Congress has repeatedly directed an enumeration not only of the free
persons in the States, but also of those in the territories, and has
required all persons over eighteen years of age to answer an
ever-lengthening list of inquiries concerning their personal and
economic affairs. This extended scope of the census has received the
implied approval of the Supreme Court;[136] it is one of the methods
whereby the national legislature exercises its inherent power to obtain
the information necessary for intelligent legislative action. Although
taking an enlarged view of its power in making the enumeration of
persons called for by this section, Congress has not always complied
with its positive mandate to reapportion representatives among the
States after the census is taken. It failed to make such a
reapportionment after the census of 1920, being unable to reach
agreement for allotting representation without further increasing the
size of the House. Ultimately, by the act of June 18, 1929,[137] it
provided that the membership of the House of Representatives should
henceforth be restricted to 435 members, to be distributed among the
States by the so-called "method of major fractions" which had been
earlier employed in the apportionment of 1911.
Clause 4. When vacancies happen in the Representation from any State,
the Executive Authority thereof shall issue Writs of Election to fill
such Vacancies.
Clause 5. The House of Representatives shall chuse their Speaker and
other Officers; and shall have the sole Power of Impeachment.
Section 3. Clause 1. [The Senate of the United States shall be
composed of two Senators from each State, chosen by the Legislature
thereof, for six Years; and each Senator shall have one vote].
Clause 2. Immediately after they shall be assembled in Consequence of
the first Election, they shall be divided as equally as may be into
three classes. The Seats of the Senators of the first Class shall be
vacated at the Expiration of the second Year, of the second Class at the
Expiration of the fourth Year, and of the third Class at the Expiration
of the sixth Year, so that one third may be chosen every second Year;
[and if Vacancies happen by Resignation, or otherwise, during the Recess
of the Legislature of any State, the Executive thereof may make
temporary Appointments until the next Meeting of the Legislature, which
shall then fill such Vacancies].[138]
Clause 3. No Person shall be a Senator who shall not have attained to
the Age of thirty Years, and been nine Years a Citizen of the United
States, and who shall not, when elected, be an Inhabitant of that State
for which he shall be chosen.
Clause 4. The Vice President of the United States shall be President of
the Senate, but shall have no Vote, unless they be equally divided.
Clause 5. The Senate shall chuse their other Officers, and also a
President pro tempore, in the Absence of the Vice President, or when he
shall exercise the Office of President of the United States.
Clause 6. The Senate shall have the sole Power to try all Impeachments.
When sitting for that Purpose, they shall be on Oath or Affirmation.
When the President of the United States is tried, the Chief Justice
shall preside: And no Person shall be convicted without the Concurrence
of two thirds of the Members present.
Clause 7. Judgment in Cases of Impeachment shall not extend further than
to removal from Office, and disqualification to hold and enjoy any
Office of honor, Trust or Profit under the United States; but the Party
convicted shall nevertheless be liable and subject to Indictment, Trial,
Judgment and Punishment, according to Law.
Section 4. Clause 1. The Times, Places and Manner of holding
Elections for Senators and Representatives, shall be prescribed in each
State by the Legislature thereof; but the Congress may at any time by
Law make or alter such Regulations, except as to the Places of chusing
Senators.
Federal Legislation Under This Clause
Not until 1842 did Congress undertake to exercise the power to regulate
the "times, places and manner of holding elections for Senators and
Representatives." In that year it passed a law requiring the election of
Representatives by districts.[139] Prior to that time some of the States
had sought to increase their influence by electing all of their
Representatives on a general ticket. The frequent deadlocks between the
two Houses of State legislatures with respect to the election of
Senators prompted Congress to pass a further act in 1866, which
compelled the two bodies to meet in joint session on a specified day,
and to meet everyday thereafter and vote for a Senator until one was
elected.[140] The first comprehensive federal statute dealing with
elections was adopted in 1870. Under the Enforcement Act of 1870 and
kindred measures,[141] false registration, bribery, voting without legal
right, making false returns of votes cast, interference in any manner
with officers of election, and the neglect by any such officer of any
duty required of him by State of federal law, were made federal
offenses. Provision was made for the appointment by federal judges of
persons to attend at places of registration and at elections with
authority to challenge any person proposing to register or vote
unlawfully, to witness the counting of votes, and to identify by their
signatures the registration of voters and election tally sheets. After
twenty-four years experience Congress repealed those portions of the
Reconstruction legislation which dealt specifically with elections, but
left in effect those dealing generally with Civil Rights.[142] As seen
earlier, those sections have been invoked for the prosecution of
election offenses which interfere with the rights of voters guaranteed
by the second section of this article. The election laws, of the
Reconstruction period were held invalid in part as applied to municipal
elections,[143] but were found to be a constitutional exercise of the
authority conferred by this section with respect to the election of
members of Congress.[144]
LEGISLATURE DEFINED
While requiring the election of Representatives by districts, Congress
has left it to the States to define the areas from which members should
be chosen. This has occasioned a number of disputes concerning the
validity of action taken by the States. In Ohio ex rel. Davis _v._
Hildebrant,[145] a requirement that a redistricting law be submitted to
a popular referendum was challenged and sustained. After the
reapportionment made pursuant to the 1930 census, deadlocks between the
Governor and legislature in several States, produced a series of cases
in which the right of the Governor to veto a reapportionment bill was
questioned. Contrasting this function with other duties committed to
State legislatures by the Constitution, the Court decided that it was
legislative in character and hence subject to gubernatorial veto to the
same extent as ordinary legislation under the terms of the State
constitution.[146]
PRESENT INEQUALITY OF ELECTION DISTRICTS
The Reapportionment Act of 1929[147] omitted a requirement contained in
the 1911 law[148] that Congressional districts be "composed of a
contiguous and compact territory, * * * containing as nearly as
practicable an equal number of inhabitants." Since the earlier act was
not repealed it was argued that the mandate concerning compactness,
contiguity and equality of population of districts was still
controlling. The Supreme Court rejected this view.[149] In Colegrove
_v._ Green,[150] the Illinois Apportionment law, which created districts
now having glaringly unequal populations, was attacked as
unconstitutional on the ground that it denied to voters in the more
populous districts the full right to vote and to the equal protection of
the laws. The Court dismissed the complaint, three Justices asserting
that the issue was not justiciable, and a fourth that the case was one
in which the Court should decline to exercise jurisdiction.[151]
Justice Black, dissenting in an opinion in which Justices Douglas and
Murphy joined, argued: "While the Constitution contains no express
provision requiring that Congressional election districts established by
the States must contain approximately equal populations, the
constitutionally guaranteed right to vote and the right to have one's
vote counted clearly imply the policy that State election systems, no
matter what their form, should be designed to give approximately equal
weight of each vote case. * * * legislation which must inevitably bring
about glaringly unequal representation in the Congress in favor of
special classes and groups should be invalidated, 'whether accomplished
ingeniously or ingenuously'."[152]
CONGRESSIONAL PROTECTION OF THE ELECTORAL PROCESS
Congress can by law protect the voter from personal violence or
intimidation and the election itself from corruption and fraud.[153] To
accomplish these ends it may adopt the statutes of the States and
enforce them by its own sanctions.[154] It may punish a State election
officer for violating his duty under a State law governing Congressional
elections.[155] It may also punish federal officers and employees who
solicit or receive contributions to procure the nomination of a
particular candidate in a State primary election.[156] At one time the
Court held that Congress had no power, at least prior to the adoption of
the Seventeenth Amendment, to limit the expenditures made to procure a
primary nomination to the United States Senate,[157] but this decision
has been greatly weakened, and the right of the National Government to
regulate primary elections conducted under State law for the nomination
of Members of Congress has been squarely recognized where such primary
is made by State law "an integral part of the procedure of choice, or
where in fact the primary effectively controls the choice,..."[158]
Clause 2. [The Congress shall assemble at least once in every Year, and
such Meeting shall be on the first Monday in December, unless they shall
by law appoint a different Day].
Section 5. Clause 1. Each House shall be the Judge of the
Elections, Returns and Qualifications of its own Members, and a Majority
of each shall constitute a Quorum to do Business; but a smaller Number
may adjourn from day to day, and may be authorized to compel the
Attendance of absent Members, in such Manner, and under such Penalties
as each House may provide.
Clause 2. Each House may determine the Rules of its Proceedings, punish
its Members for disorderly Behaviour, and, with the Concurrence of two
thirds, expel a Member.
Clause 3. Each House shall keep a Journal of its Proceedings, and from
time to time publish the same, excepting such Parts as may in their
Judgment require Secrecy; and the Yeas and Nays of the Members of either
House on any question shall, at the Desire of one fifth of those
Present, be entered on the Journal.
Clause 4. Neither House, during the Session of Congress, shall, without
the Consent of the other, adjourn for more than three days, nor to any
other Place than that in which the two Houses shall be sitting.
Powers and Duties of the Houses
POWER TO JUDGE ELECTIONS
Each House, in judging of elections under this clause acts as a judicial
tribunal, with like power to compel attendance of witnesses. In the
exercise of its discretion, it may issue a warrant for the arrest of a
witness to procure his testimony, without previous subpoena, if there is
good reason to believe that otherwise such witness would not be
forthcoming.[159] It may punish perjury committed in testifying before a
notary public upon a contested election.[160] The power to judge
elections extends to an investigation of expenditures made to influence
nominations at a primary election.[161] Refusal to permit a person
presenting credentials in due form to take the oath of office does not
oust the jurisdiction of the Senate to inquire into the legality of the
election.[162] Nor does such refusal unlawfully deprive the State which
elected such person of its equal suffrage in the Senate.[163]
"A QUORUM TO DO BUSINESS"
For many years the view prevailed in the House of Representatives that
it was necessary for a majority of the members to vote on any
proposition submitted to the House in order to satisfy the
constitutional requirement for a quorum. It was a common practice for
the opposition to break a quorum by refusing to vote. This was changed
in 1890, by a ruling made by Speaker Reed, and later embodied in Rule XV
of the House, that members present in the chamber but not voting would
be counted in determining the presence of a quorum.[164] The Supreme
Court upheld this rule in United States _v._ Ballin,[165] saying that
the capacity of the House to transact business is "created by the mere
presence of a majority," and that since the Constitution does not
prescribe any method for determining the presence of such majority "it
is therefore within the competency of the House to prescribe any method
which shall be reasonably certain to ascertain the fact."[166] The rules
of the Senate provide for the ascertainment of a quorum only by a roll
call,[167] but in a few cases it has held that if a quorum is present, a
proposition can be determined by the vote of a lesser number of
members.[168]
RULES OF PROCEDURE
In the exercise of their constitutional power to determine their rules
of proceedings the Houses of Congress may not "ignore constitutional
restraints or violate fundamental rights, and there should be a
reasonable relation between the mode or method of proceeding established
by the rule and the result which is sought to be attained. But within
these limitations all matters of method are open to the determination of
the House, * * * The power to make rules is not one which once exercised
is exhausted. It is a continuous power, always subject to be exercised
by the House, and within the limitations suggested, absolute and beyond
the challenge of any other body or tribunal."[169] Where a rule affects
private rights, the construction thereof becomes a judicial question. In
United States _v._ Smith,[170] the Court held that the Senate's attempt
to reconsider its confirmation of a person nominated by the President as
Chairman of the Federal Power Commission was not warranted by its rules,
and did not deprive the appointee of his title to the office. In
Christoffel _v._ United States[171] a sharply divided Court upset a
conviction for perjury in the district courts of one who had denied
under oath before a House Committee any affiliation with Communism. The
reversal was based on the ground that inasmuch as a quorum of the
Committee, while present at the outset, was not present at the time of
the alleged perjury, testimony before it was not before a "competent
tribunal" within the sense of the District of Columbia Code.[172] Four
Justices, speaking by Justice Jackson dissented, arguing that under the
rules and practices of the House, "a quorum once established is presumed
to continue unless and until a point of no quorum is raised" and that
the Court was, in effect, invalidating this rule, thereby invalidating
at the same time the rule of self-limitation observed by courts "where
such an issue is tendered."[173]
POWERS OF THE HOUSES OVER MEMBERS
Congress has authority to make it an offense against the United States
for a Member, during his continuance in office, to receive compensation
for services before a government department in relation to proceedings
in which the United States is interested. Such a statute does not
interfere with the legitimate authority of the Senate or House over its
own Members.[174] In upholding the power of the Senate to investigate
charges that some Senators had been speculating in sugar stocks during
the consideration of a tariff bill, the Supreme Court asserted that "the
right to expel extends to all cases where the offence is such as in the
judgment of the Senate is inconsistent with the trust and duty of a
Member."[175] It cited with apparent approval the action of the Senate
in expelling William Blount in 1797 for attempting to seduce an American
agent among the Indians from his duty and for negotiating for services
in behalf of the British Government among the Indians--conduct which was
not a "statutable offense" and which was not committed in his official
character, nor during the session of Congress nor at the seat of
government.
THE DUTY TO KEEP A JOURNAL
The object of the clause requiring the keeping of a Journal is "to
insure publicity to the proceedings of the legislature, and a
correspondent responsibility of the members to their respective
constituents."[176] When the Journal of either House is put in evidence
for the purpose of determining whether the yeas and nays, were ordered,
and what the vote was on any particular question, the Journal must be
presumed to show the truth, and a statement therein that a quorum was
present, though not disclosed by the yeas and nays, is final.[177] But
when an enrolled bill, which has been signed by the Speaker of the House
and by the President of the Senate, in open session, receives the
approval of the President and is deposited in the Department of State,
its authentication as a bill that has passed Congress is complete and
unimpeachable, and it is not competent to show from the Journals of
either House that an act so authenticated, approved, and deposited, in
fact omitted one section actually passed by both Houses of
Congress.[178]
Section 6. Clause 1. The Senators and Representatives shall
receive a Compensation for their Services, to be ascertained by Law, and
paid out of the Treasury of the United States. They shall in all Cases,
except Treason, Felony and Breach of the Peace, be privileged from
Arrest during their Attendance at the Session of their respective
Houses, and in going to and returning from the same; and for any Speech
or Debate in either House, they shall not be questioned in any other
Place.
