interstate commerce. It does
not avail to say that the legislation of a state can have no
extraterritorial force, and that in order to have a rule of
uniform application throughout the country there must be
congressional legislation, for the conclusive reply is that every
state, under the Constitution, is entitled as of right to
determine for itself by what agencies and under what conditions
commodities shall be manufactured or sold within its territory,
subject only to the paramount right of the United States to levy
duties and taxes, and to regulate commercial intercourse. As
Fuller, C. J., forcibly said in his dissenting judgment in the
Lottery Case, (299) "The scope of the commerce clause of the
Constitution cannot be enlarged because of present views of
public interest."
In the past the country has had to overcome, under
conditions of inadequate transportation facilities, the
disintegrating tendencies of the expansion of territory and the
growth of population, but as the results of the triumph of the
nation in the suppression of the Rebellion, and the development
of means of transportation and communication, our perils are now
those of governmental consolidation and not those of dissolution.
Any legislation which conflicts with the American doctrine that
all men are equal before the law, and that equality of rights
implies equality of obligations, and that subjects rights of
property and freedom of contract to administrative control is
dangerous in a republic governed by universal suffrage. The
leaders of public opinion will do well to remember that, as Mr.
Lecky has said, it is an inexorable condition that all
"legislation which seriously diminishes profits, increases risks
or even unduly multiplies humiliating restrictions, will drive
capital away and ultimately contract the field of employment."
(300)
The first of the congressional antitrust acts (301) was
drawn by Senator Hoar, (302) and was passed because of some
unintelligent clamor as to "the grave evil of the accumulation in
this country of vast fortunes in single hands, or of vast
properties in the hands of great corporations," an alleged evil
with which the United States cannot, under the Constitution,
possibly concern itself.
The Act of 1890 is entitled "An Act to Protect Trade and
Commerce against Unlawful Restraints and Monopolies; " declares
illegal "every contract, combination in the form of trust, or
otherwise, or conspiracy in restraint of trade or commerce among
the several states, or territories, or with foreign nations;" and
every monopoly, or attempt to monopolize any art of such trade or
commerce; subjects to forfeiture, seizure, and condemnation "any
property owned under any contract, or by any combination, or
person, pursuant to any conspiracy, " as aforesaid; imposes
penalties upon persons disobeying the act; vests jurisdiction in
the courts of the United States; gives a right of action for
injury to business or property by reason of anything declared
unlawful by the act, with threefold damages, costs of suit, and
attorney's fee; and requires the several district attorneys,
under the direction of the attorney general, to institute
proceedings in equity to prevent and restrain such violations.
The Act of 11th February, 1903, (303) provides that in suits
brought by the United States under the act precedence shall be
given, on the filing of a certificate by the attorney general,
and the cause be heard before not less than three judges of the
circuit, and that an appeal from the final decree of the circuit
court shall be only to the Supreme Court and must be taken within
sixty days. The Act of 14th February, 1903 (304) Creates the
Bureau of Corporations in the Department of Commerce and Labor,
provides for the appointment of a commissioner thereof, a deputy
commissioner, and clerks; authorizes the commissioner to make
"under the direction and control of the Secretary of Commerce and
Labor, diligent investigation into the organization, conduct, and
management of the business of any corporation, joint stock
company, or corporate combination engaged in the commerce among
the several states and with foreign nations, excepting common
carriers subject to" the Interstate Commerce Act, and, "to gather
such information and data as will enable the President of the
United States to make recommendations to Congress for legislation
for the regulation of such commerce, and to report such data to
the President from time to time as he shall require; and the
information so obtained, or as much thereof as the President
shall direct, shall be made public." The act also confers upon
the commissioner respect to the parties subject thereto all the
powers conferred on the Interstate Commerce Commission; and makes
it "the province and duty" of the bureau "to gather, compile,
publish, and supply useful information concerning corporations
doing business within the limits of the United States, as shall
engage in interstate commerce, or in commerce between the United
States and any foreign country, including corporations engaged in
insurance, and to attend to such other duties as may be hereafter
provided by law."
The Act of 25th February, 1903, (305) appropriates the sum
of $500,000 to be expended under the direction of the attorney
general "in the employment of special counsel and agents of the
Department of Justice to conduct proceedings, suits, and
prosecutions" under the antitrust acts. The Act of 3rd March,
1903, (306) provides for the appointment of an assistant to the
attorney general, an assistant attorney general, and two
confidential clerks to "perform such duties. as may be required
of them by the attorney general." The first of the statutes only
has been judicially construed.
Of course, in every case in which the statute has been
enforced, it has necessarily been held to be constitutional as a
regulation of commerce, and not to be open to objection on the
ground of interference with the freedom of contract. (307) In N.
S. Co. v. U.S. (308) the question of constitutionality was fully
and ably argued, and it was held that the statute, when construed
to forbid a combination to organize a corporation to hold the
shares of competing railways, is not open to objection as an
infringement upon the reserved powers of the states, but, in his
dissenting judgment in that case, White, J., (309) argued with
great force, that commerce as defined in Gibbons v. Ogden, is
commercial intercourse, and is regulated by prescribing rules for
carrying on such intercourse, and that the ownership or transfer
of shares in a corporation created by a state cannot be said to
be in any sense commercial intercourse, and the prescribing of
rules governing the ownership of such shares cannot fall within
the power to prescribe rules for regulating commercial
intercourse. White, J., also argued that the power to regulate
commerce includes the power to regulate the instrumentalities of
commerce, and that means the regulation, not of their acquisition
and ownership, but of their employment and operation, and that
because the ownership of property, if acquired, may possibly be
so used as to burden commerce, it does not follow that to acquire
and own is to burden.
Each of the cases also required of the court a construction
of the statute, and a determination whether or not the facts in
each case brought it within the statute. The general principles
which can be deduced from the cases are these:
1. The word "unlawful" in the title of the statute has
reference only to those contracts which the statute makes
unlawful, and does not operate to qualify the expression of
the legislative will in the body of the statute that "every"
contract in restraint of foreign and interstate trade shall
be unlawful, (310) but, in the more recent judgments of the
court, the force of those words has been materially
qualified by the determination that exclusive licenses to
manufacture and sell under patents for inventions are not
within the statute, and by Mr. Justice Peckham's admissions
in the judgments of the court in U.S. v. T.M.F.A., (311) in
U.S. v. J.T.A., (312) and in Hopkins v. U.S. (313) that
neither a contract of partnership, nor the withdrawal of a
competitor from business, nor the appointment by competitors
of a joint selling agent, nor the purchase of an additional
plant, nor "the formation of a corporation for business or
manufacturing purposes, " nor an agreement collateral to a
contract of sale, and requiring the competitor to abstain
from again entering into the business within a designated
territory and during a specified time, are within the
prohibition of the statute. These conceded exceptions from
the prohibitions of a statute, which expresses no
exceptions, would seem to destroy the inclusive force
claimed for the words "every and "otherwise."
2. The term "contracts in restraint of trade," as used in the
statute, includes, without regard to their reasonableness or
unreasonableness," all kinds of those contracts which in
fact restrain, or may restrain, trade." (314) In so
deciding, the court did not follow the modern and well
considered judgments in the state courts and in the courts
of England. The doctrine of contracts in restraint of trade
is not of recent discovery. Holmes, J., (315) points out
that contracts in restraint of trade, as defined by the
common law, are contracts with a stranger to the
contractor's business, and which wholly or partially
restrain the freedom of the contractor in carrying on that
business; and that combinations or conspiracies in restraint
of trade, as defined by the common law, are arrangements to
keep strangers to the agreement out of the business, and
which tend to monopolize some portion of the trade of the
country. Such contracts were originally held void at common
law, because of the injury to the public, by its deprivation
of the results of the restricted individual's industry, and
because of the injury to the individual by his deprivation
of the opportunity to labour for himself and for those who
might be dependent upon him. Under the conditions of trade
in the time of the Year Books any restraint of trade was an
unlawful restraint, but under modern conditions the test of
invalidity is the unreasonableness of the restraint, for, as
Mr. Justice Peckham said when he sat in the Court of Appeals
of New York, (316) "An agreement would not," necessarily,
"be in restraint of trade, although its direct effect might
be to restrain to some extent the trade which had been
done." The overwhelming current of authority supports this
view. Brewer, J., in his concurring judgment in N. S. Co. v.
