HAS CONGRESS THE POWER, UNDER THE CONSTITUTION, TO CREATE OR ENDOW
PRIVATE CORPORATIONS?
To answer this question intelligently, we must examine the powers
granted to the United States, as well as the rights, powers, and
relative duties of the state governments. The state governments are
supreme in all matters affecting the public and the people, save in
those which, by the expressed provisions of the constitution, are
delegated to, or conferred upon, the general government. The powers thus
delegated to the general government are all of a public character, such
as states individually could not control or execute, and such as were
deemed essential to our national existence. All privileges, rights, and
powers, not deemed essential to the successful administration of the
national government, were reserved to the states and to the people. It
follows that the general government is one of limited powers; that while
it is supreme in all matters delegated to it by the constitution, and
while in its several departments it can exercise all such implied powers
as are necessary for the complete execution of those expressly
delegated, neither the executive, legislative, nor judicial departments
can assume the exercise of powers not conferred upon them by the express
provisions of the constitution; and that while the state governments can
exercise all powers not expressly prohibited in their constitutions,
because of their general sovereign character, the general government is
limited to such as are expressly granted. If these propositions are
correct, then the general government has no authority for creating
private corporations.
We are aware that congress has assumed the negative of these
propositions, and has granted charters to some of the most gigantic
corporations of the country, under which charters they have organized
and are doing business in states which, according to our interpretation
of the constitution, as above stated, should have the absolute control
of such companies. We shall attempt to demonstrate that the acts of
congress granting charters to railroad and other private corporations
are usurpations of power, in conflict with the provisions of the
constitution, destructive of the rights of the people and of republican
government.
What are the powers delegated to the general government by the
constitution in questions of this character? Article I. Section 8,
contains, among others, the following, as some of the powers conferred
upon congress: "To regulate commerce with foreign nations, and among the
several states, and with the Indian tribes;" "To establish post offices
and post roads;" "To make all laws which shall be necessary and proper
for carrying into execution the foregoing powers and all other powers
vested by this constitution in the government of the United States, or
in any department or office thereof." The same section gives congress
power to provide for organizing the army, &c.; and, in time of war,
extraordinary powers, controlled only by the necessities of the case,
are vested in congress. If congress have power under the constitution to
charter private corporations, it must be derived from, or contained in,
the provisions above quoted. Article IX. of the constitution reads as
follows: "The enumeration in the constitution of certain rights shall
not be construed to deny or disparage others retained by the people."
And Section 10 reads as follows: "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." And the framers
of the constitution it would seem, for the purpose of making the line of
demarcation between the powers of the states and the general government
still more plain and definite, provided as follows: Article IV., Section
2: "The citizens of each state shall be entitled to all privileges and
immunities of citizens in the several states."
We think that the above quotations from the constitution (and we have
quoted all having any relation to the question we are discussing) prove
conclusively that the powers conferred upon congress by the
constitution are limited; that while within the scope of the delegated
powers its action is supreme, there is inherent in it no general power
to legislate upon subjects not named in the constitution, or not
included by necessary implication. On the contrary, all the powers not
expressly given are reserved to the states or to the people.
Is the authority to charter private corporations necessarily included in
the delegated power to regulate commerce among the several states, or to
establish post roads? We think not. What do we understand by the word
"Commerce?" Webster defines it as follows: "1st. _In a general sense_,
an interchange or mutual change of goods, wares, productions, or
property of any kind between nations or individuals, either by barter,
or by purchase and sale; trade; traffic. Commerce is _foreign, or
inland_. Foreign commerce is the trade which one nation carries on with
another; inland commerce, or inland trade, is the trade in the exchange
of commodities between citizens of the same nation or state. 2d.
Intercourse between individuals; interchange of work, business,
civilities, or amusements; mutual dealings in life." And again: "To
traffic; to carry on trade." In the absence of any definition given to
it in the constitution, we must accept the above general definition of
its meaning as being the sense in which it is used in the constitution.