Compensation, Immunities and Disabilities of Members
WHEN THE PAY STARTS
A Member of Congress who receives his certificate of admission, and is
seated, allowed to vote, and serve on committees, is _prima facie_
entitled to the seat and salary, even though the House subsequently
declares his seat vacant. The one who contested the election and was
subsequently chosen to fill the vacancy is entitled to salary only from
the time the compensation of such "predecessor" has ceased.[179]
PRIVILEGE FROM ARREST
This clause is practically obsolete. It applies only to arrests in civil
suits, which were still common in this country at the time the
Constitution was adopted.[180] It does not apply to service of process
in either civil[181] or criminal cases.[182] Nor does it apply to arrest
in any criminal case. The phrase "treason, felony or breach of the
peace" is interpreted to withdraw all criminal offenses from the
operation of the privilege.[183]
THE PRIVILEGE OF SPEECH OR DEBATE
The protection of this clause is not limited to words spoken in debate,
but is applicable to written reports, to resolutions offered, to the act
of voting and to all things generally done in a session of the House by
one of its members in relation to the business before it.[184] In
Kilbourn _v._ Thompson[185] the Supreme Court quoted with approval the
following excerpt from the opinion of Chief Justice Parsons in the early
Massachusetts of Coffin _v._ Coffin,[186] giving a broad scope to the
immunity of legislators: "'These privileges are thus secured, not with
the intention of protecting the members against prosecutions for their
own benefit, but to support the rights of the people, by enabling their
representatives to execute the functions of their office without fear of
prosecutions, civil or criminal. I, therefore, think that the article
ought not to be construed strictly, but liberally, that the full design
of it may be answered. I will not confine it to delivering an opinion,
uttering a speech, or haranguing in debate, but will extend it to the
giving of a vote, to the making of a written report, and to every other
act resulting from the nature and in the execution of the office. And I
would define the article as securing to every member exemption from
prosecution for everything said or done by him as a representative, in
the exercise of the functions of that office, without inquiring whether
the exercise was regular, according to the rules of the House, or
irregular and against their rules. I do not confine the member to his
place in the House; and I am satisfied that there are cases in which he
is entitled to this privilege when not within the walls of the
representatives' chamber.'"[187] Accordingly the Court ruled that
Members of the House of Representatives were not liable to a suit for
false imprisonment by reason of their initiation and prosecution of the
legislative proceedings under which plaintiff was arrested.[188] Nor
does the claim of an unworthy purpose destroy the privilege.
"Legislators are immune from deterrents to the uninhibited discharge of
their legislative duty, not for their private indulgence but for the
public good. One must not expect uncommon courage even in
legislators".[189]
Clause 2. No Senator or Representative shall, during the Time for which
he was elected, be appointed to any civil Office under the Authority of
the United States, which shall have been created, or the Emoluments
whereof shall have been encreased during such time; and no Person
holding any Office under the United States, shall be a Member of either
House during his Continuance in Office.
INCOMPATIBLE OFFICES
According to legislative precedents, visitors to academies, regents,
directors and trustees of public institutions, and members of temporary
commissions who receive no compensation as such, are not officers within
the constitutional inhibition of section 6.[190] Government contractors
and federal officers who resign before presenting their credentials may
be seated as Members of Congress.[191] In 1909, after having increased
the salary of the Secretary of State,[192] Congress reduced it to the
former figure so that a Member of the Senate at the time the increase
was voted would be eligible for that office.[193] The first clause again
became a subject of discussion in 1937, when Justice Black was appointed
to the Supreme Court in face of the fact that Congress had recently
improved the financial position of Justices retiring at seventy and the
term for which Mr. Black had been elected to the Senate from Alabama in
1932 had still some time to run. The appointment was defended by the
argument that inasmuch as Mr. Black was only fifty-one years old at the
time and so would be ineligible for the "increased emolument" for
nineteen years, it was not _as to him_ an increased emolument.[194]
Section 7. Clause 1. All Bills for raising Revenue shall
originate in the House of Representatives; but the Senate may propose or
concur with Amendments as on other Bills.
Clause 2. Every Bill which shall have passed the House of
Representatives and the Senate, shall, before it become a Law, be
presented to the President of the United States; If he approve he shall
sign it, but if not he shall return it, with his Objections to that
House in which it shall have originated, who shall enter the Objections
at large on their Journal, and proceed to reconsider it. If after such
Reconsideration two thirds of that House shall agree to pass the Bill,
it shall be sent, together with the Objections, to the other House, by
which it shall likewise be reconsidered, and if approved by two thirds
of that House, it shall become a Law. But in all such Cases the Votes of
both Houses shall be determined by yeas and Nays, and the Names of the
Persons voting for and against the Bill shall be entered on the Journal
of each House respectively. If any Bill shall not be returned by the
President within ten Days (Sundays excepted) after it shall have been
presented to him, the Same shall be a Law, in like Manner as if he had
signed it, unless the Congress by their Adjournment prevent its Return,
in which Case it shall not be a Law.
THE LEGISLATIVE PROCESS
REVENUE BILLS
Only bills to levy taxes in the strict sense of the word are
comprehended by the phrase "all bills for raising revenue"; bills for
other purposes, which incidentally create revenue, are not
included.[195] An act providing a national currency secured by a pledge
of bonds of the United States, which, "in the furtherance of that
object, and also to meet the expenses attending the execution of the
act," imposed a tax on the circulating notes of national banks was held
not to be a revenue measure which must originate in the House of
Representatives.[196] Neither was a bill which provided that the
District of Columbia should raise by taxation and pay to designated
railroad companies a specified sum for the elimination of grade
crossings and the construction of a union railway station.[197] The
substitution of a corporation tax for an inheritance tax,[198] and the
addition of a section imposing an excise tax upon the use of foreign
built pleasure yachts,[199] have been held to be within the Senate's
constitutional power to propose amendments.
APPROVAL BY THE PRESIDENT
The President is not restricted to signing a bill on a day when Congress
is in session.[200] He may sign within ten days (Sundays excepted) after
the bill is presented to him, even if that period extends beyond the
date of the final adjournment of Congress.[201] His duty in case of
approval of a measure is merely to sign it. He need not write on the
bill the word "approved" nor the date. If no date appears on the face of
the roll, the Court may ascertain the fact by resort to any source of
information capable of furnishing a satisfactory answer.[202] A bill
becomes law on the date of its approval by the President.[203] When no
time is fixed by the act it is effective from the date of its
approval,[204] which usually is taken to be the first moment of the day,
fractions of a day being disregarded.[205]
THE VETO POWER
If Congress adjourns within ten days (Sundays excepted) of the
presentation of a bill to the President, the return of the bill is
prevented within the meaning of this clause. Consequently it does not
become law if the President does not sign it, but succumbs to what in
Congressional parlance is called a "pocket veto."[206] But a brief
recess by the House in which a bill originated, while the Congress is
still in session, does not prevent the return of a bill by delivery to
one of the officers of the House who has implied authority to receive
it.[207] The two-thirds vote of each House required to pass a bill over
a veto means two-thirds of a quorum.[208] After a bill becomes law the
President has no authority to repeal it. Asserting this truism, the
Supreme Court held in The Confiscation Cases,[209] that the immunity
proclamation issued by the President in 1868 did not require reversal of
a decree condemning property which had been seized under the
Confiscation Act of 1862.[210]
Clause 3. Every Order, Resolution, or Vote to which the Concurrence of
the Senate and House of Representatives may be necessary (except on a
question of Adjournment) shall be presented to the President of the
United States; and before the Same shall take Effect, shall be approved
by him, or being disapproved by him, shall be repassed by two thirds of
the Senate and House of Representatives, according to the Rules and
Limitations prescribed in the Case of a Bill.
PRESENTATION OF RESOLUTIONS
The sweeping nature of this obviously ill-considered provision is
emphasized by the single exception specified to its operation. Actually,
it was impossible from the first to give it any such scope. Otherwise
the intermediate stages of the legislative process would have been
bogged down hopelessly, not to mention other highly undesirable results.
In a report rendered by the Senate Judiciary Committee in 1897 it was
shown that the word "necessary" in the clause had come in practice to
refer "to the necessity occasioned by the requirement of other
provisions of the Constitution, whereby every exercise of 'legislative
powers' involves the concurrence of the two Houses"; or more briefly,
"necessary" here means necessary if an "order, resolution, or vote" is
to have the force of law. Such resolutions have come to be termed "joint
resolutions" and stand on a level with "bills," which if "enacted"
become Statutes. But "votes" taken in either House preliminary to the
final passage of legislation need not be submitted to the President, nor
resolutions passed by the Houses concurrently with a view to expressing
an opinion or to devising a common program of action (e.g., the
concurrent resolutions by which during the fight over Reconstruction the
Southern States were excluded from representation in the House and
Senate, the Joint Committee on Reconstruction containing members from
both Houses was created, etc.), or to directing the expenditure of money
appropriated to the use of the two Houses.[211] Within recent years the
concurrent resolution has been put to a new use--the termination of
powers delegated to the Chief Executive, or the disapproval of
particular exercises of power by him. Most of the important legislation
enacted for the prosecution of World War II provided that the powers
granted to the President should come to an end upon adoption of
concurrent resolutions to that effect.[212] Similarly, measures
authorizing the President to reorganize executive agencies have provided
that a Reorganization Plan promulgated by him should be reported by
Congress and should not become effective if one[213] or both[214] Houses
adopted a resolution disapproving it. Also, it was settled as early as
1789 that resolutions of Congress proposing amendments to the
Constitution need not be submitted to the President, the Bill of Rights
having been referred to the States without being laid before President
Washington for his approval--a procedure which the Court ratified in due
course.[215]
Section 8. The Congress shall have Power to lay and collect
Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the
common Defence and general Welfare of the United States; but all Duties,
Imposts and Excises shall be uniform throughout the United States.
The Taxing-Spending Power
KINDS OF TAXES PERMITTED
By the terms of the Constitution, the power of Congress to levy taxes is
subject to but one exception and two qualifications. Articles exported
from any State may not be taxed at all. Direct taxes must be levied by
the rule of apportionment and indirect taxes by the rule of uniformity.
The Court has emphasized the sweeping character of this power by saying
from time to time that it "reaches every subject,"[216] that it is
"exhaustive"[217] or that it "embraces every conceivable power of
taxation."[218] Despite these generalizations, the power has been at
times substantially curtailed by judicial decision with respect to the
subject matter of taxation, the manner in which taxes are imposed, and
the objects for which they may be levied.
DECLINE OF THE FORBIDDEN SUBJECT MATTER TEST
In recent years the Supreme Court has restored to Congress the power to
tax most of the subject matter which had previously been withdrawn from
its reach by judicial decision. The holding of Evans _v._ Gore[219] and
Miles _v._ Graham[220] that the inclusion of the salaries received by
federal judges in measuring the liability for a nondiscriminatory income
tax violated the constitutional mandate that the compensation of such
judges should not be diminished during their continuance in office was
repudiated in O'Malley _v._ Woodrough.[221] The specific ruling of
Collector _v._ Day[222] that the salary of a State officer is immune to
federal income taxation also has been overruled.[223] But the principle
underlying that decision--that Congress may not lay a tax which would
impair the sovereignty of the States--is still recognized as retaining
some vitality.
THE RISE AND FALL OF COLLECTOR _v._ DAY
Collector _v._ Day was decided in 1871 while the country was still in
the throes of reconstruction. As noted by Chief Justice Stone in a
footnote to his opinion in Helvering _v._ Gerhardt,[224] the Court had
not then determined how far the Civil War amendments had broadened the
federal power at the expense of the States; the fact that the taxing
power had recently been used with destructive effect upon notes issued
by State banks[225] suggested the possibility of similar attacks upon
the existence of the States themselves. Two years later the Court took
the logical further step of holding that the federal income tax could
not be imposed on income received by a municipal corporation from its
investments.[226] A far-reaching extension of private immunity was
granted in Pollock _v._ Farmers Loan and Trust Co.,[227] where interest
received by a private investor on State or municipal bonds was held to
be exempt from federal taxation. As the apprehensions of this era
subsided, the doctrine of these cases was pushed into the background. It
never received the same wide application as did McCulloch _v._
Maryland[228] in curbing the power of the States to tax operations or
instrumentalities of the Federal Government. Only once since the turn of
the century has the national taxing power been further narrowed in the
name of Dual Federalism. In 1931 the Court held that a federal excise
tax was inapplicable to the manufacture and sale to a municipal
corporation of equipment for its police force.[229] Justices Stone and
Brandeis dissented from this decision and it is doubtful whether it
would be followed today.
FEDERAL TAXATION OF STATE INTERESTS
Within a decade after the Pollock decision the retreat from Collector
_v._ Day began. In 1903, a succession tax upon a bequest to a
municipality for public purposes was upheld on the ground that the tax
was payable out of the estate before distribution to the legatee.
Looking to form and not to substance, in disregard of the mandate of
Brown _v._ Maryland,[230] a closely divided Court declined to "regard it
as a tax upon the municipality, though it might operate incidentally to
reduce the bequest by the amount of the tax."[231] When South Carolina
embarked upon the business of dispensing alcoholic beverages, its agents
were held to be subject to the national internal revenue tax, the ground
of the holding being that in 1787 such a business was not regarded as
one of the ordinary functions of government.[232] Another decision
marking a clear departure from the logic of Collector _v._ Day was Flint
_v._ Stone Tracy Company,[233] where the Court sustained an act of
Congress taxing the privilege of doing business as a corporation, the
tax being measured by the income. The argument that the tax imposed an
unconstitutional burden on the exercise by a State of its reserved power
to create corporate franchises was rejected, partly in consideration of
the principle of national supremacy, and partly on the ground that the
corporate franchises were private property. This case also qualified
Pollock _v._ Farmers Loan and Trust Company to the extent of allowing
interest on State bonds to be included in measuring the tax on the
corporation. Subsequent cases have sustained an estate tax on the net
estate of a decedent, including State bonds;[234] excise taxes on the
transportation of merchandise in performance of a contract to sell and
deliver it to a county;[235] on the importation of scientific apparatus
by a State university;[236] on admissions to athletic contests sponsored
by a State institution, the net proceeds of which were used to further
its educational program;[237] and on admissions to recreational
facilities operated on a nonprofit basis by a municipal
corporation.[238] Income derived by independent engineering contractors
from the performance of State functions;[239] the compensation of
trustees appointed to manage a street railway taken over and operated by
a State;[240] profits derived from the sale of State bonds;[241] or from
oil produced by lessees of State lands;[242] have all been held to be
subject to federal taxation despite a possible economic burden on the
State.
