THE LAW OF COMMERCE
49. The power to regulate commerce belongs to sovereignty. By the
Constitution Congress is empowered “to regulate commerce with
foreign nations, and among the several States, and with the Indian
tribes.”[127] The principle of this regulation, or of the exercise
of the power, is essentially that of taxation: it is a matter of
jurisdiction. “The power of Congress to regulate commerce,” observes
Chief Justice Marshall, in the first American judicial decision on the
subject, “comprehends and warrants every act of national sovereignty
which any other sovereign nation may exercise.”[128]
The enormous powers Congress wields through this clause cannot be fully
defined. The Supreme Court has not defined them. Like sovereignty
itself, the exercise of its essential powers, even when delegated
functionally in government, does not yield to the limits of definition.
The decisions of the Supreme Court are not definitions of the power
over commerce so much as they are definitions of the particular
exercise of the power of Congress within its jurisdiction, with respect
to commerce, by the Constitution.[129] For the States also have
jurisdiction over commerce. Our knowledge of the boundaries of these
two jurisdictions arises from the conflict of laws concerning them.
50. In defining national jurisdiction and State jurisdiction over
commerce, two propositions are fundamental:
(1) The Constitution of the United States is the supreme law of the
land.[130]
(2) It is the province and duty of the judicial department to say what
the law is.[131]
It should be clearly understood that power to regulate commerce is
incident to sovereignty. Government—whatever its form—is a delegation
of power by sovereignty, and of necessity possesses this power of
regulation. The degree or extent of the delegation of the power
to regulate commerce marks unmistakably the jurisdiction of the
government exercising the power. The analogy is in the taxing power.
In our system of dual government—national and State—there are two
jurisdictions. The respective States have power over commerce; the
United States has power to regulate commerce,—each jurisdiction
expressly or impliedly outlined by the Constitution.
51. With slight change in wording, the leading decisions of the Supreme
Court on the power of the United States to lay and collect taxes, and
its decisions on the subject interpretative of the taxing power of the
States, apply, in principle, to their respective powers over commerce:
If we measure the power of {taxation }
{“regulating commerce”}
residing in a State, by the extent of sovereignty which the people of
a single State possess and can confer on its government, we have an
intelligent standard, applicable to every case to which the power may
be applied. We have a principle which leaves the power of
{taxing the people and property of the State}
{“regulating the commerce of the State” }
unimpaired; which leaves to a State the command of all its resources,
and which places beyond its reach all those powers which are conferred
by the people of the United States on the government of the Union,
and all those means which are given for the purpose of carrying those
powers into execution. We have a principle which is safe for the
States, and safe for the Union. We are relieved, as we ought to be,
from clashing sovereignty; from interfering powers.[132]
52. No evil contributed more to the feebleness of the old Confederation
than its inability to regulate commerce. The mischief being great, the
grant of power to correct the mischief was correspondingly great. This
grant of power to regulate commerce comprehends “all foreign commerce
and all commerce among the States.” As inefficiency was the evil, the
grant of power was to secure efficiency. In construing this grant—the
commerce clause of the Constitution—the large and single purpose is so
to construe as not to impair its efficiency and thus defeat the object
of the grant.[133]
The commerce clause has become the authority for exercising the
enormous powers of the national government as is illustrated, possibly,
by the exercise of power under no other clause. This means that the
United States in exercising this delegated power exercises so vast a
power that it seems to be sovereignty itself. Vast as this power is—and
practically it is incommensurable—it is a delegated, not an original
power of the national government. The scope, purpose, and nature of
this national power to regulate commerce are indicated by the Supreme
Court in its construction of the commerce clause. Here as in the
exercise of the taxing power the test is jurisdiction. The essential
question is, What is the jurisdiction of the United States, what that
of the respective States over commerce?