U.S. (317) holds that while the court had rightly decided
the prior cases under the statute, because the contracts in
all those cases were, in his opinion, in unreasonable
restraint of trade, yet, nevertheless, the statute was not
intended, and should not be construed, to prohibit contracts
in partial or reasonable restraint of trade.
3. If it were not for the judgment in N. S. Co. v. U.S. (318)
it might be regarded as authoritatively determined, that
"there must be some direct and immediate effect upon
interstate commerce in order to come within the act." (319)
Upon that principle all the cases, other than that of N. S.
Co. v. U.S. , can be reconciled.
4. A direct, (320) or indirect, (321) restraint of railway
competition in interstate commerce is within the statute,
which, although a general statute, repeals pro tanto by
implication the Interstate Commerce Acts, (322) which forbid
unjust and unreasonable charges by railway carriers, which
require public notice of increases or reductions in rates,
which forbid secret or preferential rates and which,
therefore, prohibit effective railway competition. (323)
5. A state cannot, in respect of its ownership of public lands
and its maintenance of public institutions, and the
possibilities of depreciation in the value of such lands,
and of increase in the cost of maintaining such
institutions, by reason of the possibility of a diminution
of competition between railways, sue in a federal court
under the statute to enjoin the organization of a
corporation to hold the majorities of the shares of such
railways, for the possibility of such damage to the state is
too remote and indirect and is not the direct actual injury
contemplated by the statute. (324)
6. A combination illegally formed in violation of the statute
is not precluded from recovering the purchase price of goods
sold by it, nor can its vendee set off the threefold damages
under the statute, for the liability therefor is only
enforceable by a direct action. (325) Nevertheless, anyone
sued upon a contract may set up as a defence that that
contract is a violation of the statute, and, if found to be
so, that fact will constitute a good defense to the action.
(326) Logically, a combination of labour is as clearly
subject to the statute as a combination of capital. (327)
The labour unions reasonably restrain trade, when they
combine to sell a certain minimum of labour for not less
than a certain price, but they unreasonably restrain trade
when, in order to effect their purpose, they use threats and
force to prevent employers from securing labour not provided
by members of the union. In the absence of an express and
unfulfilled contract of service, it is the legal right of
every man to refuse to work, but it is neither the legal nor
the moral right of any man to hinder other men from working.
In each case decided under the statute the judgment of the
court was based upon a construction of the agreement of
combination, and upon a consideration of the possibilities of
action thereunder, without any reference to that which the to
parties had done, or probably would do, there under.
The statute has been construed to forbid:
1. An agreement by several corporations organized under the
laws of different states and engaged in the manufacture,
interstate transportation, and sale of a commodity, to
abstain from competition as between themselves within a
designated territory, including more than one state. (328)
2. An agreement by members of an unincorporated association of
manufacturers of, and dealers in, a commodity, doing
business in several states not to sell to non-members save
at a price in excess of that at which the members sell to
each other. (329)
3. Agreements by competing railway corporations for the
maintenance of uniform rates upon interstate traffic. (330)
A combination by several persons whereby a holding
corporation is organized under the laws of a state to
acquire and hold the majorities of the shares of two
railways organized under the laws of other states and
theretofore competing in interstate traffic, (331) the
ground of decision being that the common corporate ownership
of the shares will prevent competition between those
railways, and that the statute forbids the formation and
operation by whatever means of a combination which possibly
may prevent such competition.
On the other hand the statute has been construed not to forbid:
1. Exclusive licenses to manufacture and sell under patents for
inventions, for a patent is necessarily a monopoly, and a
patentee's protection is valueless if he cannot fix prices
and restrain Competition. (332)
2. The organization of a corporation for the purchase,
manufacture, and sale of a commodity throughout the United
States and the acquisition and ownership by that corporation
of all, save one, of the manufactories of that commodity in
the United States, (333) the ground of decision being, not
that the case as presented was simply that of a combination
of factories, but that the case was that of the vesting in
one agency the ownership of, and the control over,
theretofore separated instrumentalities of interstate
commerce; that the possible abstention of those
instrumentalities from competition could only be regarded as
incidental to the exercise of lawful rights of purchase,
sale, and ownership; and that the combination, therefore,
lacked that direct and immediate effect upon interstate
commerce which there should be in order to bring it within
the statute.
3. An agreement by local sellers upon commission fixing their
rates of commission, regulating competition as between
themselves, forbidding purchases from non-members, and
forbidding the transaction of and business with suspended
members. (334)
In deciding upon the possible effect of the agreements and
acts of combination in the three railway cases (335) and in
holding that they restrained trade because they checked
competition, the court made the mistake of not properly
appreciating the essential differences which distinguish
competition between common carriers from competition between
sellers of goods. A railway company, like all other common
carriers, is bound to carry all freight that may be offered, to
the extent of its facilities, at reasonable rates, and without
unjust discrimination, either personal or local, and it is
legally compellable to refund any over charge in excess of that
which shall be adjudged to be reasonable; and the Interstate
Commerce Act, (336) has made the rule of the common law
obligatory upon all carriers engaged in interstate commerce. On
the other hand, buyers of goods may lawfully buy at the lowest
price and sellers of goods may lawfully sell at the highest
price. In railway rates it is to the interest of the public that
there should be uniformity, in order that all shippers may have
equal advantages; stability, in order that all buyers and sellers
may correctly estimate the cost of transportation as affecting
market prices; and adequacy of compensation to the carrier, in
order that the carrier may receive that which, in the words of
the court, (337) "the services rendered are reasonably worth."
Before the enactment of the statute of 1890 the Interstate
Commerce Act, as amended by the Act of 2nd March, 1889, (338) had
forbidden an advance of railway rates, "except after ten days'
public notice," and had permitted reductions in rates only "after
three days' public notice." The Act of 19th February, 1903, (339)
passed after the enactment of the statute of 1890, declared it to
be a misdemeanor for any carrier subject to the Interstate
Commerce acts to fail to obey those acts. Therefore, as well
after as before the enactment of the Antitrust statute, any real
competition between railways was forbidden by legislation, for as
a carrier can take no business away from a competitor by a
reduction in an open rate, of which three days public notice must
be given, the only way to get business by reducing the rates is
to give that reduction secretly to the customer whose traffic is
to be secured. The Antitrust statute, as construed by the court,
says that railway competition must be unrestrained. The
Interstate Commerce acts say that railways must not do those acts
which are essential to any effective competition.
Uncontrolled competition in transportation inevitably
produces evils which the country has often experienced. A war of
railway rates necessarily forces a diminution of that liberality
of railway expenditure which benefits the manufacturer, the
dealer, and the labouring man. Such a war may result also in the
bankruptcy of weaker companies, in costly receiverships, and
reorganizations, and in absorption by stronger rivals. When
competition is unrestrained the power of fixing rates is
necessarily vested in the company which receives the goods from
the shipper, and that power is inevitably delegated to
irresponsible subordinates, to whom their road's need of business
is all important. From this it follows, that not only do the
carriers fail to receive under such conditions the advantages of
adequate compensation, but also the shippers and the public lose
the benefits of uniformity and stability of rates. Uncontrolled
competition, therefore, injures, instead of benefits, the public
interest. While some judges have been captivated by the supposed
advantages of unrestricted competition among carriers, other and
equally eminent judges, and as competent observers, have detected
the fallacy in the reasoning, and have pointed out the danger.
(340) There are limits to legislation. Acts of Congress cannot
control either the laws of nature or the laws of trade. As the
statute, judicially construed, forbids treaties of peace between
warring lines and consolidations of conflicting railway
interests, some other way will be found, in the interest of the
public, to accomplish the desired result.
It is difficult to reconcile the case of N. S. Co v. U.S.