IS ANY IMMUNITY LEFT THE STATES?
Although there have been sharp differences of opinion among members of
the Supreme Court in recent cases dealing with the tax immunity of State
functions and instrumentalities, it has been stated that "all agree that
not all of the former immunity is gone."[243] Twice the Court has made
an effort to express its new point of view in a statement of general
principles by which the right to such immunity shall be determined.
However, the failure to muster a majority in concurrence with any single
opinion in the more recent of these cases leaves the question very much
in doubt. In Helvering _v._ Gerhardt,[244] where, without overruling
Collector _v._ Day, it narrowed the immunity of salaries of State
officers and federal income taxation, the Court announced "* * *, two
guiding principles of limitation for holding the tax immunity of State
instrumentalities to its proper function. The one, dependent upon the
nature of the function being performed by the State or in its behalf,
excludes from the immunity activities thought not to be essential to the
preservation of State governments even though the tax be collected from
the State treasury. * * * The other principle, exemplified by those
cases where the tax laid upon individuals affects the State only as the
burden is passed on to it by the taxpayer, forbids recognition of the
immunity when the burden on the State is so speculative and uncertain
that if allowed it would restrict the federal taxing power without
affording any corresponding tangible protection to the State government;
even though the function be thought important enough to demand immunity
from a tax upon the State itself, it is not necessarily protected from a
tax which well may be substantially or entirely absorbed by private
persons."[245]
CONFLICTING VIEWS ON THE COURT
The second attempt to formulate a general doctrine was made in New York
_v._ United States,[246] where, on review of a judgment affirming the
right of the United States to tax the sale of mineral waters taken from
property owned and operated by the State of New York, the Court was
asked to and did reconsider the right of Congress to tax business
enterprises carried on by the States. Justice Frankfurter, speaking for
himself and Justice Rutledge, made the question of discrimination _vel
non_ against State activities the test of the validity of such a tax.
They found "no restriction upon Congress to include the States in
levying a tax exacted equally from private persons upon the same subject
matter."[247] In a concurring opinion in which Justices Reed, Murphy,
and Burton joined, Chief Justice Stone rejected the criterion of
discrimination. He repeated what he had said in an earlier case to the
effect that "'* * * the limitation upon the taxing power of each, so far
as it affects the other, must receive a practical construction which
permits both to function with the minimum of interference each with the
other; and that limitation cannot be so varied or extended as seriously
to impair either the taxing power of the government imposing the tax
* * * or the appropriate exercise of the functions of the government
affected by it.'"[248] Justices Douglas and Black dissented in an
opinion written by the former on the ground that the decision
disregarded the Tenth Amendment, placed "the sovereign States on the
same plane as private citizens," and made them "pay the Federal
Government for the privilege of exercising powers of sovereignty
guaranteed them by the Constitution."[249] In the most recent case
dealing with State immunity the Court sustained the tax on the second
ground mentioned in Helvering _v._ Gerhardt--that the burden of the tax
was borne by private persons--and did not consider whether the function
was one which the Federal Government might have taxed if the
municipality had borne the burden of the exaction.[250]
THE RULE OF UNIFORMITY
Whether a tax is to be apportioned among the States according to the
census taken pursuant to article I, section 2, or imposed uniformly
throughout the United States depends upon its classification as direct
or indirect.[251] The rule of uniformity for indirect taxes is easy to
obey. It exacts only that the subject matter of a levy be taxed at the
same rate wherever found in the United States; or, as it is sometimes
phrased, the uniformity required is "geographical," not
"intrinsic."[252] The clause accordingly places no obstacle in the way
of legislative classification for the purpose of taxation, nor in the
way of what is called progressive taxation.[253] A taxing statute does
not fail of the prescribed uniformity because its operation and
incidence may be affected by differences in State laws.[254] A federal
estate tax law which permitted a deduction for a like tax paid to a
State was not rendered invalid by the fact that one State levied no such
tax.[255] The term "United States" in this clause refers only to the
States of the Union, the District of Columbia, and incorporated
territories. Congress is not bound by the rule of uniformity in framing
tax measures for unincorporated territories.[256] Indeed, in Binns _v._
United States,[257] the Court sustained license taxes imposed by
Congress but applicable only in Alaska, where the proceeds, although
paid into the general fund of the Treasury, did not in fact equal the
total cost of maintaining the territorial government.
PURPOSES OF TAXATION
Regulation by Taxation
The discretion of Congress in selecting the objectives of taxation has
also been held at times to be subject to limitations implied from the
nature of the Federal System. Apart from matters which Congress is
authorized to regulate, the national taxing power, it has been said,
"reaches only existing subjects."[258] Congress may tax any activity
actually carried on, regardless of whether it is permitted or prohibited
by the laws of the United States[259] or by those of a State.[260] But
so-called federal "licenses," so far as they relate to trade within
State limits, merely express "the purpose of the government not to
interfere * * * with the trade nominally licensed, if the required taxes
are paid." Whether the "licensed" trade shall be permitted at all is a
question for decision by the State.[261] This, nevertheless, does not
signify that Congress may not often regulate to some extent a business
within a State in order the more effectively to tax it. Under the
necessary and proper clause, Congress may do this very thing. Not only
has the Court sustained regulations concerning the packaging of taxed
articles such as tobacco[262] and oleomargarine,[263] ostensibly
designed to prevent fraud in the collection of the tax; it has also
upheld measures taxing drugs[264] and firearms[265] which prescribed
rigorous restrictions under which such articles could be sold or
transferred, and imposed heavy penalties upon persons dealing with them
in any other way. These regulations were sustained as conducive to the
efficient collection of the tax though they clearly transcended in some
respects this ground of justification.
Extermination by Taxation
A problem of a different order is presented where the tax itself has the
effect of suppressing an activity or where it is coupled with
regulations which clearly have no possible relation to the collection of
the tax. Where a tax is imposed unconditionally, so that no other
purpose appears on the face of the statute, the Court has refused to
inquire into the motives of the lawmakers and has sustained the tax
despite its prohibitive proportions.[266] In the language of a recent
opinion: "It is beyond serious question that a tax does not cease to be
valid merely because it regulates, discourages, or even definitely
deters the activities taxed. * * * The principle applies even though the
revenue obtained is obviously negligible, * * *, or the revenue purpose
of the tax may be secondary, * * * Nor does a tax statute necessarily
fall because it touches on activities which Congress might not otherwise
regulate. As was pointed out in Magnano Co. _v._ Hamilton, 292 U.S. 40,
47 (1934): 'From the beginning of our government, the courts have
sustained taxes although imposed with the collateral intent of effecting
ulterior ends which, considered apart, were beyond the constitutional
power of the lawmakers to realize by legislation directly addressed to
their accomplishment.'"[267] But where the tax is conditional, and may
be avoided by compliance with regulations set out in the statute, the
validity of the measure is determined by the power of Congress to
regulate the subject matter. If the regulations are within the
competence of Congress, apart from its power to tax, the exaction is
sustained as an appropriate sanction for making them effective;[268]
otherwise it is invalid.[269] During the Prohibition Era, Congress
levied a heavy tax upon liquor dealers who operated in violation of
State law. In United States _v._ Constantine[270] the Court held that
this tax was unenforceable after the repeal of the Eighteenth Amendment,
since the National Government had no power to impose an additional
penalty for infractions of State law.
The Protective Tariff
The earliest examples of taxes levied with a view to promoting desired
economic objectives in addition to raising revenue were, of course,
import duties. The second statute adopted by the first Congress was a
tariff act which recited that "it is necessary for the support of
government, for the discharge of the debts of the United States, and the
encouragement and protection of manufactures, that duties be laid on
goods, wares and merchandise imported."[271] After being debated for
nearly a century and a half, the constitutionality of protective tariffs
was finally settled by the unanimous decision of the Supreme Court in
Hampton and Company _v._ United States,[272] where Chief Justice Taft
wrote: "The second objection to Sec. 315 is that the declared plan of
Congress, either expressly or by clear implication, formulates its rule
to guide the President and his advisory Tariff Commission as one
directed to a tariff system of protection that will avoid damaging
competition to the country's industries by the importation of goods from
other countries at too low a rate to equalize foreign and domestic
competition in the markets of the United States. It is contended that
the only power of Congress in the levying of customs duties is to create
revenue, and that it is unconstitutional to frame the customs duties
with any other view than that of revenue raising. * * * In this first
Congress sat many members of the Constitutional Convention of 1787. This
Court has repeatedly laid down the principle that a contemporaneous
legislative exposition of the Constitution when the founders of our
Government and framers of our Constitution were actively participating
in public affairs, long acquiesced in, fixes the construction to be
given its provisions. * * * The enactment and enforcement of a number of
customs revenue laws drawn with a motive of maintaining a system of
protection, since the revenue law of 1789, are matters of history. * * *
Whatever we may think of the wisdom of a protection policy, we can not
hold it unconstitutional. So long as the motive of Congress and the
effect of its legislative action are to secure revenue for the benefit
of the general government, the existence of other motives in the
selection of the subject of taxes cannot invalidate Congressional
action."[273]
SPENDING FOR THE GENERAL WELFARE
The grant of power to "provide * * * for the general welfare" raises a
two-fold question: How may Congress provide for "the general welfare"
and what is "the general welfare" which it is authorized to promote? The
first half of this question was answered by Thomas Jefferson in his
Opinion on the Bank as follows: "* * * the laying of taxes is the
_power_, and the general welfare the _purpose_ for which the power is
to be exercised. They [Congress] are not to lay taxes _ad libitum for
any purpose they please_; but only _to pay the debts or provide for the
welfare of the Union_. In like manner, they are not _to do anything they
please_ to provide for the general welfare, but only to _lay taxes_ for
that purpose."[274] The clause, in short, is not an independent grant of
power, but a qualification of the taxing power. Although a broader view
has been occasionally asserted,[275] Congress has not acted upon it and
the Courts have had no occasion to adjudicate the point.
Hamilton _v._ Madison
With respect to the meaning of "the general welfare" the pages of The
Federalist itself disclose a sharp divergence of views between its two
principal authors. Hamilton adopted the literal, broad meaning of the
clause;[276] Madison contended that the powers of taxation and
appropriation of the proposed government should be regarded as merely
instrumental to its remaining powers, in other words, as little more
than a power of self-support.[277] From an early date Congress has acted
upon the interpretation espoused by Hamilton. Appropriations for
subsidies[278] and for an ever increasing variety of "internal
improvements"[279] constructed by the Federal Government, had their
beginnings in the administrations of Washington and Jefferson.[280]
Since 1914, federal grants-in-aid,--sums of money apportioned among the
States for particular uses, often conditioned upon the duplication of
the sums by the recipient State, and upon observance of stipulated
restrictions as to its use--have become commonplace.[281]
Triumph of the Hamiltonian Theory
The scope of the national spending power was brought before the Supreme
Court at least five times prior to 1936, but the Court disposed of four
of them without construing the "general welfare" clause. In the Pacific
Railway Cases[282] and Smith _v._ Kansas City Title and Trust
Company,[283] it affirmed the power of Congress to construct internal
improvements, and to charter and purchase the capital stock of federal
land banks, by reference to the powers of the National Government over
commerce, the post roads and fiscal operations, and to its war powers.
