THE REGULATION OF COMMERCE
=The Power to Regulate Commerce.=--Under the Articles of Confederation,
as we have seen, Congress possessed no power to regulate commerce among
the states or with foreign nations. That power remained entirely with
the states. Each state accordingly made such regulations as it saw fit,
without regard to the general welfare. It was this want of commercial
power on the part of Congress that contributed as much as anything else
perhaps to the downfall of the Confederation. The Constitution as
finally adopted gave Congress the exclusive power to regulate commerce
among the states, with foreign countries, and with the Indian tribes,
which were then treated somewhat as foreign nations for certain
purposes. The only limitations placed on the power of Congress in this
respect were that no duty should be levied on goods exported from any
state; that no preference should be given by any regulation of commerce
or revenue to the ports of one state over those of another; and that no
vessels bound to or from one state should be obliged to enter, clear, or
pay duties in another.
=Regulation of Foreign Commerce.= In pursuance of the power to regulate
commerce with foreign nations Congress has enacted a large amount of
legislation relating to tonnage duties, duties on imports, quarantine,
immigration, the importation of adulterated foods, wines, teas, and
other food products, the conduct of navigation, the construction and
inspection of ships carrying passengers, pilotage, clearances, the
protection of shipping, the rights of seamen, the registration and
insurance of vessels, life-saving appliances, the use of wireless
telegraph apparatus, and the like. It was also in pursuance of this
power that the Embargo Act was passed in 1807 and the Nonintercourse Act
in 1809--both of which were in effect prohibitions rather than
regulations of commerce.
_The Navigation Laws_ prescribe with great detail how vessels registered
under the American flag shall be constructed and equipped for the
comfort and safety of their crews and passengers; how they shall be
inspected; rules that shall be observed to avoid collisions, how signals
shall be displayed, etc.; the forms of papers vessels must carry; how
the wages of seamen shall be paid, the nature of their contracts, etc.
_The Tonnage Laws_ prescribe the rate of tonnage duties that shall be
levied on vessels entering American ports. Tonnage duties, as the name
indicates, are a form of taxation calculated on the basis of the tonnage
admeasurement of the vessel; they are levied on American as well as
foreign ships, though the rate is higher on the latter than on the
former. Sometimes they have been higher on the vessels of some foreign
countries than on those of others, in which case they are known as
discriminating tonnage duties. Such discriminating duties are employed
for the purpose of favoring the commerce of those nations which extend
us commercial privileges and for shutting out or restricting that of
nations which discriminate against our trade. In pursuance of the power
to regulate foreign commerce, Congress prohibits foreign vessels from
engaging in the coasting trade, and permits only citizens of the United
States to serve as masters on vessels registered under the American
flag. Formerly only American-built vessels could be registered, but in
1914, after the outbreak of the great war in Europe, Congress passed an
act allowing ships built in foreign yards, when owned by American
citizens, to be registered under the American flag; and more than 100
such vessels have been so registered.
_Immigration._--By virtue of the commerce power Congress has enacted a
series of immigration laws imposing restrictions on the coming of
immigrants to our shores. For a long time immigration from Europe was
encouraged rather than restricted, but within recent years so many
undesirable persons have found their way to America that Congress has
been led to pass various laws designed to shut out the worst of them and
admit only the desirable ones.[42]
[42] According to the report of the commissioner general of
immigration, 1,218,480 immigrants arrived in the United States during
the year 1914. Of those who applied for admission into the country,
more than 33,000 were turned back. In 1916 the number of arrivals
dropped to 366,748; in 1920 it was 430,000.
First of all, the immigration laws exclude convicts, insane persons,
paupers and those likely to become paupers, persons suffering with
dangerous, loathsome, and contagious diseases; epileptics, persons
afflicted with tuberculosis, idiots, feeble-minded persons, polygamists,
anarchists, immoral persons, and others of this character.
In the second place, what are known as alien contract laborers are
prohibited from entering the United States, that is, persons who come
under contract already entered into, to perform labor, whether skilled
or unskilled. The law excluding this class was enacted in obedience to
the demands of the union laborers of the United States, who did not wish
to be subjected to competition with foreign laborers specially imported
for the purpose. Actors, teachers, lecturers, and members of other
professions are exempted from the law, and so are skilled laborers if
domestic laborers of like kind are not available in the United States.