Respecting trade with foreign nations or the Indian tribes, it can only
relate to the interchange of commodities, or purchase or sale of
articles of traffic. As incidental to this power, congress can prescribe
rules for the regulation of navigation upon the high seas, including
police regulations on board of vessels, because the oceans are the
common or public highways of all nations, and each nation navigating the
same is bound to protect not only its commerce, but its citizens or
subjects. Nations hold commerce with nations across and upon the high
seas, the citizens and subjects of each being protected by their own
government. This commerce with foreign nations is not regulated by
grants of private charters, but by acts of congress is open to all
alike, save where, for the encouragement of certain branches of trade,
certain bounties or privileges have been granted to particular parties
for a specified time. But all such grants have been to parties
navigating the high seas. The control of navigable streams within the
United States does not depend alone upon the powers given to congress to
regulate the commerce of the country, but depends also upon the further
power vesting in the general government exclusive maritime jurisdiction.
If we concede that the power to regulate commerce among the several
states gives congress the exclusive right to regulate the commerce
carried on upon our rivers, it would not follow that the power to
charter railway companies is conferred. Navigable streams are _public
highways_, open to the travel of all. No man, set of men, or
corporations, can claim the exclusive right to navigate these rivers,
nor could congress grant such exclusive right. The duty of protecting
the rights of the citizen, and of making river transportation safe, and
of protecting the rights of property, demand that the national, and not
the state legislature, should be supreme in this particular
jurisdiction, and hence this branch of commerce is placed in the custody
of the nation. But keeping in mind the definition of the word,
"Commerce," let us see what is meant by the term as applied to dealings
between the states. We insist that it has no reference to the
construction of roads, railroads, canals, or any other ways upon which
commerce might be carried, or over which articles of trade or traffic
might pass, but that it refers only to the dealing of the people of one
state with another; that while the people of each state are under the
supreme control of their state authority, all the privileges enjoyed by
the citizens of any one of the states as to residence or traffic with
the citizens of another state, are to be the same. No distinction can be
made, and for the purpose of carrying out this provision of the
constitution, and preventing the levy of tariffs or taxes by one state
upon the citizens of another state, and for the purpose of guaranteeing
to all citizens of the United States immunity from these unjust
discriminations, the power to regulate commerce among the states was
delegated to congress. Nor does it follow, that, for the purpose of
regulating commerce among the states, congress can grant exclusive
privileges and monopolies in any business not confided to one state.
When the constitution was adopted, each state was independent; each had
all the powers and prerogatives of a nation; each was supreme within its
geographical limits; each might prescribe its own rules in relation to
immigrants, and to trade and traffic with other states; it might
discriminate in favor of its own citizens; it might impose tariffs on
foreign imports, and deal with its sister states as with foreign
nations. To prevent this, and to secure to all citizens of the United
States equal privileges and immunities in all parts of the United
States, the provisions of the constitution we have quoted were adopted.
While the independence of the states was recognized and preserved, the
power to regulate commerce, among them, was delegated to congress; not
the power to withdraw from the state its right to legislate upon the
subject of commerce among its own citizens, or the right to protect its
own citizens in their dealings with the citizens of other states; but
simply providing that no discriminations should be made on account of
residence, and establishing equal rights and privileges of all citizens
of the United States in all the states, free from discriminations sought
to be enforced under local or state statutes and regulations. Should any
one state attempt to deny to the people of another state the privileges
guaranteed by the constitution, then it would be the plain duty of
congress to interfere and "_regulate commerce_" between these states.