Decisions on the merits were withheld in two other cases--Massachusetts
_v._ Mellon and Frothingham _v._ Mellon[284]--on the ground that neither
a State nor an individual citizen is entitled to a remedy in the courts
against an unconstitutional appropriation of national funds. In United
States _v._ Gettysburg Electric Railway Co.,[285] however, the Court had
invoked "the great power of taxation to be exercised for the common
defence and the general welfare,"[286] to sustain the right of the
Federal Government to acquire land within a State for use as a national
park. Finally, in United States _v._ Butler,[287] the Court gave its
unqualified endorsement to Hamilton's views on the taxing power. Wrote
Justice Roberts for the Court: "Since the foundation of the Nation sharp
differences of opinion have persisted as to the true interpretation of
the phrase. Madison asserted it amounted to no more than a reference to
the other powers enumerated in the subsequent clauses of the same
section; that, as the United States is a government of limited and
enumerated powers, the grant of power to tax and spend for the general
national welfare must be confined to the enumerated legislative fields
committed to the Congress. In this view the phrase is mere tautology,
for taxation and appropriation are or may be necessary incidents of the
exercise of any of the enumerated legislative powers. Hamilton, on the
other hand, maintained the clause confers a power separate and distinct
from those later enumerated, is not restricted in meaning by the grant
of them, and Congress consequently has a substantive power to tax and to
appropriate, limited only by the requirement that it shall be exercised
to provide for the general welfare of the United States. Each contention
has had the support of those whose views are entitled to weight. This
court had noticed the question, but has never found it necessary to
decide which is the true construction. Justice Story, in his
Commentaries, espouses the Hamiltonian position. We shall not review the
writings of public men and commentators or discuss the legislative
practice. Study of all these leads us to conclude that the reading
advocated by Justice Story is the correct one. While, therefore, the
power to tax is not unlimited, its confines are set in the clause which
confers it, and not in those of Sec. 8 which bestow and define the
legislative powers of the Congress. It results that the power of
Congress to authorize expenditure of public moneys for public purposes
is not limited by the direct grants of legislative power found in the
Constitution."[288]
The Security Act Cases
Although holding that the spending power is not limited by the specific
grants of power contained in article I, section 8, the Court found,
nevertheless, that it was qualified by the Tenth Amendment, and on this
ground ruled in the Butler case that Congress could not use moneys
raised by taxation to "purchase compliance" with regulations "of matters
of State concern with respect to which Congress has no authority to
interfere."[289] Within little more than a year this decision was
reduced to narrow proportions by Steward Machine Co. _v._ Davis,[290]
which sustained the tax imposed on employers to provide unemployment
benefits, and the credit allowed for similar taxes paid to a State. To
the argument that the tax and credit in combination were "weapons of
coercion, destroying or impairing the autonomy of the States," the Court
replied that relief of unemployment was a legitimate object of federal
expenditure under the "general welfare" clause; that the Social Security
Act represented a legitimate attempt to solve the problem by the
cooperation of State and Federal Governments; that the credit allowed
for State taxes bore a reasonable relation "to the fiscal need subserved
by the tax in its normal operation,"[291] since State unemployment
compensation payments would relieve the burden for direct relief borne
by the national treasury. The Court reserved judgment as to the validity
of a tax "if it is laid upon the condition that a State may escape its
operation through the adoption of a statute unrelated in subject matter
to activities fairly within the scope of national policy and
power."[292]
Earmarked Funds
The appropriation of the proceeds of a tax to a specific use does not
affect the validity of the exaction, if the general welfare is advanced
and no other constitutional provision is violated. Thus a processing tax
on coconut oil was sustained despite the fact that the tax collected
upon oil of Philippine production was segregated and paid into the
Philippine Treasury.[293] In Helvering _v._ Davis,[294] the excise tax
on employers, the proceeds of which were not earmarked in any way,
although intended to provide funds for payments to retired workers, was
upheld under the "general welfare" clause, the Tenth Amendment being
found to be inapplicable.
Conditional Grants-in-Aid
In the Steward Machine Company case, it was a taxpayer who complained of
the invasion of the State sovereignty and the Court put great emphasis
on the fact that the State was a willing partner in the plan of
cooperation embodied in the Social Security Act.[295] A decade later the
right of Congress to impose conditions upon grants-in-aid over the
objection of a State was squarely presented in Oklahoma _v._ United
States Civil Service Commission.[296] The State objected to the
enforcement of a provision of the Hatch Act,[297] whereby its right to
receive federal highway funds would be diminished in consequence of its
failure to remove from office a member of the State Highway Commission
found to have taken an active part in party politics while in office.
Although it found that the State had created a legal right which
entitled it to an adjudication of its objection, the Court denied the
relief sought on the ground that, "While the United States is not
concerned with, and has no power to regulate local political activities
as such of State officials, it does have power to fix the terms upon
which its money allotments to State shall be disbursed. * * * The end
sought by Congress through the Hatch Act is better public service by
requiring those who administer funds for national needs to abstain from
active political partisanship. So even though the action taken by
Congress does have effect upon certain activities within the State, it
has never been thought that such effect made the federal act
invalid."[298]
"Debts of the United States"
The power to pay the debts of the United States is broad enough to
include claims of citizens arising on obligations of right and
justice.[299] The Court sustained an act of Congress which set apart for
the use of the Philippine Islands, the revenue from a processing tax on
coconut oil of Philippine production, as being in pursuance of a moral
obligation to protect and promote the welfare of the people of the
Islands.[300] Curiously enough, this power was first invoked to assist
the United States to collect a debt due to it. In United States _v._
Fisher[301] the Supreme Court sustained a statute which gave the Federal
Government priority in the distribution of the estates of its insolvent
debtors. The debtor in that case was the endorser of a foreign bill of
exchange which apparently had been purchased by the United States.
Invoking the "necessary and proper" clause, Chief Justice Marshall
deduced the power to collect a debt from the power to pay its
obligations by the following reasoning: "The government is to pay the
debt of the Union, and must be authorized to use the means which appear
to itself most eligible to effect that object. It has, consequently, a
right to make remittances by bills or otherwise, and to take those
precautions which will render the transaction safe."[302]
Clause 2. _The Congress shall have Power_ * * * To borrow Money on the
credit of the United States.
The Borrowing Power
The original draft of the Constitution reported to the convention by its
Committee of Detail empowered Congress "To borrow money and emit bills
on the credit of the United States."[303] When this section was reached
in the debates, Gouverneur Morris moved to strike out the clause "and
emit bills on the credit of the United States." Madison suggested that
it might be sufficient "to prohibit the making them a tender." After a
spirited exchange of views on the subject of paper money the convention
voted, nine States to two, to delete the words "and emit bills."[304]
Nevertheless, in 1870, the Court relied in part upon this clause in
holding that Congress had authority to issue treasury notes and to make
them legal tender in satisfaction of antecedent debts.[305] When it
borrows money "on the credit of the United States" Congress creates a
binding obligation to pay the debt as stipulated and cannot thereafter
vary the terms of its agreement. A law purporting to abrogate a clause
in government bonds calling for payment in gold coin was held to
contravene this clause, although the creditor was denied a remedy in the
absence of a showing of actual damage.[306]
Clause 3. _The Congress shall have power_ * * * To regulate Commerce
with foreign Nations, and among the several States, and with the Indian
Tribes.
Purpose of the Clause
This clause serves a two-fold purpose: it is the direct source of the
most important powers which the National Government exercises in time of
peace: and, except for the due process of law clause of Amendment XIV,
it is the most important limitation imposed by the Constitution on the
exercise of State power. The latter, or restrictive, operation of the
clause was long the more important one from the point of view of
Constitutional Law. Of the approximately 1400 cases which reached the
Supreme Court under the clause prior to 1900, the overwhelming
proportion stemmed from State legislation.[307] It resulted that, with
an important exception to be noted in a moment, the guiding lines in
construction of the clause were initially laid down from the point of
view of its operation as a curb on State power, rather than of its
operation as a source of national power; and the consequence of this was
that the word "commerce," as designating the thing to be protected
against State interference, came to dominate the clause, while the word
"regulate" remained in the background.
Definition of Terms: Gibbons _v._ Ogden
"COMMERCE"
The etymology of the word, "cum merce (with merchandise)" carries the
primary meaning of traffic--i.e., "to buy and sell goods; to trade"
(Webster's International). This narrow conception was replaced in the
great leading case of Gibbons _v._ Ogden, 9 Wheat. 1 (1824), by a much
broader one, on which interpretation of the clause has been patterned
ever since. The case arose out of a series of acts of the legislature of
New York, passed between the years 1798 and 1811, which conferred upon
Livingston and Fulton the exclusive right to navigate the waters of that
State with steam-propelled vessels. Gibbons challenged the monopoly by
sending from Elizabethtown, New Jersey, into the Hudson in the State of
New York two steam vessels which had been licensed and enrolled to
engage in the coasting trade under an act passed by Congress in 1793.
Counsel for Ogden (an assignee of Livingston and Fulton) argued that
since Gibbons' vessels carried only passengers between New Jersey and
New York, they were not engaged in traffic and hence not in "commerce"
in the sense of the Constitution. This argument Chief Justice Marshall
answered as follows: "The subject to be regulated is commerce; * * * The
counsel for the appellee would limit it to traffic, to buying and
selling, or the interchange of commodities, and do not admit that it
comprehends navigation. This would restrict a general term, applicable
to many objects, to one of its significations. Commerce, undoubtedly, is
traffic, but it is something more--it is intercourse."[308] The term,
therefore, included navigation--a conclusion which Marshall supported by
appeal to general understanding, to the prohibition in article I, Sec. 9,
against any preference being given "'* * * by any regulation of commerce
or revenue, to the ports of one State over those of another,'" and to
the admitted and demonstrated power of Congress to impose
embargoes.[309]
"COMMERCE" TODAY
Later in his opinion Marshall qualified the word "intercourse" with the
word "commercial."[310] Today "commerce" in the sense of the
Constitution, and hence "interstate commerce" when it is carried on
across State lines, covers every species of movement of persons and
things, whether for profit or not;[311] every species of communication,
every species of transmission of intelligence, whether for commercial
purposes or otherwise;[312] every species of commercial negotiation
which, as shown "by the established course of the business," will
involve sooner or later an act of transportation of persons or things,
or the flow of services or power across State lines.[313]
From time to time the Court has said that certain things were not
interstate commerce, such as mining or manufacturing undertaken "with
the intent" that the product shall be transported to other States;[314]
insurance transactions when carried on across State lines;[315]
exhibitions of baseball between professional teams which travel from
State to State;[316] the making of contracts for the insertion of
advertisements in periodicals in another State;[317] contracts for
personal services to be rendered in another State.[318] Recent decisions
either overturn or cast doubt on most if not all of these holdings. By
one of these the gathering of news by a press association and its
transmission to client newspapers is termed interstate commerce.[319] By
another the activities of a Group Health Association which serves only
its own members are held to be "trade" within the protection of the
Sherman Act and hence capable, if extended, of becoming interstate
commerce.[320] By a third the business of insurance when transacted
between an insurer and an insured in different States is interstate
commerce.[321]
THE "NECESSARY AND PROPER" CLAUSE
In the majority of the above cases the commerce clause was involved
solely as a limitation on the powers of the States. But when the clause
is treated as a source of national power it is, of course, read in
association with the power of Congress "* * * To make all Laws which
shall be necessary and proper for carrying into Execution the foregoing
Powers, * * *,"[322] with the result that, as is pointed out later,
"interstate commerce" has come in recent years practically to connote
both those operations which precede as well as those which follow
commercial intercourse itself, provided such operations are deemed by
the Court to be capable of "affecting" such intercourse.[323]
"AMONG THE SEVERAL STATES"
In Cohens _v._ Virginia, decided in 1821, Marshall had asserted, "for
all commercial purposes we are one nation."[324] In Gibbons _v._ Ogden,
however, he conceded that the phrase commerce "among the several States"
was "not one which would probably have been selected to indicate the
completely interior traffic of a State"; and added: "The genius and
character of the whole government seem to be, that its action is to be
applied to all external concerns of the nation, and to those internal
concerns which affect the States generally; but not 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."[325]
This recognition of an "exclusively internal" commerce of a State
("intrastate commerce" today) appears at times to have been regarded as
implying the existence of an area of State power which Congress was not
entitled constitutionally to enter.[326] This inference overlooked the
fact that, in consequence of its powers under the necessary and proper
clause, Congress can, as Marshall indicates in the words above quoted,
interfere with the completely internal concerns of a State "for the
purpose of executing its general powers," one of which is its power over
foreign and interstate commerce. It is today established doctrine that
"no form of State activity can constitutionally thwart the regulatory
power granted by the commerce clause to Congress."[327]
And while the word "among" serves to demark "the completely internal"
commerce of a State from that which "extends to or affects" other
States, it also serves, as Marshall further pointed out, to emphasize
the fact that "the power of Congress does not stop at the jurisdictional
lines of the several States," but "must be exercised whenever
[wherever?] the subject exists. * * * Commerce among the States must, of
necessity, be commerce [within?] the States. * * * The power of
Congress, then, whatever it may be, must be exercised within the
territorial jurisdiction of the several States."[328]
"REGULATE"
Elucidating this word in his opinion for the Court in Gibbons _v._
Ogden, Chief Justice Marshall said: "We are now arrived at the
inquiry--What is this power? It is the power to regulate; that is, to
prescribe the rule by which commerce is to be governed. This power, like
all others vested in Congress, is complete in itself, may be exercised
to its utmost extent, and acknowledges no limitations, other than are
prescribed in the Constitution. These are expressed in plain terms, and
do not affect the questions which arise in this case, or which have been
discussed at the bar. If, as has always been understood, the sovereignty
of Congress, though limited to specified objects, is plenary as to those
objects, the power over commerce with foreign nations, and among the
several States, is vested in Congress as absolutely as it would be in a
single government, having in its constitution the same restrictions on
the exercise of the power as are found in the Constitution of the United
States. The wisdom and the discretion of Congress, their identity with
the people, and the influence which their constituents possess at
elections, are, in this, as in many other instances, as that, for
example, of declaring war, the sole restraints on which they have
relied, to secure them from its abuse. They are the restraints on which
the people must often rely solely, in all representative
governments."[329]
INTERSTATE VERSUS FOREIGN COMMERCE
There are certain later judicial dicta which urge or suggest that
Congress's power to regulate interstate commerce restrictively is less
than its analogous power over foreign commerce, the argument being that
whereas the latter is a branch of the nation's unlimited power over
foreign relations, the former was conferred upon the National Government
primarily in order to protect freedom of commerce from State
interference. The four dissenting Justices in the Lottery Case (decided
in 1903) endorsed this view in the following words: "It is argued that
the power to regulate commerce among the several States is the same as
the power to regulate commerce with foreign nations, and among the
Indian tribes. But is its scope the same? * * *, the power to regulate
commerce with foreign nations and the power to regulate interstate
commerce, are to be taken _diverso intuitu_, for the latter was intended
to secure equality and freedom in commercial intercourse as between the
States, not to permit the creation of impediments to such intercourse;
while the former clothes Congress with that power over international
commerce, pertaining to a sovereign nation in its intercourse with
foreign nations, and subject, generally speaking, to no implied or
reserved power in the States. The laws which would be necessary and
proper in the one case, would not be necessary or proper in the other.