A third group of excluded classes are Chinese laborers, the immigration
of whom was first prohibited in 1882.
A law of 1916 provides, with certain exceptions, that no alien shall be
admitted unless he can read English or some other language or dialect. A
law passed in 1921 limits the number of immigrants who may enter
annually from each country, to 3 per cent of the number already in the
United States, or a total of about 356,000.
There is now a head tax of eight dollars levied upon every immigrant who
is admitted. Persons whose steamship passage has been paid by others or
who have been otherwise assisted to come are not allowed to enter. When
an immigrant has been denied admission by the commissioner of
immigration at the port at which he has landed, he may take an appeal to
a special board of inquiry. If the decision of this board is against him
he may appeal to the United States commissioner-general of immigration,
and finally to the secretary of the department of labor. If the final
decision is against him, the steamship on which he sailed is required at
its own expense to transport him to the port from which he sailed.
_Quarantine._--In pursuance of the power to regulate foreign commerce,
Congress has enacted a volume of legislation in regard to quarantine and
medical inspection of ships and their passengers coming from foreign
ports. In most instances inspections are made by the United States
consul at the port from which the vessel sails, and a bill of health is
furnished the master of the vessel, but in some Asiatic and South
American ports regular medical inspectors are stationed. At various
ports along the coast, national quarantine stations have been
established at which inspections of incoming vessels are made and at
which they may be detained if found to have on board persons suffering
from dangerous contagious diseases.
_Pure Food._--Congress has also provided for the inspection of foods
imported from abroad. Whenever a vessel is found to have on board impure
or adulterated foods or teas, it is forbidden to land the cargo or is
allowed to land it only after certain conditions are complied with such
as the change of labels to correspond with the actual contents of
packages. In this way an attempt is made to protect the American
consumer against impure and unwholesome food products shipped here from
foreign ports.
=Interstate Commerce= has been interpreted to include the carriage of
passengers from one state to another; the transportation of commodities
of whatsoever character, including lottery tickets, obscene literature,
and any other objects which may be the subject of transportation; and
the transmission of ideas or information by telegraph or telephone from
a point in one state to a point in another. In short, interstate
commerce means not only transportation and traffic in articles but
intercourse and communication by the modern devices for transmitting
thought; and the power to prescribe the conditions under which such
intercourse may be carried on across state lines belongs to Congress.[43]
Congress controls also the coasting trade between parts of the same
state and the traffic on all rivers which flow into the ocean or the
Great Lakes and thus constitute highways of interstate or foreign
commerce.
[43] Under the commerce power. Congress has also enacted the white
slave law, and an act restricting the killing of birds that migrate
from one state to another.
[Illustration: IMMIGRATION STATION, ELLIS ISLAND, NEW YORK HARBOR]
[Illustration: IMMIGRANTS READY TO START WEST]
_Power Retained by the States._--Nevertheless it is often difficult in a
particular case to draw the line between acts which regulate interstate
commerce and acts which merely affect it without regulating it. The
Supreme Court in a long line of decisions has held that the states not
only have complete power of control over all commerce originating and
ending within their limits but that they may also enact legislation for
the protection of the public health, safety, good order, and morals of
their people even when such legislation affects commerce among the
states, the only restriction being that such legislation must be
reasonable and must not amount to a direct interference with interstate
traffic. The right of the states in this respect is known as the _police
power_--a power which is very extensive and of which they cannot be
deprived by Congress. Thus they may enact reasonable quarantine laws
forbidding the entrance into their territory of diseased persons from
other states or the importation of diseased live stock. Likewise they
may limit the speed of interstate trains running through their towns,
may require railroads to provide gates at crossings, safety appliances
for cars, and the like.
_The Original Package Doctrine._--A state, however, prior to 1920, could
not without the consent of Congress prohibit the importation of liquor
in original packages into its territory from other states, although it
might be a prohibition state.[44] But Congress itself, by an act passed
in 1913, prohibited the transportation of intoxicating liquors into
states having prohibition laws.
[44] Early in 1919 the eighteenth amendment to the federal constitution
was adopted, prohibiting the liquor traffic after one year.
Likewise, the states cannot impose taxes on passengers passing through
their territory bound for points in other states, or require interstate
trains to stop at county seats, or impose taxes on telegraph messages
sent to points in other states, or on bills of lading of freight
destined to points in other states, or on goods intended for
exportation, and so on.