53. Commerce is intercourse,[134] and comprehends traffic, navigation,
telegraphic intercommunication, and consequently, communication by
telephone, wireless, or signals.[135]
The Constitution empowers Congress to regulate commerce “among the
several States,” an expression which excludes “the completely interior
traffic of a State.” This completely internal commerce is reserved
for the State itself. To whatsoever extent the foreign or interstate
commerce of the United States penetrates a State, it is subject to
regulation by the United States; it is carried on within national
jurisdiction. The power of Congress to regulate commerce within this
jurisdiction is complete in itself and knows no limitations other than
these prescribed in the Constitution. Thus this power to regulate
commerce, though limited to commerce with foreign nations and among the
States, and with the Indian tribes, is plenary as to these objects,
and Congress in exercising this power is commonly spoken of as
“sovereign.”[136] It follows, that as the Constitution is the supreme
law of the land, and the Supreme Court has power to say what the law
is—State laws to regulate commerce, in conflict with national laws,
are unconstitutional. The essential issue, in such conflict, is one of
jurisdiction. And here, the real question is whether the regulation
of commerce by a State is essential to its existence as a State, or
regulation by the United States is essential to its existence as the
United States. Such regulation by a State is known as the exercise of
the police power.[137]
But the United States also possesses police power. The line of
demarcation between the State and the national police power follows
closely, if not precisely, the line of demarcation between State power
and national power to regulate commerce.[138] The State has power to
protect itself,—that is, to guard its people against contagious or
infectious diseases, as is exemplified in laws for the inspection
of foods, for forbidding the pollution of streams, for securing
the accuracy of weights and measures, the peace and good order of
communities, the comfort of the inhabitants,—and, in a word,—to
exercise such authority as, were no such authority exercised, the State
would cease being the State.
54. The power granted to Congress to regulate commerce is not a power
granted to the States; it pertains to the United States only. Therefore
Congress has no power to regulate commerce that is not “with foreign
nations, and among the several States, and with the Indian tribes.”
Practically this deprives the State of police power over foreign and
interstate commerce, and deprives the United States of police power
over commerce that is, as to the State, completely internal. To what
extent a State can protect itself from the entrance of paupers, insane
or diseased persons, is a question for determination by the Courts.
If such persons are “commerce” their entrance is a matter within
the jurisdiction of Congress. But the welfare of the people of the
United States is essentially the welfare of the people of the States,
and Congress, in considering that welfare, avoids possible conflict
with State legislation. Thus the immigration laws—all of which are
national—include, or seek to include, these provisions for inspection
which a State would prescribe, in the exercise of its police power for
the health, safety, and general welfare of its own citizens. But here,
too, a dominant principle prevails;
The government of the United States, within the scope of
its powers, operates upon every foot of territory under its
jurisdiction. It legislates for the whole nation, and is not
embarrassed by State lines. Its peculiar duty is to protect one
part of the country from encroachments by another upon the national
rights which belong to all.[139]
Tested by this principle, any State laws conflicting with national
immigration laws are unconstitutional.
55. The power to regulate commerce among the several States extends to
commercial highways and to agencies employed in such commerce. Thus
waterways capable of navigation and the free and unobstructed use of
them are subjects of congressional legislation under the commerce
clause. From this it follows that Congress legislates concerning these
waterways, their protection, their dredging, the bridges that cross
them, the boats that navigate them, the form, size, construction,
command, and equipment of these boats, the inspection of boilers, the
licensing of officers,—indeed, concerning navigation in its broadest
application under the commerce clause. Vessels engaged in such
commerce are described as “the public property of the nation, and
subject to all the requisite legislation of Congress.”[140]
56. In like manner, the national power to regulate commerce extends
over interstate commerce when carried on by land transportation.