* * * But that does not challenge the legislative power of a sovereign
nation to exclude foreign persons or commodities, or place an embargo,
perhaps not permanent, upon foreign ships or manufactures. * * * The
same view must be taken as to commerce with Indian tribes. There is no
reservation of police powers or any other to a foreign nation or to an
Indian tribe, and the scope of the power is not the same as that over
interstate commerce."[330]
And twelve years later Chief Justice White, speaking for the Court,
expressed the same view, as follows: "In the argument reference is made
to decisions of this court dealing with the subject of the power of
Congress to regulate interstate commerce, but the very postulate upon
which the authority of Congress to absolutely prohibit foreign
importations as expounded by the decisions of this court rests is the
broad distinction which exists between the two powers and therefore the
cases cited and many more which might be cited announcing the principles
which they uphold have obviously no relation to the question in
hand."[331]
But dicta to the contrary are much more numerous and span a far longer
period of time. Thus Chief Justice Taney wrote in 1847: "The power to
regulate commerce among the several States is granted to Congress in the
same clause, and by the same words, as the power to regulate commerce
with foreign nations, and is coextensive with it."[332] And nearly fifty
years later Justice Field, speaking for the Court, said: "The power to
regulate commerce among the several States was granted to Congress in
terms as absolute as is the power to regulate commerce with foreign
nations."[333] Today it is firmly established doctrine that the power to
regulate commerce, whether with foreign nations or among the several
States comprises the power to restrain or prohibit it at all times for
the welfare of the public, provided only the specific limitations
imposed upon Congress's powers, as by the due process clause of the
Fifth Amendment, are not transgressed.[334]
Nor does the power to regulate commerce stop with, nor in fact is it
most commonly exercised in, measures designed to outlaw some branch of
commerce. In the words of the Court: It is the power to provide by
appropriate legislation for its "protection and advancement";[335] to
adopt measures "to promote its growth and insure its safety";[336] "to
foster, protect, control and restrain, [commerce]."[337] This
protective power has, moreover, two dimensions. In the first place, it
includes the power to reach and remove every conceivable obstacle to or
restriction upon interstate and foreign commerce from whatever source
arising, whether it results from unfavorable conditions within the
States or from State legislative policy, like the monopoly involved in
Gibbons _v._ Ogden; or from both combined. In the second place, it
extends--as does also the power to restrain commerce--to the instruments
and agents by which commerce is carried on; nor are such instruments and
agents confined to those which were known or in use when the
Constitution was adopted.[338]
INSTRUMENTS OF COMMERCE
The applicability of Congress's power to the agents and instruments of
commerce is implied in Marshall's opinion in Gibbons _v._ Ogden,[339]
where the waters of the State of New York in their quality as highways
of interstate and foreign transportation are held to be governed by the
overruling power of Congress. Likewise, the same opinion recognizes that
in "the progress of things," new and other instruments of commerce will
make their appearance. When the Licensing Act of 1793 was passed, the
only craft to which it could apply were sailing vessels, but it and the
power by which it was enacted were, Marshall asserted, indifferent to
the "principle" by which vessels were moved. Its provisions therefore
reached steam vessels as well. A little over half a century later the
principle embodied in this holding was given its classic expression in
the opinion of Chief Justice Waite in the case of the Pensacola
Telegraph Co. _v._ Western Union Co.,[340] a case closely paralleling
Gibbons _v._ Ogden in other respects also. The passage alluded to reads
as follows: "The powers thus granted are not confined to the
instrumentalities of commerce, or the postal service known or in use
when the Constitution was adopted, but they keep pace with the progress
of the country, and adapt themselves to the new developments of times
and circumstances. They extend from the horse with its rider to the
stage-coach, from the sailing-vessel to the steamboat, from the coach
and the steamboat to the railroad, and from the railroad to the
telegraph, as these new agencies are successively brought into use to
meet the demands of increasing population and wealth. They were intended
for the government of the business to which they relate, at all times
and under all circumstances. As they were intrusted to the general
government for the good of the nation, it is not only the right, but the
duty, of Congress to see to it that intercourse among the States and the
transmission of intelligence are not obstructed or unnecessarily
encumbered by State legislation."[341] The Radio Act of 1927 whereby
"all forms of interstate and foreign radio transmissions within the
United States, its Territories and possessions" were brought under
national control, affords another illustration. Thanks to the foregoing
doctrine the measure met no serious constitutional challenge either on
the floors of Congress or in the Courts.[342]
Congressional Regulation of Waterways
NAVIGATION
In the case of Pennsylvania _v._ Wheeling & Belmont Bridge Co.,[343]
decided in 1852, the Court, on the application of the complaining State,
acting as representative of the interests of its citizens, granted an
injunction requiring that a bridge, erected over the Ohio under a
charter from the State of Virginia, either be altered so as to admit of
free navigation of the river, or else be entirely abated. The decision
was justified by the Court on the basis both of the commerce clause and
of a compact between Virginia and Kentucky, whereby both these States
had agreed to keep the Ohio River "free and common to the citizens of
the United States." The injunction was promptly rendered inoperative by
an act of Congress declaring the bridge to be "a lawful structure" and
requiring all vessels navigating the Ohio to be so regulated as not to
interfere with it.[344] This act the Court sustained as within
Congress's power under the commerce clause, saying: "So far, * * *, as
this bridge created an obstruction to the free navigation of the river,
in view of the previous acts of Congress, they [the said acts] are to be
regarded as modified by this subsequent legislation; and, although it
still may be an obstruction in fact, [it] is not so in the contemplation
of law. * * * That body [Congress] having in the exercise of this power,
regulated the navigation consistent with its preservation and
continuation, the authority to maintain it would seem to be complete.
That authority combines the concurrent powers of both governments, State
and federal, which, if not sufficient, certainly none can be found in
our system of government."[345] In short, it is Congress and not the
Court which is authorized by the Constitution to regulate commerce.
The law and doctrine of the earlier cases with respect to the fostering
and protection of navigation are well summed up in the following
frequently cited passage from the Court's opinion in Gilman _v._
Philadelphia,[346] decided in 1866. "Commerce includes navigation. The
power to regulate commerce comprehends the control for that purpose, and
to the extent necessary, of all the navigable waters of the United
States which are accessible from a State other than those in which they
lie. For this purpose they are the public property of the nation, and
subject to all requisite legislation by Congress. This necessarily
includes the power to keep them open and free from any obstruction to
their navigation, interposed by the States or otherwise; to remove such
obstructions when they exist; and to provide, by such sanctions as they
may deem proper, against the occurrence of the evil and for the
punishment of offenders. For these purposes, Congress possesses all the
powers which existed in the States before the adoption of the national
Constitution, and which have always existed in the Parliament in
England."[347]
Thus Congress was within its powers in vesting the Secretary of War with
power to determine whether a structure of any nature in or over a
navigable stream is an obstruction to navigation and to order its
abatement if he so finds.[348] Nor is the United States required to
compensate the owners of such structures for their loss, since they were
always subject to the servitude represented by Congress's powers over
commerce; and the same is true of the property of riparian owners which
is damaged.[349] And while it was formerly held that lands adjoining
nonnavigable streams were not subject to the above mentioned
servitude,[350] this rule has been impaired by recent decisions;[351]
and at any rate it would not apply as to a stream which had been
rendered navigable by improvements.[352]
In exercising its power to foster and protect navigation Congress
legislates primarily on things external to the act of navigation. But
that act itself and the instruments by which it is accomplished are also
subject to Congress's power if and when they enter into or form a part
of "commerce among the several States." When does this happen? Words
quoted above from the Court's opinion in the Gilman case answered this
question to some extent; but the decisive answer to it was returned five
years later in the case of The "Daniel Ball."[353] Here the question at
issue was whether an act of Congress, passed in 1838 and amended in
1852, which required that steam vessels engaged in transporting
passengers or merchandise upon the "bays, lakes, rivers, or other
navigable waters of the United States," applied to the case of a vessel
which navigated only the waters of the Grand River, a stream which lies
entirely in the State of Michigan. Argued counsel for the vessel: "The
navigable rivers of the United States pass through States, they form
their boundary lines, they are not in any one State, nor the exclusive
property of any one, but are common to all. To make waters navigable
waters of the United States, some other incident must attach to them
besides the territorial and the capability for public use. This term
contrasts with _domestic_ waters of the United States, and implies, not
simply that the waters are public and within the Union, but that they
have attached to them some circumstance that brings them within the
scope of the sovereignty of the United States as defined by the
Constitution." Then as a sort of _reductio ad absurdum_ counsel added:
"* * * if merely because a stream is a highway it becomes a navigable
water of the United States, in a sense that attaches to it and to the
vessels trading upon it the regulating control of Congress, then every
highway must be regarded as a highway of the United States, and the
vehicles upon _it_ must be subject to the same control. But this will
not be asserted on the part of the Government."[354] The Court answered:
"In this case it is admitted that the steamer was engaged in shipping
and transporting down Grand River, goods destined and marked for other
States than Michigan, and in receiving and transporting up the river
goods brought within the State from without its limits; * * * So far as
she was employed in transporting goods destined for other States, or
goods brought from without the limits of Michigan and destined to places
within that State, she was engaged in commerce between the States, and
however limited that commerce may have been, she was, so far as it went,
subject to the legislation of Congress. She was employed as an
instrument of that commerce; for whenever a commodity has begun to move
as an article of trade from one State to another, commerce in that
commodity between the States has commenced."[355] Turning then to
counsel's _reductio ad absurdum_, the Court added: "We answer that the
present case relates to transportation on the navigable waters of the
United States, and we are not called upon to express an opinion upon the
power of Congress over interstate commerce when carried on by land
transportation. And we answer further, that we are unable to draw any
clear and distinct line between the authority of Congress to regulate an
agency employed in commerce between the States, when the agency extends
through two or more States, and when it is confined in its action
entirely within the limits of a single State. If its authority does not
extend to an agency in such commerce, when that agency is confined
within the limits of a State, its entire authority over interstate
commerce may be defeated. Several agencies combining, each taking up the
commodity transported at the boundary line at one end of a State, and
leaving it at the boundary line at the other end, the Federal
jurisdiction would be entirely ousted, and the constitutional provision
would become a dead letter."[356] In short, it was admitted
inferentially, that the principle of the decision would apply to land
transportation; but the actual demonstration of the fact still awaited
some years.[357] See _infra_.
HYDROELECTRIC POWER
As a consequence, in part, of its power to forbid or remove obstructions
to navigation in the navigable waters of the United States, Congress has
acquired the right to develop hydroelectric power, and the ancillary
right to sell it to all takers. By a long-standing doctrine of
Constitutional Law the States possess dominion over the beds of all
navigable streams within their borders,[358] but on account of the
servitude which Congress's power to regulate commerce imposes upon such
streams, they are practically unable, without the assent of Congress, to
utilize their prerogative for power development purposes. Sensing, no
doubt, that controlling power to this end must be attributed to some
government in the United States and that "in such matters there can be
no divided empire,"[359] the Court held, in 1913, in United States _v._
Chandler-Dunbar Co.,[360] that in constructing works for the improvement
of the navigability of a stream, Congress was entitled, as a part of a
general plan, to authorize the lease or sale of such excess water power
as might result from the conservation of the flow of the stream. "If the
primary purpose is legitimate," it said, "we can see no sound objection
to leasing any excess of power over the needs of the government. The
practice is not unusual in respect to similar public works constructed
by State governments."[361]
Congress's Jurisdiction Over Navigable Streams Today
Since the Chandler-Dunbar case the Court has come, in effect, to hold
that it will sustain any act of Congress which purports to be for the
improvement of navigation whatever other purposes it may also embody;
nor does the stream involved have to be one which is "navigable in its
natural state." Such, at least, seems to be the algebraic sum of its
holdings in Arizona _v._ California,[362] decided in 1931, and in the
United States _v._ Appalachian Electric Power Co.,[363] decided in 1940.
In the former the Court, speaking through Justice Brandeis, said that it
was not free to inquire into the motives "which induced members of
Congress to enact the Boulder Canyon Project Act," adding: "As the river
is navigable and the means which the Act provides are not unrelated to
the control of navigation, * * *, the erection and maintenance of such
dam and reservoir are clearly within the powers conferred upon Congress.