(341) with the case of U.S. v. E. C. Knight Co. (342) Obviously
a statutory prohibition of "every" restraint of trade cannot be
so construed as to permit mercantile, and forbid transportation,
restraints of trade. In each of those cases the controlling fact
is that there is vested in one agency the ownership of, and
control over, instrumentalities of interstate commerce, if there
be a resultant restraint of trade, that result follows, not
because of any agreement to abstain from competition, but only
because such abstention may possibly follow the exercise of legal
rights of purchase, sale and ownership. (343)
The result in N.S. Co. v. U.S. (344) seems to be open to
two further objections, which do not appear to be met by anything
in the judgment of the court, as read by Harlan, J., or in the
concurring judgment of Brewer, J.
1. The act, as construed in the T. M. F. A. and J. T. A. cases,
forbids railways to agree not to compete, but it does not
forbid noncompetition in the absence of agreement. As well
after as before the act, railways were, and are, bound in
law to carry all passengers and freight that may be offered,
to the extent of their facilities, at reasonable rates, and
without unjust discrimination, either personal or local; and
if the managers of any railway, while observing those
requirements, charge the same rates as are charged by other
railways under like conditions, but without entering into
any agreement to that effect, they violate no law. If it be
not unlawful for two railway companies owned by different
shareholders to abstain from competition, it cannot be
unlawful for two railway companies owned by one body of
shareholders to similarly abstain. The fact of common
ownership, therefore, is not in itself a restraint of trade,
nor does it give rise to a presumption that any restraint of
trade will be committed. How can it then be unlawful to
organize a holding company to acquire the shares of two
operating companies?
If it be said that the organization of the holding
corporation is only a means to the end of so unifying the
management of the operating companies as to prevent any
possibility of competition as between those companies and
that the organization is therefore a fraud upon the statute,
the answer is that which the court, speaking by Mr. Justice
Hunt, gave (345) in a case where the question was as to the
validity of that which was alleged to be a device to avoid
the payment of a stamp duty; for in that case the court said
"if the device is carried out by the means of legal forms,
it is subject to no legal censure.
2. In the case, there is neither contract, combination, nor
conspiracy between the operating companies, but there is an
organization of a holding company by shareholders of the
operating companies, and, by force of that Organization, the
holding company becomes the majority shareholder of both
operating companies. While the rights of the shareholder of
both operating companies entitle them to elect its
directors, and to participate in net profits, when declared,
and, upon dissolution, in net assets, those rights,
nevertheless, do not give any power of direct corporate
management. A corporatism is a legal entity distinguishable
from the body of its shareholders. It can act only by its
officers and agents, and its shareholders are neither its
officers nor agents. An agreement signed by every
shareholder will not bind the corporation. If an express
agreement of shareholders of the operating companies be not
effective, how can effect be given to a sale and transfer of
shares as legal evidence of presumptive corporate action.
Telegraphs.
54. Congress has authorized (346) any telegraph company
organized under the laws of any state "to construct, maintain,
and operate lines of telegraph through and over any portion of
the public domain of the United States, over and along any of the
military or post roads (347) of the United States which have been
or may hereafter be declared such by act of Congress, and over,
under, or across, the navigable streams or waters of the United
States" upon certain conditions, including priority to government
messages, a reservation of the privilege of purchase by the
government, and the written acceptance by the company of the
restrictions and obligation of the act. (348) Under this
legislation it has been decided that a state may require
telegraph companies to receive on payment of their charges
messages to be transmitted to points in other states, and to
deliver messages with due diligence. (349) A state may require a
telegraph company doing interstate business to pay to the
municipality a rental for the use of public highways by its
poles. (350) A state may tax the property owned by a telegraph
company within the state. (351) A state may require from a
telegraph company, payment of a license tax on business done
within the state by the company, though it also carries on an
interstate business. (352)
A state may not, as against the privileges conferred by the
United States, (353) vest an exclusive monopoly in one telegraph
company. (354) A state may not tax messages sent to points
without the state, nor messages sent by officers of the United
States on public business. (355) A state may not, as affecting
delivery in other states of messages from points within the
state, require delivery by special messengers. (356) A state may
not require a license for the privilege of doing interstate
business. (357) A state may not prohibit, until all state taxes
have been paid by it, the doing of business by a corporation
which has accepted the privileges granted by the act of Congress.
(358)
Commerce with the Indian tribes.
55. The Indian tribes are not foreign but domestic and dependent
nations; their relation to the United States resembles that of a
ward to his guardian; and they are completely under the
sovereignty and dominion of the United States. They, therefore,
cannot sue in the courts of the United States as foreign states.
(359) The regulation of the relation between the several states
and the Indian tribes is exclusively vested in the United States,
and state laws cannot operate within an Indian reservation. (360)
Congress, under the power to regulate commerce with the Indian
tribes, may grant to a railroad corporation a right of way
through their lands. (361) It may also forbid the sale of
spirituous liquors to all persons belonging to Indian tribes
within the territorial limits of a state, even outside the bounds
of an Indian reservation (362) and it is competent for the United
States, in the exercise of the treaty making power, to stipulate
in a treaty with an Indian tribe, that the introduction and sale
of spirituous liquors shall be prohibited within certain
territories ceded by the tribe to the United States, and such
stipulation operates proprio vigore, and is binding though the
ceded territory be within the limits of an organized county of
one of the United States. (363)
Footnotes:
(1) Gibbons v. Ogden, 9 Wheat. 1; Brown v. Maryland, 12 id. 445;
Cook v. Pennsylvania, 97 U.S. 566 ; County of Mobile v.
Kimball, 102 id. 691.
(2) Gibbons v. Ogden, 9 Wheat. 1.
(3) P. T. Co. v. W. U. T. Co., 96 U.S. 1.
(4) Bank of Augusta v. Earle, 13 Pet. 519, 531; Starges v.
Crowninshield, 4 Wheat. 147; Nathan v. Louisiana, 8 How. 73.
(5) People v. Comissioners, 104 U.S. 466.
(6) Per Gray, J., Nutting v. Massachusetts, 183 U.S. 556.
(7) Paul v. Virginia, 8 Wall. 168; Ducat v. Chicago, 10 id. 410;
L. I. Co. v. Massachusetts, ibid. 566; P. F. A. v. New York,
119 id. 110; Hooper v. California, 155 id. 648; N. Y. L. 1.
Co. v. Cravens, 178 id. 389; Nutting v. Massachusetts, 183
id. 553.
(8) Allgeyer v. Louisiana, 1185 U.S. 578.
(9) 14th August, 1876, 19 Stat. 141; 8th July, 1870, Rev. Stat.,
secs. 4937 to 4947.
(10) The Trade Mark Cases, 100 U.S. 82.
(11) Act of 3d March, 1881, 21 Stat. 502, c. 138. See also Ryder
v. Holt, 128 U.S. 525; Warner v. S & H. Co., 191 id. 195.
(12) Almy v. California, 24 How. 169; as explained by Miller, J.,
in Woodruff v. Parham, 8 Wall. 138. A tax on foreign bills
of lading is a tax On exports: Fairbank v. U.S. , 181 U.S.
283.
(13) P. T. Co. v. W. U. T. Co., 96 U.S. 1, 9; Tel Co. v. Texas,
105 id. 460, 464; W. U. T. Co. v. James, 162 id. 650.
(14) Lottery Case, 188 U.S. 321, 363. FiiUer, C. J., and Brewer,
Shiras, and Peckham, JJ., dissented.
(15) N. S. Co v. U.S. , 193 U.S. 197.
(16) Per Marshall, C. J., Gibboons v. Ogden, 9 Wheat. 1, 196.
(17) P. & S. S. S. Co. v. Pensylvania, 122 U. S. 336, per
Bradley, J. "Taxing is one of the forms of regulation. It is
one of the principal forms."
(18) Supra, see. 14.
(19) McCulloch v. Maryland, 4 Wheat. 420; The State Freight Tax,
15 Wall. 277.
(20) Taney, C. J., said, in the License Cases, 5 How. 504, 583,
that the police powers "are nothing more nor less than the
powers of government inherent in every sovereignty to the
extent of its dominions." Harlan, J., said, in Patterson v.