Thus cars on railroads used in interstate commerce must be equipped
with automatic couplers and continuous brakes, and locomotives with
driving-wheel brakes.[141]
To what length this regulation of commerce may be carried by Congress
is unknown, nor can it be determined in advance. The limitations,
if any, are of expediency.[142] Thus in exercise of this vast power
Congress may regulate hours of labor, wages, selection and use of
material in construction of vehicles engaged in such commerce; the
education, training, and conduct of persons engaged in handling such
commerce; the age of employment; and physical equipment for the welfare
of employees, as well as tariff rates and other incidents.[143]
57. But in the exercise of this power to regulate commerce Congress has
legislated “to protect trade and commerce against unlawful restraints
and monopolies.”[144] Individuals, or corporations under State laws,
engaged in business, in so far as they are contracts, combinations
in the form of trusts, or otherwise, or conspiracies in restraint of
trade or commerce among the several States are illegal. The test here
is, Are such combinations in restraint of commerce among the several
States, or with foreign nations, or with the Indian tribes? If any such
combination be in restraint of commerce completely internal in a State,
it does not fall within the jurisdiction of the United States. If
illegal, it is illegal by State laws.[145] Thus a combination that is
engaged in manufacturing is within the jurisdiction of the police power
of the State, not within the jurisdiction given by the commerce clause
of the Constitution.[146] The regulation of manufactures is not the
regulation of commerce. A monopoly of manufacturing is not necessarily
a monopoly of commerce among the several States. In other words,
manufacturing is not commerce. The Constitution does not give Congress
power to regulate manufactures. However, as soon as the article
manufactured becomes an article of commerce among the several States,
then it is subject to regulation by Congress.
58. As soon as the article is manufactured it is subject to the law of
the State; the moment the article commences its final movement from the
State of its origin, that moment it is an article of commerce as that
word is used in the Constitution, and is within the jurisdiction of
Congress.[147]
Manufacture is transformation,—the fashioning of raw materials
into a change of form for use. The functions of commerce are
different. The buying and selling and the transportation incidental
thereto constitute commerce; and the regulation of commerce in
the constitutional sense, embraces the regulation at least of
such transportation. If it be held that the term includes the
regulation of all such manufactures as are intended to be the
subjects of commercial transactions in the future, it is impossible
to deny that it would also include all productive industries that
contemplate the same thing. The result would be that Congress
would be invested, to the exclusion of the States, with the
power to regulate, not only manufactures, but also agriculture,
horticulture, stock-raising, domestic fisheries, mining,—in short,
every branch of human industry.[148]
Assumption of power such as this by Congress would conflict with the
residuary powers of the States,—powers over intrastate commerce, and
that vast authority possessed by the States and known as their police
powers. Were such authority possessed and exercised by Congress, the
State governments would be paralyzed and between the States and the
United States there would be endless conflict.
59. It is not the delegation to Congress of power to regulate commerce
that makes the exercise of a similar power by the State void; it is
the actual exercise by Congress of its power to regulate commerce that
works the prohibition. In the absence of congressional legislation
on the subject the State may legislate. Thus a State law for the
regulation of pilots and pilotage, in the absence of Federal law for
the same, is valid.[149] This means that sovereignty acting through the
State government controls—or has jurisdiction—unless sovereignty has
acted in the matter through the government of the United States. Thus,
where the subject, say a bridge, a wharf, or a stream, over which power
may be exercised, is local in its nature and operation, or constitutes
a mere aid to commerce, the authority of the State may be exerted for
its regulation and management until Congress interferes and supersedes
State action.[150]
But a license fee exacted by a State law, from a vessel engaged in
commerce is a tax for the use of navigable waters and not a charge
in the nature of compensation for any specific improvement, or use
of wharves. It is a burden on commerce and is a State regulation of
commerce in conflict with the power of Congress to regulate it and
therefore unconstitutional.[151] But the internal commerce of a State,
that is, the commerce that is wholly confined within its limits is as
much under its control as foreign or interstate commerce is under the
control of the general government.[152]
60. By the words “taxation of commerce” is understood the taxation of
the agency, means, instrument, vehicle, or article in such a way or
with such effect as to control commerce; and by “control” is understood
any degree of control. If the State can tax foreign or interstate
commerce lightly, it can tax it heavily, and if heavily, it can so
tax as to destroy commerce. So long as the article imported remains
in the original form of package, the property of the importer, in his
warehouse, it is within the jurisdiction of the United States; but as
soon as it has become incorporated and mixed with the mass of property
in the State, it is within the jurisdiction of the State and becomes
subject to its taxing power.[153]
Were the State to tax the importer as such, this would be a tax
on importation and beyond State jurisdiction. So too would be any
charges, imposed by the State, on the introduction or incorporation
of the imported article into and with the mass of property in the
State. The essential principle here is that the taxing power of the
State cannot reach and restrain the action of the national government
within its proper sphere. “It cannot interfere with any regulation of
commerce.”[154]
61. The object in delegating to Congress the power to regulate
commerce—a delegation without limitations—was to insure uniformity
against discriminating State legislation.[155] The large and
fundamental purposes of the people of the United States in establishing
a national government are cited in the Preamble to the Constitution.