Whether the particular structures proposed are reasonably necessary, is
not for this Court to determine. * * * And the fact that purposes other
than navigation will also be served could not invalidate the exercise of
the authority conferred, even if those other purposes would not alone
have justified an exercise of congressional power."[364] And in the
Appalachian Electric Power case, the Court, abandoning previous holdings
which had laid down the doctrine that to be subject to Congress's power
to regulate commerce a stream must be "navigable in fact," said: "A
waterway, otherwise suitable for navigation, is not barred from that
classification merely because artificial aids must make the highway
suitable for use before commercial navigation may be undertaken,"
provided there must be a "balance between cost and need at a time when
the improvement would be useful. * * * Nor is it necessary that the
improvements should be actually completed or even authorized. The power
of Congress over commerce is not to be hampered because of the necessity
for reasonable improvements to make an interstate waterway available for
traffic. * * * Nor is it necessary for navigability that the use should
be continuous. * * * Even absence of use over long periods of years,
because of changed conditions, * * * does not affect the navigability of
rivers in the constitutional sense."[365]
Purposes for Which Power May be Exercised
Furthermore, the Court defined the purposes for which Congress may
regulate navigation in the broadest terms, as follows: "It cannot
properly be said that the constitutional power of the United States
over its waters is limited to control for navigation. * * * That
authority is as broad as the needs of commerce. * * * Flood protection,
watershed development, recovery of the cost of improvements through
utilization of power are likewise parts of commerce control."[366] These
views the Court has since reiterated.[367] Nor is it by virtue of
Congress's power over navigation alone that the National Government may
develop super-power. Its war powers and power of expenditure in
furtherance of the common defense and the general welfare supplement its
powers over commerce in this respect.[368]
Congressional Regulation of Land Transportation
EARLY ACTS; FEDERAL PROVISION FOR HIGHWAYS
The acquisition and settlement of California stimulated Congress some
years before the Civil War to authorize surveys of possible routes for
railway lines to the Pacific; but it was not until 1862, in the midst of
war, with its menace of a general dissolution of the Union, that more
decisive action was taken. That year Congress voted aid in the
construction of a line from Missouri River to the Pacific; and four
years later it chartered the Union Pacific Company.[369] First and last,
litigation growing out of this type of legislation has resulted in the
establishment in judicial decision of the following propositions:
_First_, that Congress may provide highways for interstate
transportation (earlier, as well as today, this result might have
followed from Congress's power of spending, independently of the
commerce clause, as well as from its war and postal powers, which were
also invoked by the Court in this connection); _second_, that it may
charter private corporations for the purpose of doing the same thing;
_third_, that it may vest such corporations with the power of eminent
domain in the States; and _fourth_, that it may exempt their franchises
from State taxation.[370]
BEGINNINGS OF FEDERAL RAILWAY REGULATION
Congress began regulating the railroads of the country in a more
positive sense in 1866. By the so-called Garfield Act of that year
"every railroad company in the United States, whose road is operated by
steam," was authorized by Congress "* * * to connect with roads of
other States so as to form continuous lines for the transportation of
passengers, freight, troops, governmental supplies, and mails, to their
destination";[371] while by an act passed on July 24 of the same year it
was ordered, "in the interest of commerce and the convenient
transmission of intelligence * * * by the government of the United
States and its citizens, that the erection of telegraph lines shall, so
far as State interference is concerned, be free to all who will submit
to the conditions imposed by Congress, and that corporations organized
under the laws of one State for constructing and operating telegraph
lines shall not be excluded by another from prosecuting their business
within its jurisdiction, if they accept the terms proposed by the
National Government for this national privilege."[372]
Another act of the same period provided that "no railroad company within
the United States whose road forms any part of a line of road over which
cattle, sheep, swine, or other animals are conveyed from one State to
another, or the owners or masters of steam, sailing, or other vessels
carrying or transporting cattle, sheep, swine, or other animals from one
State to another, shall confine the same in cars, boats, or vessels of
any description, for a longer period than twenty-eight consecutive
hours, without unloading the same for rest, water, and feeding, for a
period of at least five consecutive hours, unless prevented from so
unloading by storm or other accidental causes."[373]
REGULATION OF RAILROAD RATES: THE INTERSTATE COMMERCE COMMISSION
On account of the large element of "fixed charges" which enters into the
setting of rates by railway companies, competition between lines for new
business was from the first very sharp, and resulted in many evils
which, in the early 70's, led in the Middle West to the enactment by the
State legislatures of the so-called "Granger Laws"; and in the famous
"Granger Cases," headed by Munn _v._ Illinois,[374] the Court at first
sustained this legislation, in relation to both the commerce clause and
the due process of law clause of Amendment XIV. The principal
circumstance, however, which shaped the Court's attitude toward the
"Granger Laws" had, by a decade later, disappeared, the fact, namely,
that originally the railroad business was largely in local hands. In
consequence, first, of the panic of 1873, and then of the panic of 1885,
hundreds of these small lines went into bankruptcy, from which they
emerged consolidated into great interstate systems. The result for the
Court's interpretation of the commerce clause was determinative. In the
case of Wabash, St. Louis and Pacific R. Co. _v._ Illinois,[375] decided
in 1886, it was ruled that a State may not regulate charges for the
carriage even within its own boundaries of goods brought from without
the State or destined to points outside it; that in this respect
Congress's power over interstate commerce was exclusive. The following
year, Congress, responding to a widespread public demand, passed the
original Interstate Commerce Act.[376]
By this measure a commission of five was created with authority to pass
upon the "reasonableness" of all charges by railroads for the
transportation of goods or persons in interstate commerce and to order
the discontinuance of all such charges as it found to be "unreasonable,"
or otherwise violative of the provisions of the act. In Interstate
Commerce Commission _v._ Brimson,[377] decided in 1894, the validity of
the Commission as a means "necessary and proper" for the enforcement of
Congress's power to regulate commerce among the States was sustained, as
well as its right to enter the courts of the United States in order to
secure process for the execution of its orders. Later decisions of the
Court, however, including one in which the act was construed not to give
the Commission power to set reasonable maximum rates in substitution for
those found by it to be unreasonable, disappointed earlier
expectations.[378]
The history of the Commission as an effective instrument of government
dates from the Hepburn Act of 1906[379] which was followed four years
later by the Mann-Elkins Act.[380] By the former the Commission was
explicitly endowed with the power, after a full hearing on a complaint
made to it, "to determine and prescribe just and reasonable" maximum
rates. By the latter it was further authorized to set such rates on its
own initiative, and without waiting for a complaint; while any increase
of rates by a carrier was made subject to suspension by the Commission
until its approval could be obtained. At the same time, the Commission's
jurisdiction was extended to telegraphs, telephones and cables.[381]
THE INTERSTATE COMMERCE COMMISSION TODAY
The powers of the Commission, which has been gradually increased to a
body of eleven, are today largely defined in the Transportation Act of
February 28, 1920. By that act they were extended not only to all
"railroads," comprehensively defined, but also to the following
additional categories of "'common carriers' * * * all pipeline
companies; telegraph, telephone, and cable companies operating by wire
or wireless [_See_ note 3 above][Transcriber's Note: Refers to Article
I, Footnote [381].]; express companies; sleeping-car companies; and all
persons, natural or artificial, engaged in such transportation or
transmission as aforesaid as common carriers for hire." The jurisdiction
of the Commission covers not only the characteristic activities of such
carriers in commerce among the States, but also the issuance of
securities by them, and all consolidations of existing companies, or
lines. Furthermore, for the first time, the Commission was put under the
injunction, in exercising its control over rates and charges, to "give
due consideration, among other things, to the transportation needs of
the country and the necessity (under honest, efficient and economical
management of existing transportation facilities) of enlarging such
facilities in order to provide the people of the United States with
adequate transportation."[382] Railway rate control itself, which was
originally entered upon by the National Government exclusively from the
point of view of restraint, has thus been assimilated to the idea of
"fostering and promoting" transportation.
Two types of constitutional questions have presented themselves under
the legislation just passed in review: 1. Those arising out of the
safeguards which the Bill of Rights throws about property rights; 2.
Those arising out of the intermingling of the interstate and intrastate
operations of the same carriers, and the resulting tangency of State
with national power. Only the latter are considered at this point.
THE SHREVEPORT CASE
Section 1 of the act of 1887 contains the proviso "that the provisions
of this act shall not apply to 'transportation' wholly within the
State." Section 3 of the act prohibits "any common carrier subject to
the provisions" of the act from giving "any unreasonable preference or
advantage" to any person, firm, or locality. In the Shreveport
Case,[383] decided in 1914, the Commission, reading Sec. 3 independently
of Sec. 1, had ordered several Texas lines to increase certain of their
rates between points in Texas till they should approximate rates already
approved by the Commission to adjoining points in Louisiana. The latter
rates, being interstate, were admittedly subject to the Commission. The
local rates were as clearly within the normal jurisdiction of the State,
and had in fact been set by the Texas Railway Commission. The Court
found that the Interstate Commerce Commission had not exceeded its
statutory powers. The constitutional objection to the Commission's
action was stated thus: "That Congress is impotent to control the
intrastate charges of an interstate carrier even to the extent necessary
to prevent injurious discrimination against interstate traffic." This
objection the Court met, as follows: "Wherever the interstate and
intrastate transactions of carriers are so related that the government
of the one involves the control of the other, it is Congress, and not
the State, that is entitled to prescribe the final and dominant rule,
for otherwise Congress would be denied the exercise of its
constitutional authority and the State, and not the Nation, would be
supreme in the national field."[384] This, the Court continued, "is not
to say that Congress possesses the authority to regulate the internal
commerce of a State as such, but that it does possess the power to
foster and protect interstate commerce, and to take all measures
necessary or appropriate to that end, although intrastate transactions
of interstate carriers may thereby be controlled."[385]
THE ACT OF 1920 AND STATE RAILWAY RATE REGULATION
The power of the Commission under Sec. 3 of the act of 1887, as
interpreted in the Shreveport Case, was greatly enlarged by Sec. 416 of
the act of 1920, which authorizes the Commission to remove "any undue,
unreasonable, or unjust discrimination against interstate or foreign
commerce." Thus, commerce as a whole, instead of specific firms or
localities, is made the beneficiary of the restriction. In the Wisconsin
R.R. Comm. _v._ Chicago, B. & Q.R.R. Co.,[386] the Court held that this
section sustained the Interstate Commerce Commission in annulling
intrastate passenger rates which it found to be unduly low, in
comparison with rates which the Commission had established for
interstate travel, and so tending to thwart, in deference to a merely
local interest, the general purpose of the act to maintain an efficient
transport service for the benefit of the country at large.[387]
REGULATION OF OTHER AGENTS OF CARRIAGE AND COMMUNICATION
In the Pipe Line Cases, decided in 1914,[388] the Court affirmed the
power of Congress to regulate the transportation of oil and gas in pipe
lines from one State to another and held that this power applies to such
transportation even though the oil (or gas) in question was the property
of the owner of the lines.[389] Thirteen years later, in 1927, the Court
ruled that an order by a State commission fixing rates on electric
current generated within the State and sold to a distributor in another
State was invalid as imposing a burden on interstate commerce, thus
holding impliedly that Congress' power to regulate the transmission of
electric current from one State to another carried with it the power to
regulate the price of such electricity.[390] Proceeding on this
implication Congress, in the Federal Power Act of 1935,[391] conferred
upon the Federal Power Commission the power to govern the wholesale
distribution of electricity in interstate commerce; and three years
later vested in the same body like power over natural gas moving in
interstate commerce.[392] In Federal Power Commission _v._ Natural Gas
Pipeline Company,[393] the power of the Commission to set the prices at
which gas, originating in one State and transported into another,
should be sold to distributors wholesale in the latter State, was
sustained by the Court in the following terms: "The argument that the
provisions of the statute applied in this case are unconstitutional on
their face is without merit. The sale of natural gas originating in the
State and its transportation and delivery to distributors in any other
State constitutes interstate commerce, which is subject to regulation by
Congress. * * * It is no objection to the exercise of the power of
Congress that it is attended by the same incidents which attend the
exercise of the police power of a State. The authority of Congress to
regulate the prices of commodities in interstate commerce is at least as
great under the Fifth Amendment as is that of the States under the
Fourteenth to regulate the prices of commodities in intrastate
commerce."[394]
Other acts regulative of interstate commerce and communication which
belong to this period are the Federal Communications Act of 1934, which
regulates, through the Federal Communications Commission,[395]
"interstate and foreign communication by wire and radio"; the Federal
Motor Carrier Act of 1935, which, through the Interstate Commerce
Commission, governs the transportation of persons and property by motor
vehicle common carriers;[396] the Civil Aeronautics Act of 1938, enacted
for the purpose of bringing under the control of a central agency,
called "the Civil Aeronautics Authority" (functioning through the Civil
Aeronautics Administrator and the Civil Aeronautics Board) all phases of
airborne commerce, foreign and interstate.[397] None of these measures
have provoked challenge to the power of Congress to enact them.
ACTS OF CONGRESS PROTECTIVE OF LABOR ENGAGED IN INTERSTATE
TRANSPORTATION
In the course of the years 1903 to 1908 Congress enacted a series of
such measures which were notable both on account of their immediate
purpose and as marking the entry of the National Government into the
field of labor legislation. The Safety Appliance Act of 1893,[398] which
applied only to cars and locomotives engaged in moving interstate
traffic, was amended in 1903 to embrace "all trains, locomotives,
tenders, cars," etc., "used on any railway engaged in interstate
commerce * * * and to all other locomotives * * * cars," etc., "used in
connection therewith."[399] In Southern Railway Company _v._ United
States,[400] the validity of this extension of the act was challenged.
The Court sustained the measure as being within Congress's power,
saying: "* * * this is so, not because Congress possesses any power to
regulate intrastate commerce as such, but because its power to regulate
interstate commerce is plenary and competently may be exerted to secure
the safety of the persons and property transported therein and of those
who are employed in such transportation, no matter what may be the
source of the dangers which threaten it. That is to say, it is no
objection to such an exertion of this power that the dangers intended to
be avoided arise, in whole or in part, out of matters connected with
intrastate commerce."[401]
Four years later the Hours of Service Act of 1907[402] was passed,
requiring, as a safety measure, that carriers engaged in the
transportation of passengers or property by railroad in interstate or
foreign commerce should not work their employees for longer periods than
those prescribed by the Act. In sustaining this legislation the Court,
speaking through Justice Hughes, said: "The fundamental question here is
whether a restriction upon the hours of labor of employes who are
connected with the movement of trains in interstate transportation is
comprehended within this sphere of authorized legislation. This question
admits of but one answer. The length of hours of service has direct
relation to the efficiency of the human agencies upon which protection
of life and property necessarily depends. * * * In its power suitably to
provide for the safety of the employes and travelers, Congress was not
limited to the enactment of laws relating to mechanical appliances, but
it was also competent to consider, and to endeavor to reduce, the
dangers incident to the strain of excessive hours of duty on the part of
engineers, conductors, train dispatchers, telegraphers, and other
persons embraced within the class defined by the act."[403]
But by far the most notable of these safety measures were the Federal
Employers Liability Acts of 1906 and 1908,[404] the second of which
merely reenacted the first with certain "unconstitutional" features
eliminated. What the amended act does, in short, is to modify, in the
case of injuries incurred by the employees of interstate carriers while
engaged in interstate commerce, the defenses that had hitherto been
available to the carriers at common law. The principal argument against
the acts was that the commerce clause afforded no basis for an attempt
to regulate the relation of master and servant, which had heretofore in
all cases fallen to the reserved powers of the States; that indeed the
rules of common law modified or abrogated by the act existed solely
under State authority, and had always been enforced, in the main, in the
courts of the States.[405] Countering this argument, the Court, speaking
by Justice Van Devanter, quoted the following passage from the brief of
the Solicitor-General: "Interstate commerce--if not always, at any rate
when the commerce is transportation--is an act. Congress, of course, can
do anything which, in the exercise by itself of a fair discretion, may
be deemed appropriate to save the act of interstate commerce from
prevention or interruption, or to make that act more secure, more
reliable or more efficient. The act of interstate commerce is done by
the labor of men and with the help of things; and these men and things
are the agents and instruments of the commerce. If the agents or
instruments are destroyed while they are doing the act, commerce is
stopped; if the agents or instruments are interrupted, commerce is
interrupted; if the agents or instruments are not of the right kind or
quality, commerce in consequence becomes slow or costly or unsafe or
otherwise inefficient; and if the conditions under which the agents or
instruments do the work of commerce are wrong or disadvantageous, those
bad conditions may and often will prevent or interrupt the act of
commerce or make it less expeditious, less reliable, less economical and
less secure. Therefore, Congress may legislate about the agents and
instruments of interstate commerce, and about the conditions under
which those agents and instruments perform the work of interstate
commerce, whenever such legislation bears, or in the exercise of a fair
legislative discretion can be deemed to bear, upon the reliability or
promptness or economy or security or utility of the interstate commerce
act."[406]
The Adair Case
But while the idea expressed here that the human agents of commerce, in
the sense of transportation, are instrumentalities of it, and so, in
that capacity, within the protective power of Congress, signalized the
entrance of Congress into the field of labor legislation, the Court was
not at the time prepared to give the idea any considerable scope.