=Regulation of Interstate Railway Traffic.=--For a long time Congress
took no action toward regulating railway traffic among the states, thus
leaving the railroads free to carry on their business as they pleased,
regardless of the interest of the public whom they served. But with the
enormous development of the railway system of the country gross evils
began to creep in, in the form of excessive rates, discriminations,
combinations for the suppression of competition, inadequate provision
for the safety of passengers, etc., in consequence of which a widespread
demand grew up for legislation bringing the railroads under governmental
control. The outcome of this agitation was the interstate commerce act
of 1887, the provisions of which have been amended and extended by
several subsequent acts, notably the Elkins act of 1903, the railway
rate law of 1906, and the interstate commerce law of 1910.
_Interstate Commerce Commission._--The law of 1887 created an interstate
commerce commission which now consists of eleven members appointed by
the President and paid a salary of $12,000 a year each, which commission
has general supervision of the execution of the several acts mentioned
above. It hears complaints against the railroads, makes investigations
upon petition, and to this end may summon witnesses and compel the
production of papers and records, and conduct hearings. If, after an
investigation, it finds that the law is being violated by a railroad
company, it may request the proper federal authorities to institute a
prosecution of the offending company, and the law requires that such a
prosecution shall be made. For a long time the commission had no power
to fix rates, but only the negative right to say that a given rate was
unjust and unreasonable. But by the act of 1906 it was given the power,
after a full hearing, to determine and prescribe just and reasonable
maximum rates and charges, as well as to prescribe regulations for the
conduct of railway traffic.
_The Laws Now in Force_ prescribe that all railway rates and charges for
carrying freight and passengers must be just and reasonable; that no
rebates, drawbacks, or special rates shall be granted to particular
shippers; that no discriminations shall be made as to rates or service
to certain persons or places; that no free passes, with certain
specified exceptions, shall be granted; that no greater charges shall be
made for a "short haul" than for a "long haul"; that no railroads shall
be allowed to transport commodities which they are engaged in producing,
with certain exceptions; that competing railways shall not be allowed to
pool their freight or earnings; that schedules showing rates, fares, and
charges shall be published and kept open for inspection and cannot be
changed except after thirty days' notice to the commission; that all
railroads shall keep their accounts according to a uniform system
prescribed by the commission; and that they shall make annually to the
commission a full and complete report of their business and earnings.
An important extension of the interstate commerce act was made in 1906,
when express and sleeping car companies, pipe lines used for
transporting oil from one state to another, and telegraph, telephone,
and cable companies engaged in sending messages from one state to
another or to foreign countries, were brought under the operation of the
law and their business subjected to the same conditions and restrictions
as those applying to railroads. By an act of 1912 railroads were
prohibited from owning, controlling, or having any interest in competing
water carriers, and by an act of 1913 provision was made for preparing a
valuation of all railroads in the United States.
Congress has also enacted laws requiring interstate railroads to equip
their cars with automatic couplers and other safety appliances, fixing
the liability of railway employers for injuries sustained by railway
employees, encouraging the arbitration of railway strikes, and
establishing an eight-hour work day on railways (1916). An act excluding
the products of child labor from interstate commerce (1916) was declared
unconstitutional by the Supreme Court.
In pursuance of acts of Congress passed in 1916 and 1918, the President
in 1918 took over the control of railroads, telegraphs, and telephones
for the duration of the war.
=Federal Anti-trust Legislation.=--The commerce clause of the
Constitution has also furnished the authority for some important
congressional legislation against what are popularly known as "trusts,"
that is, combinations of corporations or business associations formed to
avoid the wastes of competition and to secure economy of management. But
the control of the supply of a commodity means the elimination of
competition and usually the maintenance of high rates to the injury of
consumers. For a long time the greater part of the business of the
country was conducted by individuals, companies, or corporations, and
the advantages of competition were preserved to the public, but in the
course of the economic development of the country, corporations began to
consolidate for the reasons stated, with the result that the supply of
many commodities came to be controlled by single combinations. At first
the states undertook to deal with the problem by passing anti-"trust"
laws, but the business of so many of the more powerful organizations
was interstate in character that state legislation was inadequate to
deal with them.
_The Sherman Anti-"trust" Law._--Finally, in obedience to a widespread
popular demand, Congress took action in 1890 by passing what is
popularly known as the Sherman anti-"trust" act to protect trade and
commerce among the states against unlawful restraint and monopolies.