Kentucky, 97 U.S. 501: "The police powers extend at least
to the protection of the lives, the health, and the property
of the community against the injuricous exercise by the
citizen of his own rights."
(21) Gibbous v. Ogden, 9 Wheat. 201; The Passenger Cases, 7 How.
402, 479.
(22) See particularly T. Co. v. Wheeling, 99 U.S. 280; W. F. Co.
v. St.Louis, 107 id. 374; C. & C. B. Co. v. Kentucky, 154
id. 204, 212.
(23) Buttfield v. Stranahan, 192 U.S. 470.
(24) 29 Stat# 188 c. 255.
(25) Rev. Stat. 4197 et seq.
(26) Rev. Stat. 4219; 24 Stat. 79, c. 421.
(27) Rev. Stat. 4233;6 Stat. 320, c. 802;26 Stat. 425, C. S75;27
Stat. 55T, e. 202; 28 Stat. 82, c. 83 ; 28 Stat. 281, c.
284; 28 Stat. 645, C. 64; 28 Stat. 672, c. 102; 29 Stat.
381, c. 401; 29 Stat. 689, c. 389; 30 Stat. 96, c. 4.
(28) Rev. Stat. 4252, 4463; 22 Stat. 186, C. 374; 27 Stat. 445,
C. 105; 29 Stat. 122, c. 199; 31 Stat 799, c. 386.
(29) Rev. Stat. 4501, 4509; 28 Stat. 667, c. 97; 29 Stat. 691, c.
389; 30 Stat. 775, c. 28.
(30) Rev. Stat. 4549; 30 f3tat. 755, c. 28.
(31) Rev. Stat. 4653.
(32) Rev. Stat. 4681.
(33) 27 Stat. 110, c. 158; 28 Stat. 362, c. 299; 30 Stat. 1151,
C. 425.
(34) Rev. Stat. 5244; 26 Stat. 426, 453, 454, c. 907; 27 Stat.
110, c. 158; 30 Stat. 1151 c. 425.
(35) Rev. Stat. 5623; 25 Stat. 382, C. 772.
(36) Rev. Stat. 5285; 25 Stat. 382, C. 772.
(37) 26 Stat. 313, c. 728.
(38) Rev. Stat. 4386 et seq.; 23 Stat. 31, 32, C. 60.
(39) 30 Stat. 424, c. 370.
(40) 27 Stat. 531, c. 196.
(41) 24 Stat. 379, e. 104; 2 5 Stat. 855, c. 382; 26 Stat. 743,
c. 128; 27 Stat. 443.
(42) 26 Stat. 209, c. 647. Bee, also U.S. v. T. M. P. A., 166 U.
S. 290; U.S. v. J. T. A., 171 id. 505; U. S. v. E. C.
Knight Co., 156 id. 1; Hopkins v. U.S. , 171 id. 578; A. P.
& S. Co. v. U.S. , 175 id. 211; N. S. CO v. U.S. , 193 id.
197.
(43) L. v. R. v. Penna., 145 U.S. 192.
(44) Hanley v. K. C. S. Ry., 187 U.S. 617.
(45) Lord v. S. S. Co., 102 U.S. 541.
(46) The Daniel Ball, 10 Wall. 557.
(47) Coe v. Errol, 116 U.S. .528; per Bradley, J.
(48) Gibbons v. Ogden, 9 Wheat. 294.
(49) Cooley v. Board of Wardens, 12 How. 299, 314.
(50) Welton v. Missouri, 91 U.S. 275; County of Mobile v.
Kimball, 102 id. 691; Browm v. Houston, 114 id. 681; Robbins
v. Shelby County Taxing District, 120 id. 493; Bowman v. C.
& N. W. Ry., 125 id. 465, 508; Iiesy v. Hardin, 135 id. 100.
Compare the ingenious argument of Dr. Wm. Draper Lewis, in
Chapter VI of his "Federal Power over Commerce aud its
Effect on State Action."
(51) C. & C. B. Co. v. Keentucky, 154 U.S. 204. See particularly
the judgment of Brown, J., p.p. 209 to 213, where there is a
full discussion of this subject, and an exhaustive
classification of the cases. License Tax Cases, 5 VVAH. 462,
470.
(52) U.S. v. Dewitt, 9 Wall 41; cf. Felsenheld v. U.S. , 186 U.
S. 126.
(54) McGuire v. The Comminnwealth, 3 Wall. 387.
(55) Pervear v. The Commomwealth, 5 Wau. 475.
(56) Patterson v. Kentu&y, 97 U.S. 501.
(57) A herd of sheep, driven at a reasonable rate of speed from a
point in one state a distance of many hundred miles across
the territory of a second state to a point in a third state
and fed by grslzing en route, is property engaged in
interstate commerce, and, as such, exempt from taxation in
the second state: Kelley v. Rhoads, 188 U.S. 1.
(58) Martin v. Waddell, 16 Pet. 367; Rundle v. D. & R. C. Co., 14
How. 80; Den v. Jersey Co., 15 id. 426; Smith v. Maryland,
18 id. 71; Jones v. Soulard,'24 id. 41; R. Co. v. Schurmeir,
7 Wall. 272; Weber v. Harbor Commissioners, 18 Wall. .57; 1.
C. R. v. IWnoiE, 146 U.S. 387, 184 id. 77; St. A. F. W. P.
Co. v. St. P. W. Comrs., 168 id. 349.
(59) Barney v. Keokuk, 94 U.S. 324; H din v. Jordan, 140 id.
371; Mitchell v. Smale, ibid. 406.
(60) Pollard v. Hagan, 3 How. 212; Weber v. Harbor Commissioners,
18 Wall. 57; Shively v. Bowlby, 152 U.S. 1; M. T. Co. v.
Mobile, 187 id. 479; U.S. v. M. R. Co., 189 id. 391.
(61) Smith v. Maryland, 18 How. 71; Manchester v. Massachusetts,
139 U. S. 240; cf. Geer v. Conueeticut, 161 id. 5ig. (62)
MeCready v. Virginia, 94 U.S. 391, 395.
(63) U.S. v. Bevans, 3 Wheat. 336.
(64) Article I, See. 9.
(65) South Carolina v. Georgia, 93 U.S. 4.
(66) Pennsylvania v. W. & B. B. Co., 18 How. 421, 423.
(67) Const., Article T, Sec. 9.
(68) Woodruff v. Parham, 8 Wall. 123.
(69) Act of 12th April, 1900, 31 Stat. 77, c. 191, sees. 2 and 3;
Dooley v. U.S. , 183 U. S. 151. White, J., held that the
fact that Porto Rico is not a foreign country, is decisives.
Brown, Gray,, Shiras, and McKenna, JJ., concurred, holding,
also, that the tax was imposed upon importations into Porto
Rico, and not upon iexports from the TJnited States. Fuller,
C. J., and Harlan, Drewer, and Peckham, JJ., dissented upon
the ground that the prohibition forbids duties upon exports
"irrespective of their destination." See supra, see. 17.
(70) Pace v. Burgess, 92 U.S. 372; Turpin v. Burgess, 117
id. 504; Cornell v. Coyne, 192 id. 418.
(71) Fairbank v. U.S. , 181 U. S. 283. @rlan, Gray, White, and
McKenna, JJ., dissented.
(72) State Tonnage Tax Cases, 12 Wall. 204.
(73) 13 Stat. 70; ibid. 444.
(74) State Tonnage Tax Cases, 12 Wall. 204.
(75) Steamship Co. v. Port Wardens, 6 Wall. 31.
(76) Peete v. Morgan, 19 Wan. 581.
(77) Cannon v. New Orleans, 20 Wall. 577.
(78) I. S. S. Co. v. Tinker, 94 U.S. 238.
(79) Such dues are also open to objectiou as duties on tonnage.
Section 3.6.
(80) 6 Wall. 31.
(81) Foster v. Master and Wardens of the Port of New Orleans, 94
U.S. 2". (82) Section 38.
(83) Peete v. Morgan, 19 Wall. 581.
(84) Cannon v. New Orleans, 20 Wall. 577.
(85) Act 7th August, 1789, see. 4, 1 Stat. 54.