Unless the power to regulate commerce with foreign nations and among
the several States was delegated to Congress, these fundamental
purposes could not be realized.[156] It is a nice question: When has
the commercial power of the United States over a commodity ceased
and the power of the State commenced? The Supreme Court answers: The
federal commercial power continues until the commodity has ceased to
be the subject of discriminating legislation by reason of its foreign
character. That power protects it even after it has entered the State
from any burdens imposed by reason of its foreign origin.[157] Any
article brought into a State, as an article of commerce, from another
State,—that is from another political jurisdiction possesses “foreign
character.” The principle involved here may thus be stated: (1) The
Constitution having given Congress power to regulate commerce with
foreign nations and among the several States, that power is necessarily
exclusive whenever the subjects of it are national in their character,
or admit only of one uniform system, or plan of regulation. (2)
Where the power to regulate is exclusively in Congress, the failure
of Congress to make express regulations indicates its will that the
subject shall be left free from any restrictions or impositions; and
any regulation of the subject by the States, except only in matters
of local concern, is repugnant to such freedom. (3) The only way in
which commerce between the States can be legitimately affected by State
laws is when, by virtue of its police power, and by its jurisdiction
over persons and property within its limits, a State provides for
the security of the lives, limbs, health, and comfort of persons and
the protection of property. But these police regulations, affecting
commerce only incidentally,—such as (for example) the establishment
and regulation of highways, canals, railroads, and wharves by taxation
as forming part of the mass of property within the State,—must be
strictly internal regulations, not imposing taxes on persons or
property passing through the State, or coming into it for a temporary
purpose and forming no part of the common mass of property within its
jurisdiction. Any State regulation which discriminates adversely to the
persons or property of other States is an unauthorized interference
with the power of Congress over the subject.[158]
62. Interstate commerce cannot be taxed by the State even though the
same amount of tax should be laid by the State on commerce carried
on wholly within its limits.[159] The right involved is not a State
right. “To carry on interstate commerce is not a franchise or privilege
granted by the State; it is a right which every citizen of the United
States is entitled to exercise under the Constitution and laws of
the United States.”[160] That persons engaged in such commerce are
incorporated under the laws of a State and thereby possess facilities
for carrying on their business cannot deprive them of their fundamental
right as against the State, but Congress, by its power to regulate
commerce, may prescribe conditions under which their business is
carried on, or by regulation, destroy their business entirely.[161]
Thus a State cannot, by a license tax, exclude from its jurisdiction
a foreign corporation engaged in interstate commerce, or impose any
burdens upon such commerce within its limits.[162] But it is within the
police power of a State to protect the lives and health of its people,
and to protect property through laws suppressing nuisances; prohibiting
manufactures injurious to the public health; prohibiting the
manufacture and sale of intoxicating liquors; prohibiting lotteries,
gambling, horse-racing, or anything else which the Legislature
considers opposed to the public welfare.[163] A local regulation
limiting the speed of trains on entering a town or city, or approaching
a curve or a bridge, or requiring a train to stop at a particular
place, comes within the exercise of the police power of the State.[164]
63. The power of a State over commerce being exclusive only as to
commerce strictly internal and within its own boundaries,—that is,
within its own jurisdiction,—it follows that “a State can no more
regulate or impede commerce among the several States than it can
regulate or impede commerce with foreign nations.”[165] Taxation, by
a State, of goods coming into it from another State, would destroy
freedom of trade within the nation, which Congress has seen fit shall
remain undisturbed. This freedom of trade is national in character, and
interference with it, by a State, would violate a function and defeat
the purpose of nationality: that is, such violation would prevent the
people of the United States from realizing their own sovereignty.