This act declared that every contract, combination in the form of trust
or otherwise, or conspiracy in restraint of trade or commerce among the
states or with foreign nations was illegal, and it prescribed
appropriate penalties for violations thereof. This law, however, applies
only to "trusts" which are in restraint of trade among the states or
with foreign nations. It has no application to those whose activities
are confined entirely within the boundaries of a single state; with such
"trusts" the states alone have the power to deal.
In pursuance of the act of 1890, prosecutions have been instituted in
the federal courts against a large number of "trusts," and some of them
have been broken up, but the larger number have escaped. In 1911, for
example, the Supreme Court decided that the Standard Oil and tobacco
"trusts" were illegal, and their dissolution was decreed.
_The Clayton Anti-"trust" Act._--In 1914 Congress passed another
important act directed against combinations in restraint of trade. In
brief, it prohibits price discriminations among purchasers, exclusive
trade agreements between manufacturers and retailers, the holding of the
stock of one corporation by another, and interlocking directorates. Like
the other anti-"trust" acts it applies, of course, only to persons or
corporations engaged in interstate commerce or trade. To enforce the act
a _federal trade commission_ was created. It consists of five members
appointed by the President, at a salary of $10,000 each.
=Federal Pure Food Legislation.=--The commerce clause of the
Constitution is also the source of some important legislation designed
to protect the public against impure, unwholesome, and adulterated foods
produced in the United States. We have already called attention to the
legislation of Congress against the importation of impure foods, and
teas from abroad. Still more recently Congress passed an interstate pure
food law prohibiting the transportation among the states and territories
of any food products which are adulterated or which contain foreign
substances not indicated in the labels. The law also provides for the
fixing of a standard of pure foods and other products transported from
one state to another or intended for interstate transportation, and
provides that they must come up to the standard prescribed.
_The Meat Inspection Law._--To protect the public against unwholesome
meat products, Congress enacted in 1891 a law which was strengthened in
important particulars in 1906, providing for the inspection of
slaughtering houses whose products are intended for interstate commerce.
The law requires the registration of all establishments engaged in
slaughtering animals the products of which are to be shipped into other
states or are intended for export. Each is given a number, and federal
inspectors are assigned to inspect the animals intended for slaughter,
to inspect their carcasses in certain cases, and to see that the
business of slaughtering is conducted under clean and wholesome
conditions. Animals found suffering with certain diseases are not
allowed to be slaughtered for food purposes, and meat discovered to be
unwholesome must be rejected. Supervision is also exercised over the
processes of packing and canning, and there are detailed regulations in
regard to labeling.
=References.= ANDREWS, Manual of the Constitution, pp. 89-95.
BEARD, American Government, ch. xix. COOLEY, Principles of
Constitutional Law, pp. 66-88. HART, Actual Government, ch. xxiv.
HINSDALE, American Government, secs. 374-380. JOHNSON, Railway
Transportation, ch. xxvi.
=Illustrative Material.=--Annual reports of the Interstate Commerce
Commission, of the Department of Agriculture, of the
Attorney-General, of the Commissioner of Navigation, of the
Commissioner of Immigration, and of the Public Health and Marine
Hospital Service.
RESEARCH QUESTIONS
1. What were the reasons for giving Congress control over foreign and
interstate commerce?
2. Why did the delegates from the Southern states oppose giving this
power to Congress?
3. What is meant by the "original package" doctrine?
4. Why should a railroad company be prohibited from granting rebates?
For charging more for a "short haul" than for a "long haul"? From
transporting the products of its own mines and manufactories? From
pooling its freight or earnings?
5. What are the arguments for and against granting government subsidies
for the upbuilding of the merchant marine?
6. What have been the principal reasons for the decline of the American
carrying trade?
7. What is the amount of money annually appropriated for improving the
rivers and harbors of the country?
8. How has the commerce clause of the Constitution been the source of
important extensions of the power of the national government? Mention
some important recent acts of Congress that have been passed in
pursuance of this clause.
9. Should Congress, in your judgment, impose greater restrictions upon
immigration than it now imposes?
10. Do you think Congress should have power to regulate the business of
life insurance? To regulate marriage and divorce?
11. Is the policy of governmental regulation of railroads preferable to
governmental ownership? Give your reasons.