(86) Cooley v. The Board of Wardens, 12 How. 299.
(87) Ex paru McNiel, 13 Wall. 236; Wilson v. MeNamee, 102 U.S.
572.
(88) Ex parte MeNiel, supra.
(89) Wilson v. MeNamee, supra.
(90) S. S. Co. v. lit
(91) The China, 7 Wall. 53.
(92) Spraigue v. Thompson, 118 U.S. 90.
(93) Gibbons v. Ogden, 9 Wheat. 1.
(94) Acts 7th July, 1838, 5 Stat. 304; 30th August, 1852, 10
Stat. 61.
(95) The Daniel Ball, 10 Wall. 557.
(96) Sinnot v. Davenport, 22 How. 227.
(97) Foster v. Davenport, 22 How. 244.
(98) The case of New York v. Miln, 11 Pet. 102, though cited, and
relied on, in the argument, was not noticed in the judgment
of the court.
(99) Hall v. De Cuir, 95 U. S. 485; cf. L., N. 0. & T. Ry. v.
Mississippi, 133 id. 587; C. & 0. Ry. v. Kentucky, 179 id.
388.
(100) Veazie v. Moor, 14 How. 568.
(101) 21 How. 184.
(102) P. 187.
(103) 11 Pet. 102.
(104) P. 161.
(105) 22 How. 227.
(106) 22 How. 224; supra, Section 41.
(107) Infra, Section 52b.
(108) 160 U.S. 357, 361.
(109) Morgan v. Louisiana, 118 U.S. 455; Bartlett v. Lockwood,
160 id. 357. See also C. P. D. N. v. Louisiana, 186 id. 380.
(110) Peete v. Morgan, 19 Wzall. 581.
(111) Kimmish v. Bali, 129 U S. 217; M., K. & T. Ry. v. Haber,
169 id. 613.
(112) Rasmussen v. Idaho, 181 U.S. 198; Smith v. S. L. & S. W.
R., ibid. 248. See also Reid v. Colorado, 187 id. 137.
(113) R. Co. v. Husen, 95 U.S. 465.
(114) Minnesota v. Baxber, 136 U.S. 313.
(115) Smith v. S. L. & S. W. Ry,., 181 U.S. 248, 255.
(116) G. F. Co. v. Pennsylvania, 114 U.S. 196, per Field, J.
(117) II A ferry is in respect of the landing place, and not of
the water: Vin. Abr. Vol. XIII, P. 208, Title "Ferry."
(118) Fanning v. Gregoire, :16 How. 524; Conway v. Taylor, 1 Bl.
603.
(119) W. P. Co. v. East St. Louis, 107 U. S. 365; T. Co. v.
Wheeling, 99 id. 273.
(120) St. Louis v. W. F. Ce., 11 Wall. 423; G. F. Co. v.
Pennsylvania, 114 U.S. 196. See also St. Clair County v. I.
S. & C. T. Co., 192 id. 454.
(121) The MonteUo, 20 Wall. 430, 441; Leovy v. U.S., 177 U.S.
621; The Daniel Ball, 10 WalL 557.
(122) N. B. Co. v. U.S. , 105 U.S. 470; U.S. v. B. B. B. Co.,
176 id. 211.
(123) N. B. Co. v. U.S. , 105 U.S. 470.
(124) The Clinton Bridge, 10 Wall. 454.
(125) Pennsylvania v. W. & B. B. Co., 18 How. 421.
(126) Act of 13th July, 1892, c. 158, 27 Stat. 88, 110.
(127) Per White, J., in L. S. 8= M. S. Ry. v. Ohio, 165 U.S.
365, 369.
(128) Ibid. 368. See also Cummings v. Chicago, 188 U.S. 410;
Montgomery v. Portland, 190 id. 89, which decide that under
existing legislation the right to construct a wharf or dock
in a navigable water of the United States wholly within the
limits of a state depends upon the consent of the state in
addition to the consent of the federal government.
(129) Willson v. The B. B. C. M. Co., 2 Pet. 245 ; Pennsylvania
v. The W. & B. B. Co., 9 How 647, 11 id. 528, 13 id. 518, 18
id. 421; M. & M. R. v. Ward, 2 Bl. 485; The Albany Bridge
Case, 2 Wall. 403; The Passaic Bridge Case, .3 Wall. 782;
Gilman v. Philadelphia, ibid. 713; Pound v. Turelk, 95 U.S.
459; Escanaba Co. v. Chicago, 107 id. 678; CardweU v. A. B.
Co., 113 id. 205; Hamilton v. V., S. & P. R., 119 id. 280;
Huse v. Glover, ibid. 543; W. B. Co. v. Hatch, 125 id. 1; L.
S. & M. S. R. v. Ohio, 165 id. 365; U.S. v. B. B. B. Co.,
176 id. 211; Rider v. U. S., 178 id. 251; Leovy v. U.S. ,
177 id. 621.
(130) Escanaba Co. v. Chicago, 107 U.S. 678; Huse v. Glover, 119
id. 543; @ds v. M. R. I. Co., 123 id. 288.
(131) Cardwell v. A. B. Co., 113 U.S. 205; Hamilton v. V., S. &
P. R., 119 id. 280; W. B. Co. v. Hatch, 125 id. 1.
(132) U.S. v. R. G. D. & 1. Co., 174 U.S. 690.
(133) C. & C. B. Co. v. Kentucky, 154 U.S. 204; Brown, Harlan,
Brewer, Shiras, and Jackson, JJ., concurring in the judgment
and also in the opinion, and Fuller, C. J, and Field, Gray,
and White, JJ., concurring in the judgement but not in the
opinion.
(134) P., C., C. & S. L. Ry. v. Board of Public Works, 172 U.S.
32.
(135) K. & H. B. Co. v. Illimois, 175 U.S. 626.
(136) South Caxolina v. Georgia, 93 U.S. 4.
(137) Wisconsin v. Duluth, 96 U.S. 379.
(138) Veazie v. Moor, 14 How. 568; Withers v. Buckley, 20 id. 84.
(139) 102 U.S. 691, 698.
(140) County of Mobile v. Kimball, 102 U.S. 691.
(141) Huse v. Glover, 119 U.S. 543; Sands v. M. R. I. Co., 123
id. 288; L. & P. Co. v. Mullen, 176 id 126.
(142) Harman v. Chicago, 147 U.S. 396.
(143) P. Co. v. Kookuk, 95 U.S. 80; P. Co. v. St. Louis, 100 id.
423; Vicks burg v. Tobin, ibid. 430 @ P. C. v.
Catlettsburg, 105 id. 559.
(144) T. Co. v. Parkersburg, 107 U.S. 691; 0. P. Co v. Aiken,
121 id. 444.
(145) Guy v. Baltimore, 10 0 U.S. 434; infra, Section 50.
(146) A. S. & W. Co. v. Sp@, 192 U.S. 500.
(147) Brown v. Maryland, 12 Wheat. 419.
(148) Low v. Austin, 13 Wall. 29.
(149) Cook v. Pennsylvania, 97 U.S. 566.
(150) May, v. New Orleans, 178 U.S. 496. Almy v. California, 24
How. 169, is explained in Woodruff v. Parham, 8 WaH. 123,
138, and should have been decided upon the ground that the
tax in question was a tax upon the transportation of goods
from one state to another, and, therefore, a regulation of
commerce and as such void.
(151) Waring v. The Mayor, 8 Wall. 110.
(152) Gibbons v. Ogden, 9 Wheat. 1, 203, per Marshall, C. J.
(153) Turner v. Maryland, 107 U.S. 55.
(154) Turner v. Maryland, ui5i supra.
(155) P. & tSS. C. Co. v. Louisiana, 156 U.S. 590.
(156) L. & P. Co. v. Mullen, 176 7U.S. 126.
(157) P. G. Co. v. North Carolina, 171 U.S. 345.
(158) Crandall v. Nevada, 6 Wall. 35.
(159) People v. C. G. T., 10T U.S. 59.
(160) Brimmer v. Rebman, 138 U.S. 78.
(161) Voight v. NVright, 141 U.S. 62.