Pertinent in this connection is the case of Adair _v._ United
States,[407] which was decided between the two Employers' Liability
Cases. Here was involved the validity of Sec. 10 of the "Erdman Act" of
1898,[408] by which it was made a misdemeanor for a carrier or agent
thereof to require of an employee, as a condition of employment, that he
should not become or remain a member of a trade union, or to threaten
him with loss of employment if he should become or remain a member. This
proviso the Court held not to be a regulation of commerce, there being
no connection between an employee's membership in a labor organization
and the carrying on of interstate commerce. Twenty-two years later,
however, in 1930, the Court conceded that the connection between
interstate commerce and union membership was a real and substantial one,
and on that ground sustained the power of Congress in the Railway Labor
Act of 1926[409] to prevent employers from interfering with the right of
employees to select freely their own collective bargaining
representatives.[410]
The Railroad Retirement Act
Still pursuing the idea of protecting commerce and the labor engaged in
it concurrently, Congress, by the Railroad Retirement Act of June 27,
1934,[411] ordered the compulsory retirement of superannuated employees
of interstate carriers, and provided that they be paid pensions out of a
fund comprising compulsory contributions from the carriers and their
present and future employees. In Railroad Retirement Board _v._ Alton
R.R. Company,[412] however, a closely divided Court held this
legislation to be in excess of Congress's power to regulate commerce and
contrary to the due process clause of Amendment V. Said Justice Roberts
for the majority: "We feel bound to hold that a pension plan thus
imposed is in no proper sense a regulation of the activity of interstate
transportation. It is an attempt for social ends to impose by sheer fiat
noncontractual incidents upon the relation of employer and employee, not
as a rule or regulation of commerce and transportation between the
States, but as a means of assuring a particular class of employees
against old age dependency. This is neither a necessary nor an
appropriate rule or regulation affecting the due fulfillment of the
railroads' duty to serve the public in interstate transportation."[413]
Chief Justice Hughes, speaking for the dissenters, contended, on the
contrary, that "the morale of the employees [had] an important bearing
upon the efficiency of the transportation service." He added: "The
fundamental consideration which supports this type of legislation is
that industry should take care of its human wastage, whether that is due
to accident or age. That view cannot be dismissed as arbitrary or
capricious. It is a reasoned conviction based upon abundant experience.
The expression of that conviction in law is regulation. When expressed
in the government of interstate carriers, with respect to their
employees likewise engaged in interstate commerce, it is a regulation of
that commerce. As such, so far as the subject matter is concerned, the
commerce clause should be held applicable."[414] Under subsequent
legislation, an excise is levied on interstate carriers and their
employees, while by separate but parallel legislation a fund is created
in the Treasury out of which pensions are paid along the lines of the
original plan. The constitutionality of this scheme appears to be taken
for granted in Railroad Retirement Board _v._ Duquesne Warehouse
Company.[415]
BILLS OF LADING; THE FERGER CASE
Some years earlier the Court had had occasion in United States _v._
Ferger,[416] decided in 1919, to reiterate the rule laid down in the
Southern Railway Case, that Congress's protective power over interstate
commerce reaches all kinds of obstructions whatever the source of their
origin. Ferger and associates had been indicted under a federal statute
for issuing a false bill of lading, to cover a fictitious shipment in
interstate commerce. Their defense was that, since there could be no
commerce in a fraudulent bill of lading, therefore Congress's power
could not reach their alleged offense, a contention which Chief Justice
White, speaking for the Court, answered thus: "But this mistakenly
assumes that the power of Congress is to be necessarily tested by the
intrinsic existence of commerce in the particular subject dealt with,
instead of by the relation of that subject to commerce and its effect
upon it. We say mistakenly assumes, because we think it clear that if
the proposition were sustained it would destroy the power of Congress to
regulate, as obviously that power, if it is to exist, must include the
authority to deal with obstructions to interstate commerce (_In re
Debs_, 158 U.S. 564) and with a host of other acts which, because of
their relation to and influence upon interstate commerce, come within
the power of Congress to regulate, although they are not interstate
commerce in and of themselves. * * * That as instrumentalities of
interstate commerce, bills of lading are the efficient means of credit
resorted to for the purpose of securing and fructifying the flow of a
vast volume of interstate commerce upon which the commercial intercourse
of the country, both domestic and foreign, largely depends, is a matter
of common knowledge as to the course of business of which we may take
judicial notice. Indeed, that such bills of lading and the faith and
credit given to their genuineness and the value they represent are the
producing and sustaining causes of the enormous number of transactions
in domestic and foreign exchange, is also so certain and well known that
we may notice it without proof."[417]
Congressional Regulation of Commerce as Traffic
THE SHERMAN ACT; THE "SUGAR TRUST CASE"
Congress's chief effort to regulate commerce in the primary sense of
"traffic" is embodied in the Sherman Antitrust Act of 1890, the opening
section of which declares "every contract, combination in the form of
trust or otherwise," or "conspiracy in restraint of trade and commerce
among the several States, or with foreign nations" to be "illegal,"
while the second section makes it a misdemeanor for anybody to
"monopolize or attempt to monopolize any part of such commerce."[418]
The act was passed to curb the growing tendency to form industrial
combinations and the first case to reach the Court under it was the
famous "Sugar Trust Case," United States _v._ E.C. Knight Co.[419] Here
the Government asked for the cancellation of certain agreements,
whereby, through purchases of stock in other companies, the American
Sugar Refining Company, had "acquired," it was conceded, "nearly
complete control of the manufacture of refined sugars in the United
States." The question of the validity of the act was not expressly
discussed by the Court, but was subordinated to that of its proper
construction. So proceeding, the Court, in pursuance of doctrines of
Constitutional Law which were then dominant with it, turned the act from
its intended purpose and destroyed its effectiveness for several years,
as that of the Interstate Commerce Act was being contemporaneously
impaired. The following passage early in Chief Justice Fuller's opinion
for the Court, sets forth the conception of the Federal System that
controlled the decision: "It is vital that the independence of the
commercial power and of the police power, and the delimitation between
them, however sometimes perplexing, should always be recognized and
observed, for while the one furnishes the strongest bond of union, the
other is essential to the preservation of the autonomy of the States as
required by our dual form of government; and acknowledged evils, however
grave and urgent they may appear to be, had better be borne, than risk
be run, in the effort to suppress them, of more serious consequences by
resort to expedients of even doubtful constitutionality."[420]
In short, what was needed, the Court felt, was a hard and fast line
between the two spheres of power, and in the following series of
propositions it endeavored to lay down such a line: (1) production is
always local, and under the exclusive domain of the States; (2) commerce
among the States does not commence until goods "commence their final
movement from their State of origin to that of their destination"; (3)
the sale of a product is merely an incident of its production and while
capable of "bringing the operation of commerce into play," affects it
only incidentally; (4) such restraint as would reach commerce, as above
defined, in consequence of combinations to control production "in all
its forms," would be "indirect, however inevitable and whatever its
extent," and as such beyond the purview of the act.[421] Applying then
the above reasoning to the case before it, the Court proceeded: "The
object [of the combination] was manifestly private gain in the
manufacture of the commodity, but not through the control of interstate
or foreign commerce. It is true that the bill alleged that the products
of these refineries were sold and distributed among the several States,
and that all the companies were engaged in trade or commerce with the
several States and with foreign nations; but this was no more than to
say that trade and commerce served manufacture to fulfil its function.
Sugar was refined for sale, and sales were probably made at Philadelphia
for consumption, and undoubtedly for resale by the first purchasers
throughout Pennsylvania and other States, and refined sugar was also
forwarded by the companies to other States for sale. Nevertheless it
does not follow that an attempt to monopolize, or the actual monopoly
of, the manufacture was an attempt, whether executory or consummated, to
monopolize commerce, even though, in order to dispose of the product,
the instrumentality of commerce was necessarily invoked. There was
nothing in the proofs to indicate any intention to put a restraint upon
trade or commerce, and the fact, as we have seen that trade or commerce
might be indirectly affected was not enough to entitle complainants to a
decree."[422]
THE SHERMAN ACT REVISED
Four years later occurred the case of Addyston Pipe and Steel Co. _v._
United States,[423] in which the Antitrust Act was successfully applied
as against an industrial combination for the first time. The agreements
in the case, the parties to which were manufacturing concerns, effected
a division of territory among them, and so involved, it was held, a
"direct" restraint on the distribution and hence of the transportation
of the products of the contracting firms. The holding, however, did not
question the doctrine of the earlier case, which in fact continued
substantially undisturbed until 1905, when Swift and Co. _v._ United
States,[424] was decided.
THE "CURRENT OF COMMERCE" CONCEPT: THE SWIFT CASE
Defendants in the Swift case were some thirty firms engaged in Chicago
and other cities in the business of buying livestock in their
stockyards, in converting it at their packing houses into fresh meat,
and in the sale and shipment of such fresh meat to purchasers in other
States. The charge against them was that they had entered into a
combination to refrain from bidding against each other in the local
markets, to fix the prices at which they would sell, to restrict
shipments of meat, and to do other forbidden acts. The case was appealed
to the Supreme Court on defendants' contention that certain of the acts
complained of were not acts of interstate commerce and so did not fall
within a valid reading of the Sherman Act. The Court, however, sustained
the Government on the ground that the "scheme as a whole" came within
the act, and that the local activities alleged were simply part and
parcel of this general scheme.[425]
Referring to the purchases of livestock at the stockyards, the Court,
speaking by Justice Holmes, said: "Commerce among the States is not a
technical legal conception, but a practical one, drawn from the course
of business. When cattle are sent for sale from a place in one State,
with the expectation that they will end their transit, after purchase,
in another, and when in effect they do so, with only the interruption
necessary to find a purchaser at the stockyards, and when this is a
typical, constantly recurring course, the current thus existing is a
current of commerce among the States, and the purchase of the cattle is
a part and incident of such commerce."[426] Likewise the sales alleged
of fresh meat at the slaughtering places fell within the general design.
Even if they imported a technical passing of title at the slaughtering
places, they also imported that the sales were to persons in other
States, and that shipments to such States were part of the
transaction.[427] Thus, sales of the type which in the Sugar Trust Case
were thrust to one side as immaterial from the point of view of the law,
because they enabled manufacture "to fulfill its function," were here
treated as merged in an interstate commerce stream. Thus, the concept of
commerce as _trade_, that is, as _traffic_, again entered the
Constitutional Law picture, with the result that conditions which
directly affected interstate trade could not be dismissed on the ground
that they affected interstate commerce, in the sense of interstate
_transportation_, only "indirectly." Lastly, the Court added these
significant words: "But we do not mean to imply that the rule which
marks the point at which State taxation or regulation becomes
permissible necessarily is beyond the scope of interference by Congress
in cases where such interference is deemed necessary for the protection
of commerce among the States."[428] That is to say, the line that
confines State power from one side does not always confine national
power from the other. For even though the line accurately divides the
subject matter of the complementary spheres, still national power is
always entitled to take on such additional extension as is requisite to
guarantee its effective exercise, and is furthermore supreme.
THE DANBURY HATTERS CASE
In this respect, the Swift Case only states what the Shreveport Case was
later to declare more explicitly; and the same may be said of an ensuing
series of cases in which combinations of employees engaged in such
intrastate activities as manufacturing, mining, building construction,
and the distribution of poultry were subjected to the penalties of the
Sherman Act because of the effect or intended effect of their activities
on interstate commerce.[429]
STOCKYARDS AND GRAIN FUTURES ACTS
In 1921 Congress passed the Packers and Stockyards Act[430] whereby the
business of commission men and livestock dealers in the chief stockyards
of the country was brought under national supervision; and the year
following it passed the Grain Futures Act[431] whereby exchanges dealing
in grain futures were subjected to control. The decisions of the Court
sustaining these measures both built directly upon the Swift Case.
In Stafford _v._ Wallace,[432] which involved the former act, Chief
Justice Taft, speaking for the Court, said: "The object to be secured by
the act is the free and unburdened flow of livestock from the ranges and
farms of the West and Southwest through the great stockyards and
slaughtering centers on the borders of that region, and thence in the
form of meat products to the consuming cities of the country in the
Middle West and East, or, still as livestock, to the feeding places and
fattening farms in the Middle West or East for further preparation for
the market."[433] The stockyards, therefore, were "not a place of rest
or final destination." They were "but a throat through which the current
flows," and the sales there were not merely local transactions. "They do
not stop the flow;--but, on the contrary" are "indispensable to its
continuity."[434]
In Chicago Board of Trade _v._ Olsen,[435] involving the Grain Futures
Act, the same course of reasoning was repeated. Speaking of the Swift
Case, Chief Justice Taft remarked: "That case was a milestone in the
interpretation of the commerce clause of the Constitution. It
recognized the great changes and development in the business of this
vast country and drew again the dividing line between interstate and
intrastate commerce where the Constitution intended it to be. It refused
to permit local incidents of a great interstate movement, which taken
alone were intrastate, to characterize the movement as such."[436] Of
special significance, however, is the part of the opinion which was
devoted to showing the relation between future sales and cash sales, and
hence the effect of the former upon the interstate grain trade. The
test, said the Chief Justice, was furnished by the question of price.