64. An illustration of the constitutional use of the power of the State
over commerce is afforded by the tax, in Texas, on telegraph messages
sent from one place to another exclusively within the State, by private
parties, and not by the agents of the government of the United States.
The Texas law imposing this tax is not in conflict with the power of
Congress to regulate commerce,[166] and therefore was not repugnant
to the Constitution of the United States. The line of demarcation as
to exercise of the police power by a State is drawn “by the undoubted
right of the States of the Union to control their purely internal
affairs, in doing which they exercise powers not surrendered to the
general government.”[167]
Many State laws regulating its administration of internal affairs are
applications of its police power. The police power of the State is
of right, and is founded on “the sacred law of self-defense.”[168]
But this sacred law applies strictly to the domain of the State—to
its own jurisdiction. “It cannot invade the domain of the national
government.”[169] A State inspection law is a familiar example of the
exercise of its police power, but such a law, working obstruction of
interstate commerce, or any limitation of it, though such effect be
only incidental, is repugnant to the Constitution.[170] Such repugnancy
is effected by a State law levying a tax on tonnage, and is void.[171]
But a charge for mooring or landing at a wharf, is not a tax on
tonnage, but a charge for services rendered;[172] neither is the tax a
tonnage tax when the State imposes a tax on vessels (even if regularly
engaged in interstate commerce), the property of persons residing
within the jurisdiction of the State, the vessels themselves being
part of the mass of property within the State, being moored for long
periods at the wharf for repairs and being under the protection of the
State. The taxing power is a distinct and separate power from the power
to regulate commerce. The right of taxation in a State remains over
every subject where it existed before the adoption of the Constitution
with the exception only of prohibitions expressed or implied in the
Constitution.
The sovereign jurisdiction of the State is not limited; within
that jurisdiction it is free to tax. But the powers to tax and
to prohibit taxation are given in the Constitution by separate
clauses, and these powers are separate and distinct from the power
to regulate commerce. From this it follows that the enrolment of
a ship or vessel in interstate commerce does not exempt its owner
from taxation for his interest in it as property, upon a valuation
by State law, as in the case of other personal property.[173]
65. There ever remains the question of the extent of the power of
Congress to regulate commerce. American constitutional law as to
commerce is largely of what the States may not do. But the enormous
power of Congress to regulate commerce, more and more as the years
pass,—as the meaning of “national jurisdiction” is defined by the
courts of law,—the definition, however, slowly conforming to public
opinion,—discloses the extent of the federal power through the commerce
clause. Doubtless Congress has made but a beginning in its exercise
of this power. Thus it has made lottery tickets articles of commerce,
has excluded them from the mails, has assumed plenary authority of the
carriage of such articles from State to State, and, by authority of the
commerce clause has practically destroyed the lottery business in the
United States.[174] The principle here decided is that, under the power
to regulate commerce, regulation may take the form of prohibition, and
that the power “may be exerted with the effect of excluding particular
articles from such commerce.”[175]
In this decision the Court observes, “that the suppression of
nuisances injurious to public health or morality is among the most
important duties of government,” and quotes an earlier decision as to
“the widespread pestilence of lotteries.” It might seem that while
exercising its powers under the commerce clause Congress was really
exercising the police power of the United States.
66. Of highest importance is the act of Congress of July 2, 1890,
and later amendments, known as the Anti-Trust Act, entitled, An
“Act to Protect Trade and Commerce against Unlawful Restraints and
Monopolies.” The decisions growing out of this act have been made on
issues involving the particular questions whether or not restraints
and monopolies so-called were such under the act and conflicted with
it. The power of Congress, under the commerce clause to prohibit such
restraints and monopolies has not been denied. It will be remembered
that power to regulate commerce is not power to regulate manufactures.