(162) Minnesota v. Barber, 136 U.S. 313.
(163) Vance v. W. A. v. Co., 170 U.S. 438.
(164) Woodruff v. PELrham, 8 Wall. 123; Brown v. Houston, 114 U.
S. 622; Emert v. Missouri, 156 id. 296.
(165) Ward v. Maryland, 12 Wall. 418. Bradlev J., concurred, but
held that the license required would be equally void if it
imposed upon residents the same burden for selling goods as
it imposed upon nonresidents, for it would be in fact a duty
upon importations from one state to another.
(166) Welton v. Missouri, 91 U.S. 275; Webber v. Virginia, 103
id. 344.
(167) Guy v. Baltimore, 100 U.S. 434.
(168) Corson v. Maryland, 120 U.S. 502, 506.
(169) Walling v. Michigan, 116 U.S. 446.
(170) Lyng v. Michigan, 135 U.S. 161.
(171) Brimmer v. Rebman, 138 U.S. 78.
(172) Voight v. Wright, 141 U.S. 62.
(173) Act of 8th August, 1890, 26 Stat. 313, C. 728.
(174) Leisy v. Hardin, 135 U.S. 100.
(175) Seott v. Donald, 165 U.S. 58, 100.
(176) Hinson v. Lott, 8 Wan. 148.
(177) M. Co v. Gage, 100 U.S. 676; Emert v. Missouri, 156 id.
296; v. Farley, 159 id. 263.
(178) Ficklen v. Shelby County Taxing District, 145 U.S. 1.
(179) R. D. Co. v. orister, 179 U.S. 445.
(180) Downham v. Alexandria council, l0 wall. 173; Brenian v.
Titusville, 153 U.S. 289; Stockard v. Morgan, 185 id. 27.
(181) Robbins v. Shelby County Taxing District, 120 U.S. 489,
494.
(182) Asher v. Texas, 128 r. S. 129; Brennan v. Titusville, 153
id. 289; N. & W. Ry. v. Sims, 191 id. 441; cf. A. S. & W. Co
v. Speed, 192 id. 500.
(183) Robbins v. Shelby County Taxing District, 120 U.S. 489,
501.
(184) Crutcher v. Kentucky, 141 U.S. 47, 57.
(185) 12 Wheat. 419,
(186) P. 441.
(187) P. 447.
(188) P. 443.
(189) Woodruff v. Parham, 8 Wall. 123; A. S. & W. Co. v. Speed,
192 U.S. 500.
(190) Woodruff v. Parham, 8 Wall. 123.
(191) Brown v. Houston, 114 U.S. 622; P. & S. C. Co. v. Bates,
156 id. 577. (192) Bowman v. C. & N. W. Ry., IL25 U.S.
465. Waite, C. J., and Harlan and Gray, JJ., dissented.
(193) Leisy v. Hardin, 135 U.S. 100. Harlan, Grav, and Drewer,
JJ., dissented.
(194) Act of 8th August, 1890, 26 Stat. 313, C. 728.
(195) License Cases, 5 How. 580.
(196) In re Rahrer, 140 TJ. S. 545.
(197) Harlan, Gray, and Brewer, JJ., concurred in the judgment,
but not in all the reasoning of the court.
(198) Scott v. Donald, 165 U.S. 58, 100.
(199) Act of N August, 1886, 2 4 Stat. 209, c. 840.
(200) Plumley v. Massachusetts, 155 U.S. 461, Fuller, C. J., and
Field and Brewer, JJ., dissenting. See also Crossman v.
Lurman, 192 U.S. 189.
(201) Schollenberger v. Pennsylvania, 171 U. S. 1. Harlan and
Gray, JJ., dissented.
(202) Austin v. Tennessee, 179 U.S. 343. White, J., concurred,
and Fuller, C. J., and Brewer, Shiras, and Peckham, JJ.,
dissented.
(203) P. 359.
(204) Gibbons v. Ogden, 9 Wheat. 203, 235.
(205) Searight v. Stokes, 3 How. 151; N., M. & Co. v. Ohio, ibid.
720; Achison v. Huddleson, 12 id. 293.
(206) R. Co. v. Fuller, 17 Wall 560.
(207) Munn v. lllinois, 94 U.S. 113; Budd v. New York, 143 id.
517; Brass v. North Dakota, 153 id. 391.
(208) C., B. & Q. R. v. Iowa, 94 U.S. 155; Peik v. C. & N. W.
Ry., ibid. 164. Field and Strong, IJ., dissented in each
case.
(209) Stone v. F. L. m& T. Co., 116 U.S. 307; Stone v. T. C. R.,
ibid. 347; Stone v. N. 0. & N. E. R., ibid. 352.
(210) N., C. & S. L. Ry. v. Alabama, 128 U.S. 96.
(211) L., N. 0. & T. Ry. v. Mississippi, 133 U.S. 587. Harlan
and Bradley, JJ., dissented. C. & 0. Ry. v. Kentucky, 179 U.
S. 388.
(212) He@gtou v. Georgia, :163 U.S. 299.
(213) N. Y., N. H. & H. R. v. New York, 165 U.S. 628.
(214) N. Y., N. H. & H. R. v . New York, supra.
(215) Gladson v. Minnesota, 166 U.S. 427; cf. L. S. & M. S. Ry.
v. Ohio, 173 id. 285; I. C. R. v. llliinois, 163 id. 142.
(216) C., M. & S. P. Ry. v. Solan, 169 U.S. 133.
(217) R. & A. R. v. P. T. Co., 169 U.S. 311.
(218) L. S. & M. S. RY. v. Ohio, 173 U.S. 285.
(219) M., K. & T. Ry. v. McCann, 174 U.S. 580.
(220) Erb v. Morasch, 177 U.S. 584.
(221) W., M. & P. R. v. Jacobson, 179 U.S. 287.
(222) M. P. Ry. v. Mackey, 127 U.S. 205.
(223) M. P. Ry. v. Humes, 115 U.S. 512.
(224) M. & S. L. R. v. Beckwith, 129 U.S. 26.
(225) M. & S. L. R. v. Minnesota, 193 U.S. 53.
(226) The License Cases, 5 How. 504; Bartemeyer v. Iowa, 18 Wall.
129; Beer Co. v. Massachusetts, 97 U.S. 25; Poster v.
Kang@, 112 id. 201; Mugler v. Kansas, 123 id. 623; Act of
8th August, 1890, 26 Stat. 313, c. 728, legislatively
limiting the operation of Leisy v. Hardin, 135 U.S. 100
(227) Crossman v. Lurman, 192 U.S. 189.
(228) Escanaba Co. v. Chicago, 107 U.S. 678.
(229) Finning v. Gregoire, 16 How. 524, 534; Conway v. Taylor, 1
Black, 603
(230) The James Gray v. The John Fraser, 21 How. 184.
(231) R. Co. v. Richmond, 9(5 U.S. 521.
(232) W., S. L. & P. Ry. v. Lllinois, 118 U.S. 557. Waite, C.
J., and Bradley and Gray, JJ., dissented.
(233) L. & N. R. t,. Eubank, 184 U.S. 27. Gray and Brewer, ii.,
dissented. G., C. & S. F. Ry. v. Helfley, 158 id. 98.
(234) 1. C. R. v. Illinois, 163 U.S. 142.
(235) C., C., C. &St. L. Ry. v. Illinois, 177 U.S. 514; Gladson
v. Minnesota, 166 id. 427.
(236) Sinnot v. Davenport, 22 How. 227; Foster v. Davenport,
ibid, 244. New York v. Miln, 11 Pet. 102, from the judgment
in which Marshall, C. J., and Story, J., dissented, though
not formally, is practicallyy, overruled.
(237) Bowman v. C. & N. W. Ry., 125 U.S. 465.
(238) Ilanley v. K. C. S. Ry., 187 U.S. 617.
(238) a C., M. & St. P. Ry v. Tompkins, 176 U.S. 167, 173.
(238) b Stone v. F. L. & T. Co., 116 U. S. 307; Dow v.