"The question of price dominates trade between the States. Sales of an
article which affect the country-wide price of the article directly
affect the country-wide commerce in it."[437] Thus a practice which
demonstrably affects prices would also affect interstate trade
"directly," and so, even though local in itself, would fall within the
regulatory power of Congress. In the following passage, indeed, Chief
Justice Taft whittles down, in both cases, the "direct-indirect" formula
to the vanishing point: "Whatever amounts to more or less constant
practice, and threatens to obstruct or unduly to burden the freedom of
interstate commerce is within the regulatory power of Congress under the
commerce clause, and it is primarily for Congress to consider and decide
the fact of the danger and meet it. This court will certainly not
substitute its judgment for that of Congress in such a matter unless the
relation of the subject to interstate commerce and its effect upon it
are clearly nonexistent."[438] And it was in reliance on the doctrine of
these cases that Congress first set to work to combat the Depression in
1933 and the years immediately following. But in fact, much of its
legislation at this time marked a wide advance upon the measures just
passed in review. They did not stop with regulating traffic among the
States and the instrumentalities thereof; they also essayed to govern
production and industrial relations in the field of production.
Confronted with this revolutionary claim to power on Congress' part, the
Court again deemed itself called upon to define a limit to the commerce
power that would save to the States their historical sphere, and
especially their customary monopoly of legislative power in relation to
industry and labor management.
THE SECURITIES AND EXCHANGE COMMISSION
Not all antidepression legislation, however, was of this revolutionary
type. The Securities Exchange Act of 1934[439] and the Public Utility
Company Act ("Wheeler-Rayburn Act") of 1935[440] were not. The former
creates the Securities and Exchange Commission, and authorizes it to lay
down regulations designed to keep dealing in securities honest and
above-board and closes the channels of interstate commerce and the mails
to dealers refusing to register under the act. The latter requires, by
sections 4 (a) and 5, the companies which are governed by it to register
with the Securities and Exchange Commission and to inform it concerning
their business, organization and financial structure, all on pain of
being prohibited use of the facilities of interstate commerce and the
mails; while by section 11, the so-called "death sentence" clause, the
same act closes after a certain date the channels of interstate
communication to certain types of public utility companies whose
operations, Congress found, were calculated chiefly to exploit the
investing and consuming public. All these provisions have been
sustained,[441] Gibbons _v._ Ogden, furnishing the Court its principal
reliance.[442]
Congressional Regulation of Production and Industrial Relations
ANTIDEPRESSION LEGISLATION
In the following words of Chief Justice Hughes, spoken in a case which
was decided a few days after President Franklin D. Roosevelt's first
inauguration, the problem which confronted the new Administration was
clearly set forth: "When industry is grievously hurt, when producing
concerns fail, when unemployment mounts and communities dependent upon
profitable production are prostrated, the wells of commerce go
dry."[443]
THE NATIONAL INDUSTRIAL RECOVERY ACT
The initial effort of Congress to deal with this situation was embodied
in the National Industrial Recovery Act of June 16, 1933.[444] The
opening section of the act asserted the existence of "a national
emergency productive of widespread unemployment and disorganization of
industry which" burdened "interstate and foreign commerce," affected
"the public welfare," and undermined "the standards of living of the
American people." To effect the removal of these conditions the
President was authorized, upon the application of industrial or trade
groups, to approve "codes of fair competition," or to prescribe the same
in cases where such applications were not duly forthcoming. Among other
things such codes, of which eventually more than 700 were promulgated,
were required to lay down rules of fair dealing with customers and to
furnish labor certain guarantees respecting hours, wages and collective
bargaining. For the time being business and industry were to be
cartelized on a national scale.
THE SCHECHTER CASE
In the case of Schechter Corp. _v._ United States,[445] one of these
codes, the Live Poultry Code, was pronounced unconstitutional. Although
it was conceded that practically all poultry handled by the Schechters
came from outside the State, and hence via interstate commerce, the
Court held, nevertheless, that once the chickens came to rest in the
Schechters' wholesale market interstate commerce in them ceased. The
act, however, also purported to govern business activities which
"affected" interstate commerce. This, Chief Justice Hughes held, must be
taken to mean "directly" affect such commerce: "the distinction between
direct and indirect effects of intrastate transactions upon interstate
commerce must be recognized as a fundamental one, essential to the
maintenance of our constitutional system. Otherwise, * * *, there would
be virtually no limit to the federal power and for all practical
purposes we should have a completely centralized government."[446] In
short, the case was governed by the ideology of the Sugar Trust Case,
which was not mentioned in the Court's opinion.[447]
THE AGRICULTURAL ADJUSTMENT ACT
Congress' second attempt to combat the Depression comprised the
Agricultural Adjustment Act of 1933.[448] As is pointed out elsewhere
the measure was set aside as an attempt to regulate production, a
subject which was held to be "prohibited" to the United States by
Amendment X.[449] _See_ pp. 917-918.
THE BITUMINOUS COAL CONSERVATION ACT
The third measure to be disallowed was the Guffey-Snyder Bituminous Coal
Conservation Act of 1935.[450] The statute created machinery for the
regulation of the price of soft coal, both that sold in interstate
commerce and that sold "locally," and other machinery for the regulation
of hours of labor and wages in the mines. The clauses of the act dealing
with these two different matters were declared by the act itself to be
separable so that the invalidity of the one set would not affect the
validity of the other; but this strategy was ineffectual. A majority of
the Court, speaking by Justice Sutherland held that the act constituted
one connected scheme of regulation which, inasmuch as it invaded the
reserved powers of the States over conditions of employment in
productive industry, was violative of the Constitution and void.[451]
Justice Sutherland's opinion set out from Chief Justice Hughes's
assertion in the Schechter Case of the "fundamental" character of the
distinction between "direct" and "indirect" effects; that is to say,
from the doctrine of the Sugar Trust Case. It then proceeded: "Much
stress is put upon the evils which come from the struggle between
employers and employees over the matter of wages, working conditions,
the right of collective bargaining, etc., and the resulting strikes,
curtailment and irregularity of production and effect on prices; and it
is insisted that interstate commerce is greatly affected thereby. But,
..., the conclusive answer is that the evils are all local evils over
which the Federal Government has no legislative control. The relation of
employer and employee is a local relation. At common law, it is one of
the domestic relations. The wages are paid for the doing of local work.
Working conditions are obviously local conditions. The employees are not
engaged in or about commerce, but exclusively in producing a commodity.
And the controversies and evils, which it is the object of the act to
regulate and minimize, are local controversies and evils affecting local
work undertaken to accomplish that local result. Such effect as they may
have upon commerce, however extensive it may be, is secondary and
indirect. An increase in the greatness of the effect adds to its
importance. It does not alter its character."[452] We again see the
influence of the ideology of the Sugar Trust Case.[453]
THE NATIONAL LABOR RELATIONS ACT
The case in which the Court reduced the distinction between "direct" and
"indirect" effects to the vanishing point, and thereby put Congress in
the way of governing productive industry and labor relations in such
industry was National Labor Relations Board _v._ Jones and Laughlin
Steel Corp.,[454] decided April 12, 1937. Here the statute involved was
the National Labor Relations Act of July 5, 1935,[455] which forbids
"any unfair labor practice affecting interstate commerce" and lists
among these "the denial by employers of the right of employees to
organize and the refusal by employers to accept the procedure of
collective bargaining." Ignoring recent holdings, government counsel
appealed to the "current of commerce" concept of the Swift Case. The
scope of respondent's activities, they pointed out, was immense. Besides
its great steel-producing plants, it owned and operated mines,
steamships, and terminal railways scattered through several States, and
altogether it gave employment to many thousands of workers. A vast
industrial commonwealth such as this, whose operations constantly
traversed State lines, comprised, they contended, a species of
territorial enclave which was subject in all its parts to the only
governmental power capable of dealing with it as an entity, that is,
the National Government. Yet even if this were not so, still the
protective power of Congress over interstate commerce must be deemed to
extend to disruptive strikes by employees of such an immense concern,
and hence to include power to remove the causes of such strikes. The
Court, speaking through Chief Justice Hughes, held the corporation to be
subject to the act on the latter ground. "The close and intimate
effect," said he, "which brings the subject within the reach of federal
power may be due to activities in relation to productive industry
although the industry when separately viewed is local." Nor will it do
to say that such effect is "indirect." Considering defendant's
"far-flung activities," the effect of strife between it and its
employees "* * * would be immediate and [it] might be catastrophic. We
are asked to shut our eyes to the plainest facts of our national life
and to deal with the question of direct and indirect effects in an
intellectual vacuum. * * * When industries organize themselves on a
national scale, making their relation to interstate commerce the
dominant factor in their activities, how can it be maintained that their
industrial labor relations constitute a forbidden field into which
Congress may not enter when it is necessary to protect interstate
commerce from the paralyzing consequences of industrial war? We have
often said that interstate commerce itself is a practical conception. It
is equally true that interferences with that commerce must be appraised
by a judgment that does not ignore actual experience."[456]
While the act was thus held to be within the constitutional powers of
Congress in relation to a productive concern, the interruption of whose
business by strike "might be catastrophic," the decision was forthwith
held to apply also to two minor concerns;[457] and in a later case the
Court stated specifically that "the smallness of the volume of commerce
affected in any particular case" is not a material consideration.[458]
Moreover, the doctrine of the Jones-Laughlin Case applies equally to
"natural" products, to coal mined, to stone quarried, to fruit and
vegetables grown.[459]
THE FAIR LABOR STANDARDS ACT; THE DARBY CASE
In 1938 Congress enacted the Fair Labor Standards Act.[460] The measure
prohibits not only the shipment in interstate commerce of goods
manufactured by employees whose wages are less than the prescribed
minimum or whose weekly hours of labor are greater than the prescribed
maximum, but also the employment of workmen in the production of goods
for such commerce at other than the prescribed wages and hours.
Interstate commerce is defined by the act to mean "trade, commerce,
transportation, transmission, or communication among the several States
or from any State to any place outside thereof." It was further provided
that "for the purposes of this act an employee shall be deemed to have
been engaged in the production of goods [that is, for interstate
commerce] if such employee was employed * * *, or in any process or
occupation necessary to the production thereof, in any State."
Sustaining an indictment under the act, a unanimous Court, speaking by
Chief Justice Stone, said: "The motive and purpose of the present
regulation are plainly to make effective the congressional conception of
public policy that interstate commerce should not be made the instrument
of competition in the distribution of goods produced under substandard
labor conditions, which competition is injurious to the commerce and to
the States from and to which commerce flows."[461] In support of the
decision the Court invokes Chief Justice Marshall's reading of the
necessary and proper clause in McCulloch _v._ Maryland and his reading
of the commerce clause in Gibbons _v._ Ogden.[462] Objections purporting
to be based on the Tenth Amendment are met from the same point of view:
"Our conclusion is unaffected by the Tenth Amendment which provides:
'The powers not delegated to the United States by the Constitution, nor
prohibited by it to the States, are reserved to the States respectively,
or to the people.' The amendment states but a truism that all is
retained which has not been surrendered. There is nothing in the history
of its adoption to suggest that it was more than declaratory of the
relationship between the national and State governments as it had been
established by the Constitution before the amendment or that its purpose
was other than to allay fears that the new National Government might
seek to exercise powers not granted, and that the States might not be
able to exercise fully their reserved powers. _See_ e.g., II Elliot's
Debates, 123, 131; III id. 450, 464, 600; IV id. 140, 149; I Annals of
Congress, 432, 761, 767-768; Story, Commentaries on the Constitution,
Sec. 1907-1908."[463] Commenting recently on this decision, former
Justice Roberts said: "Of course, the effect of sustaining the Fair Labor
Standards Act was to place the whole matter of wages and hours of
persons employed throughout the United States, with slight exceptions,
under a single federal regulatory scheme and in this way completely to
supersede state exercise of the police power in this field."[464] In a
series of later cases construing terms of the act, it had been given
wide application.[465]
THE AGRICULTURAL MARKETING AGREEMENT ACT
Meantime Congress had returned to the task of bolstering agriculture by
passing the Agricultural Marketing Agreement Act of June 3, 1937,[466]
authorizing the Secretary of Agriculture to fix the minimum prices of
certain agricultural products, when the handling of such products occurs
"in the current of interstate or foreign commerce or * * * directly
burdens, obstructs or affects interstate or foreign commerce in such
commodity or product thereof." In United States _v._ Wrightwood Dairy
Company[467] the Court sustained an order of the Secretary of
Agriculture fixing the minimum prices to be paid to producers of milk in
the Chicago "marketing area." The dairy company demurred to the
regulation on the ground of its applying to milk produced and sold
intrastate. Sustaining the order the Court said: "Congress plainly has
power to regulate the price of milk distributed through the medium of
interstate commerce, * * *, and it possesses every power needed to make
that regulation effective. The commerce power is not confined in its
exercise to the regulation of commerce among the States. It extends to
those activities intrastate which so affect interstate commerce, or the
exertion of the power of Congress over it, as to make regulation of them
appropriate means to the attainment of a legitimate end, the effective
execution of the granted power to regulate interstate commerce. _See_
McCulloch _v._ Maryland, 4 Wheat. 316, 421; * * * The power of Congress
over interstate commerce is plenary and complete in itself, may be
exercised to its utmost extent, and acknowledges no limitations other
than are prescribed in the Constitution. Gibbons _v._ Ogden, 9 Wheat. 1,
196. It follows that no form of State activity can constitutionally
thwart the regulatory power granted by the commerce clause to Congress.
Hence the reach of that power extends to those intrastate activities
which in a substantial way interfere with or obstruct the exercise of
the granted power."[468]