The purpose of the Anti-Trust law[176] is “to destroy the power to
place any direct restraint on interstate trade or commerce, when by
any combination or conspiracy formed by either natural or artificial
persons, such a power has been acquired; and the government may
intervene and demand relief as well after the combination is fully
organized as while it is in process of formation.”[177] The principle
involved here is as to the power of corporations organized under State
laws to restrain or to monopolize interstate commerce. The State has
no power to create corporations with such powers, and consequently
they cannot exercise them lawfully. And like attempts to restrain
and monopolize interstate commerce made by individuals is alike
unlawful.[178]
67. So, too, where a labor organization sought by a boycott to prevent
the manufacture of articles intended for interstate commerce, and
to prevent the re-selling of these articles in other States, the
combination and plan were held to be restraint of commerce and in
violation of the Anti-Trust act.[179] The cases strongly suggest that
federal laws to regulate commerce may be essentially police regulations
as, notably, laws requiring safety appliances on railroad trains and
steamboats; laws regulating hours of labor and child labor; laws
requiring arbitration of controversies between employers and employees
operating in interstate commerce; the pure food law; the exclusion
of lottery tickets from the mails, and the like. The Constitution
contains no clause explicitly delegating the police power to the United
States, and the exercise of police power by Congress has thus far been
quite without exception under the commerce clause. Yet by parity of
reasoning, the police power may be included under the power to declare
war.
68. There is such a thing as the peace of the United States.[180] The
enormous power of Congress under the commerce clause has undoubtedly
promoted that peace: “domestic tranquillity” is one of the specified
purposes in ordaining and establishing the Constitution. As absence
of power to regulate commerce marked the weakness of the Articles
of Confederation, so the special inclusion of that power among those
delegated to Congress marks the strength of the Constitution.
69. Within their respective jurisdictions the United States and
the several States have power to regulate commerce. The power over
commerce, in either jurisdiction, is exercisable within the principle
of self-preservation. Whatsoever exercise of this power is essential
to the existence of either government belongs to that government and
cannot be repugnant to the other, that is, under the dual system of
American constitutional government. Simple as this principle may seem,
its practical application in defining the two jurisdictions, or the
authority of either government, involves all the issues in American
constitutional law, and the decisions of the American judiciary in
cases arising under the commerce clause of the Constitution.
A notable instance of the authority given by the commerce clause is the
power of Congress, over the transportation of the mails, to prevent
“any unlawful and forcible interference” with them. “The strong arm of
the government may be put forth to brush away all obstructions to the
freedom of interstate commerce or the transportation of the mails”;
“the United States have a property in the mails.” The contents of the
mail-bags—that is, matter, lawfully mailable—are commerce in the sense
in which that word is used in the Constitution.
Constitutional provisions do not change, but their operation
extends to new matters as the modes of business and the habits of
life of the people vary with each succeeding generation. The law
of the common carrier is the same to-day as when transportation on
land was by coach and wagon, and on water by canal boat and sailing
vessel, yet in its actual operation it touches and regulates
transportation by modes then unknown, the railroad train and the
steamship. Just so is it with the grant to the national government
of power over interstate commerce. The Constitution has not
changed. The power is the same. But it operates to-day upon modes
of interstate commerce unknown to the fathers, and it will operate
with equal force upon any new modes of such commerce which the
future may develop.[181]
Under the commerce clause Congress
may enact such legislation as shall declare void and prohibit the
performance of any contract between individuals or corporations
where the natural and direct effect of such a contract will be,
when carried out, to directly, and not as a mere incident to other
and innocent purposes regulate to any substantial extent interstate
commerce.
And “interstate” also includes “foreign commerce.”[182]
All the decisions
illustrate the principle that Congress in the exercise of its
paramount power may prevent the common instrumentalities of
interstate and intrastate commercial intercourse from being
used in their intrastate operations to the injury of interstate
commerce. This 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.[183]