Beidelnian, 125 id. 680, 689; G. R. & B. Co. v. Smith, 128
id. 174, 179; C., M. & St. P. Ry. v. Minnesota, 134 id.,618,
458; C. & G. T. Ry. v. Wellman, 143 ii. 339, 344; Budd v.
New York, ibid. 517, 547. Until Congress otherwise directs,
a state may regulate the intrastate rates of railways
chartered by the United States: Smyth v. Ames, 169 U.S.
466; Reagan v. M. T. Co., 154 id. 413.
(238) c L. S. & M. S. Ry. v. Smith, 173 U.S. 684.
(238) d C. & G. T. Ry. v. Wellman, 143 U.S. 339, 344.
(238) e Reagan t,. F. L. & T. Co., 154 U.S. 362, 399.
(238) f Reagan v. P. L. & T. Co., supra; St. L. & S. F. Ry. v.
Gill, 156 U.S. 649, 657; C. & L. T. IL Co. v. Sandford, 164
id. 578, 584; C., B. & Q. R. v.
(238) g M. & St. L. Ry. v. Minnesota, 186 U.S. 287.
(238) h Smyth v. Ames, 169 U.S. 466, 546; 171 id. 361.
(238) i See also S. D. L. & T. Co. v. National City, 174 U.S.
739, 757; Stanislaus County v. S. J & K. R. C. & I. Co., 192
id. 201; S. D. L. & T. Co v. Jasper, 189 id. 439.
(239) Act of 3d August, 1882, 23 Stat. 214; The Head Money Cases,
112 U.S. 580.
(240) Per Miller, J., 112 U.S. 594.
(241) B. & 0. R. v. Maryland, 21 Wall. 456. Miller, J., page 475,
dissented, holding that the state could not raise a revenue
from all persons going from, or through, the state by
railway to a point beyond the state. And compare Allen v. P.
P. C. Co., 191 U.S. 171.
(242) Minot v. P., W. & B. R., The Delaware Railroad Tax Case, 18
Wall. 206.
(243) Maine v. G. T. Ry., 142 U.S. 217. Bradley, Harlan, Lamar,
and Browin, JJ., dissented. A state cannot, upon this
principle, tax a corporation created by an act of Congress:
California v. C. P. E., 127 U.S. 1. Arad a state cannot tax
the right of transporting interstate passengers within its
borders: Allen P. P. C. Co., 191 U.S. 171.
(244) N. Y., L. E. & W. R. v. Pennsylvania, 158 U.S. 431.
(245) P. P. C. Co. v. Pennsylvania, 141 U. S. 18. (Field,
Bradley, and Haxlan, JJ., dissented, on the ground that the
tax was in reality imposed on cars which only came within
the state in pursuit of commerce, and wsa, therefore, void
under the principle of Hays v. P.M.S. Co., 17 How. 596)
P.P.C. Co. v. Hayward, 141 U.S. 36; C.,C.,C.&S.L.Ry. v.
Backus, id. 439; A.R.T. Co. v. Hall, 174 id. 70; U.R.T. Co
v. Lynch, 177 id. 149. And a state, in taxing an express or
telegraph company, may regard the mileage or property within
the state not strictly loeally but part of a system operated
in several states: A. E. Co. v. Ohio, 165 U.S. 194, 166 id.
185; A. E Co. v. Kentucky, ibid. 171; W. U. T. Co. v.
Missouri, 190 id. 412; cf. Fargo v. Hart, 193 id. 490.
(246) Osborne v. Florida, 1164 U.S. 650; P. Co v. Adams, 189 id.
420. See also Allen u. P. P. C. Co, 191 id. 171.
(247) Ashley v. Ryan, 153 U.S. 436.
(248) L. v. R. v. Pennsylvania, 145 U.S. 192.
(249) New York v. Knight, 192 U.S. 21.
(250) Woodruff v. Parham, 8 Wall. 123.
(251) Brown v. Houston, 114 U.S. 622; P. & S. C. Co. v. Bates,
156 id. 577.
(252) Coe v. Errol, 116 U.S. 517.
(253) Crandall v. Nevada, 6 Wall. 35.
(254) By Chase, C. J., and Clifford, J.
(255) By Miller, J.
(256) The State Freight Tax, 15 Wall. 232; Swayne and Davis, JJ.,
dissented; E. Ry. v. Pennsylvan 5 Wall. 282.
(257) Packard v. P. S. C. Co, 117 U.S. 34; Tennessee v. P. S. C.
Co., ibid. 51. See also Allen v. P. P. Co., 191 id. 171.
(258) Fargo v. Michigan, 121 U.S. 230.
(259) P. & S. S. Co. v. Pennsylvania, 122 U.S. 326, overruling
the State Tax on Railway Gross Receipts, 15 Wall. 284, from
the judgment in which Miller, Field, and Hunt, JJ., had
dissented.
(260) N. & W. R. v. Pennsylvania, 136 U.S. 114.
(261) McCall v. California, 136 U.S. 104; Fuller, C. J., and
Brewer and. Gray, JJ., dissented.
(262) Crutcher v. Kentucky, 141 U.S. 47.
(263) The Passenger Cases, 7 How. 283; Taney, C. J., and Daniel,
Nelson, and Woodbury, JJ., dissented; Henderson v. The
Mayor, 92 U.S. 259; Chy Lung v. Freeman, ibid. 275; People
v. Compagnie G6n6rale Transatlantique, 107 U.S. 59.
(264) Almy v. California, 24 How. 169, as explained by Miner, J.,
in Woodruff v. Parham, 8 Wall. 124, 137.
(265) T. Co. v. Wheeling, 99 U.S. 273; W. P. Co. v. East St.
Louis, 107 id. 365.
(266) Hays v. P. M. S. Co., 17 How. 596; St. Louis v. W. F. Co.,
11 W&U. 423; G. P. Co. v. Pennsylvania, 114 U.S. 196.
(267) Morgan v. Parham, 16 Wall. 471; Act of 18th February, 1793,
11 Stat. 306.
(268) Moran v. New Orleans, 112 U. S. 69; S. S. Co. v.
Portwardens, 6 Wall. 31.
(269) Harman v. Chicago, 147 U.S. 396.
(270) Act 4th February, 1887, 24 Stat. 379, as amended by Acts of
7th August, 1888, 25 Stat. 382; 2nd March, 1889, 25 Stat.
855; 10th February, 1891, 26 Stat. 743; llth ]Pebruary,
1893, 27 Stat. 443; 2nd March, 1893, 27 Stat. 531; 1st
April, 1896, 29 Stat. 85; 8th February, 1895, 28 Stat. 643;
3d Mareh, 1901, 31 Stat. IL446; llth February, 1903, 32
Stat. 823; 19th February, 1903, 32 Stat. 847; 2nd March,
1903, 32 Stat. 943.
(271) T. & P. Ry. v. 1. C. C., 16 U.S. 197.
(272) I. C. C. v. Brimson, 154 U.S. 447.
(273) C., N. 0. & T. P. Ry. v. I. C. C., 162 U.S. 184; I. C. C.
v. C., N. 0. & T. P. Ry., 167 id. 479; Harlan, J.,
dissented.
(274) I. C. C. v. A. M. Ry., 168 TJ. S. 144.
(275) I. C. C. v. A., T. & S. P. R., 149 U.S. 264.
(276) 1. C. C. v. Brimson, 154 U.S. 447.
(277) I. C. C. v. Brimson, 154 U. S. 447; Fuller, C. J., and
Brewer and Jackson, JJ., dissented, and Field, J., did not
sit.
(278) 27 Stat. 44@ c. 83.
(279) Counselman v. Hitchcock, 14:2 U.S. 547.
(280) Brown v. Walker, 161 U. S. 591; Shiras, Gray, and White,
JJ., dissented.
(281) C., N. 0. & T. P. Ry. v. I. C. C., 162 U.S. 184.
(282) Parsoias v. C. & N. W. Ry., 167 U.S. 447.
(283) 1. C. C. v. B. & 0. R., 145 U.S. 263.
(284) 1. C. C. v. D., G. H. & M. Ry., 167 U.S. 633.
(285) Wight v. U.S. , 167 U.S. 512.
(286) M. C. P. & S. Co. v. Insurance Co. of N. A., 151 U.S. 368.
(287) U.S. v. T. M. P. A., 166 U.S. 290.
(288) Parsons v. C. & N. W. Ry., 167 U.S. 447.
(289) 1. C. C. v. A. M. Ry., 168 U.S. 144.
(290) T. & P. Ry. v. T. C. C., 162 U.S. 197.
(291) T. & P. Ry. v. I. C. C., 162 U.S. 197.
(292) 1. C. C. v. A. M. Ry., 168 U. S. 144; L. & N. IR. v.
Behlmer, 175 id. 648; E. T., v. & G. Ry. v. I. C. C., 181
id. 1; I. C. C. v. L. & N. R., 190 id. 273.
(293) R. Co. v. Fuller, 17 Wall. 560.
(294) W., S. L. & P. Ry. v. luinois, 118 U.S. 5.i7; Waite, C.
J., and Bradley and Gray, JJ., dissented.
(295) L. & N. R. v. Eubank, 1 84 U.S. 27; Gray and Brewer, JJ.,
dissented; G.1 C. & S. P. Ry. v. Hefley, 158 U.S. 98.
(296) 1. C. C. v. Baird, 194 U.S. 25.
(297) Mogul S. S. Co. v. McGregor, 23 Q. B. Div. 598; (1892), C.
A. 43.
(298) Mrs. Green, "Town Life in the XV Century."
(299) 188 U.S. 373.
(300) Democracy and Liberty, Vol. 11, page 463.
(301) 2nd July, 1890, 26 Stat. 209.
(302) Autobiography of Hon. Geo. F. Hoar, Vol. 11, page 363.
(303) 32 Stat. 823.
(304) 32 Stat. 825.
(305) 32 Stat. 854.
(306) 32 Stat. 1031,1062.
(307) U.S. v. J. T. A., 171 U.S. 505.
(308) 193 U.S. 197.
(309) Fuller, C. J., and Peckbaim and Holmes, JJ., concur.
(310) U.S. v. J. T. A., 171 U.S. 505.
(311) 166 U.S. 290.
(312) 171 U.S. 505.
(313) 171 U.S. 578.
(314) U.S. v. J. T. A., 171 U.S. 505.
(315) In his dissentiug judgment in N. S. Co. v. U.S. , 193 U.S.
197, 400.
(316) Matthew v. A. P. of N. Y., 136 N. Y. 333.
(317) 193 U.S. 357.
(318) 18 193 U.S. 197.
(319) Per Peckham, J., in FIopkins v. U.S. , 171 U.S. 578, 592.
(320) U.S. v. T. M. F. A., 166 U.S. 290; U.S. v. J. T. A., 171
id. 505.
(321) N. S. Co. v. U.S. , 193 U.S. 393.
(322) Act 4th February, 1887, 24 Stat. 379, C. 104, and its
supplements, supra, Section 49.
(323) See the dissenting judgment of Wite, J., in U.S. v.
T.M.F.A., 166 U.S. 357 et seq.
(324) Minnesota v. N. S. Co., 194 U.S. 48.
(325) Connolly v. U.S. P. Co., 184 U.S. 540.
(326) Bement v. N. H. Co., 186 U.S. 70, 88.
(327) In re Debs, 64 Fed. 724, 745, 755, 158 U.S. 564. See 'The
Law of Contracts in Restraint of Trade, with special
Reference to Trusts, "by George Stuart Patterson, Esq.
(328) A.P. & S. Co. v. U.S. , 175 U.S. 211.
(329) Montague v. Lowry, 193 U.S. 38.
(330) U. S. v. T. M. F. A., 166 U. S. 290; Gray, Shiras, and
White, JJ., dissented; U.S. v. J. T. A., 171 id. 505; Gray,
Shiras and White, JJ., dissented, and McKenna, J., did not
sit.
(331) N. S. Co. v. U.S. 193 U.S. 197; Harlan, Brown, McKenna,
and Day, JJ., concurred in the judgment read by Harlan, J.,
and Brewer, J., concurred in the decree, but did not concur
in all the reasoning of Harlan, J.; @er, C. J., and Peckham,
White, and Holmes, JJ., dissented.
(332) Bement v. N. H. Co., 186 U.S. 70; Harlan, Gray, and White,
JJ., did not sit in this case.
(333) U. S. v. E. C. Knight Co., 156 U. S. 1. Harlan, J.,
dissented.
(334) Hopkins v. U. B., 171 U.S. 5T8; Anderson v. U.S. , ibid.
604. Harlan, J., dissented in both cases. In the first case
it was held to be an immaterial circumstance that the local
market was situated partly in one state and partly in
another state. In the last case the facto differed only in
that the parties to the agreement were purchasers of
property upon their own account.
(335) U.S. v. T. M. F. A., U.S. v. J. T. A., and N. S. Co. v. U.
S.
(336) 4th February, 1887, 24 Stat. 379, c. 104.
(337) Smyth v. Ames, 169 U.S. 466.
(338) 25 Stat. 855.
(339) 32 Stat. 847.
(340) Hare v. L. & N. R., 2 J. & H. Ch. 80, 103; M. & L. R. v. C.
R., 66 N. H. 100. See Report XIV of the Interstate Commerce
Commission.
(341) 193 U.S. 197.
(342) 156 U.S. 1.
(343) See the view of Holmes, J., 193 U.S. 405.
(344) 193 U.S. 197.
(345) U.S. v. Isham, 17 Wall 506.
(346) Act of 24th July, 18616, 14 Stat. 221; Rev. Stat. 5263,
etc.
(347) Congress, by Act of 8th June, 1872, c. 335, 17 Stat. 308;
Rev. Stat. 3964, declared all railway lines in the United
States to be post roads.
(348) This act does not apply to telephone companies: Richmond v.
S. B. T. Co., 174 U.S. 761.
(349) W. U. T. Co. v. James, 162 U.S. 650.
(350) St. Louis v. W. U. T. Co., 148 U.S. 92; P. T. C. Co. v.
Baltimore, 156 id. 210. See also W. U. T. Co. v. New Hope,
187 id. 419; but of. A. & P. T. Co. v. Philadelphia, 190 id.
160; P. T. C. Co. v. New Hope, 192 id. 55; P. T. C. Co. v.
Taylor, ibid. 64.
(351) Massachusetts v. W. U. T. Co., 141 U.S. 40; P. T. Co. v.
Adams, 155 ia. 688; W. U. T. Co. v. Taggart, 163 id. 1; W.
U. T. Co. v. Missouri, 190 id. 412.
(352) Ratterman v. W. U. T. Co, 127 U.S. 411; P. T. C. Co. v.
Charleston, 153 id. 692.
(353) Rev. Stat., see. 5263, etc.
(354) P. T. Co. v. W. U. T. Co., 96 U.S. 1.
(355) W. U. T. Co. v. Texas, 105 U.S. 460.
(356) W. U. T. Co. v. Pendleton, 122 U.S. 347.
(357) Leloup v. Port of Mobile, 127 U.S. 640 (overruling Osborne
v. Mobile, 16 Wall. 479); W. U. T. Co. v. Alabama, 132 U.S.
472.
(358) W. U. T. Co. v. Massachusetts, 125 U.S. 530.
(359) Cherokee Nation v. Georgia, 5 Pet. 1; Worcester v. Georgia,
6 id. 515; Cherokee Nation v. S. K. Ry., 135 U.S. 641.
(360) Worcester v. Georgia, 6 Pet. 515.
(361) Cherokee Nation v. S. K. Ry. 7 135 U.S. 641.
(362) U.S. v. Holliday; U. S v. Haas, 3 Wall. 407.
(363) U. S. v. Forty-three Gallons of Whiskev, 9,3 U.S. 188. As
to the term "Indian Country," see Ex parte Crow Dog, 109 U.
S. 556; U.S. v. Le Bris, 121 id. 278. The subject of the
exercise by the states of their Powers of taxation, and of
police regulation, as affecting commerce, is more fully
treated in other chapters of this book.
# # #
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C. Stuart Patterson