But while a general national law might constitutionally be enacted upon
this subject, it certainly cannot be claimed, that upon the pretext of
regulating commerce among the states, congress can charter railroad
companies, or any other companies organized for pecuniary profit. Nor
can this power be claimed under the constitutional provision for the
establishment of post offices and post roads. We admit that the grant of
this power carries with it all such as are incidental; that by
implication it includes within its terms the carrying and distribution
of the mails, and all other matter necessarily connected therewith; and
that congress might build, own, and control post roads, so far as the
same might be found necessary for the transportation of the mails over
the territory belonging to the United States, and to provide for the use
of public roads for government purposes. Public highways are free to
all. Over these highways, whether on land or water, congress can
provide for the transportation of the mails, troops, army stores,
munitions of war, and other public property. These highways are at all
times open to the public. But while this is true, it does not follow
that the government of the United States can take the absolute control
of these public highways, and, by act of congress, deny the states a
control over those within their borders respectively. The location and
establishment of public roads within a state is a part of the local or
police regulation, and while these roads are free to the passage of all,
they are, by the provisions of the constitution and the universally
accepted custom of the country, recognized as being under the exclusive
control of the states within which they are situated. The fact that
congress never has taken the control of the public roads of the country
is a full recognition of the exclusive right of the states to control
them. Then how can it be claimed that congress, under the constitution,
possesses the power to charter railroad companies? Until within the last
few years, no attempt was made to grant charters to railroad companies
by the general government, nor indeed were charters granted for any
purpose save in relation to the financial departments, as in the case of
United States banks, fiscal agencies, &c., which were chartered for the
public benefit, and not as private institutions. We are not positive
that the constitutionality of these railroad charters has been
determined by the courts of the United States, but we are aware of the
fact that congress has deemed it necessary, in almost every instance
where charters have been granted and aid voted, to declare, and place
upon the record as a part of the charter, the reasons for granting it.
The following are the reasons assigned in some of the charters, to-wit:
In the charter of the Union Pacific railroad company--"For the purpose
of aiding in the construction of said railroad and telegraph line, and
to secure _the safe and speedy transportation of the mails, troops,
munitions of war, and public stores thereon_."
In the charter of the Northern Pacific railroad company: "For the
purpose of aiding in the construction of said railroad and telegraph
line to the Pacific coast, and to secure _the safe and speedy
transportation of the mails, troops, munitions of war, and public
stores_." In all other cases the above quoted statement of cause is
inserted in the charters, as though the right or authority to make these
grants was so doubtful that it became necessary in every case to state
the reason for the grant. If the present necessities of the government
demand such special legislation, then the same reasons existed from the
organization of our government; and if congress possesses the power
under the constitution to make these grants, and to assume the absolute
control of public or private roads through the states, then from the
adoption of that constitution congress could have taken the absolute
control of all the public roads in all the states of the Union. Before
railroads were constructed, all overland transportation of mails,
troops, munitions of war, &c., was over the public highways--highways
that were and still are under the exclusive control of the states in
which they lie. Over these public roads and such private ways as maybe
selected, government has a right to transport the mails, troops, and
public property, and no state has the right to prohibit or restrict this
right. Still, no power is given by the constitution, nor is there any
implied, under which congress can, under the plea of rendering more safe
and speedy the transportation of mails, troops, &c., grant exclusive
charters and privileges to private corporations. In the nature of
things, as our government is organized, the right to charter and control
all corporations organized for pecuniary profit remains with the states.
This power has never been delegated to the general government, nor
prohibited to the states, or people. There can be no doubt upon this
point, when we remember that the general government is limited to the
delegated powers; and that it is supreme only in those matters which are
delegated to and vested in it by the constitution. This position is
fully sustained by the adjudication of the supreme court of the United
States. In Marshall, on the federal constitution, page 164, we find the
following: "This government is acknowledged by all to be one of
enumerated powers. The principle that it can exercise only the powers
granted to it, would seem too apparent to have required to be enforced
by all those arguments which its enlightened friends, while it was
depending before the people, found it necessary to urge. That principal
is now universally admitted." Again, on page 301, the author says: "In
our complex system presenting the rare and difficult scheme of one
general government whose action extends over the whole, but which
possesses only certain enumerated powers and of numerous state
governments, which retain and exercise all powers not delegated to the
union, contests respecting power must arise. Were it otherwise, the
measures taken by the respective governments to execute their
acknowledged powers would often be of the same description, and might
sometimes interfere. This, however, does not prove that the one is
exercising, or has the right to exercise, the power of the other."
As to the power of congress to create corporations, an argument has been
drawn in its favor from the provision of the constitution, which
declares that congress shall have the power of making "all laws which
shall be necessary and proper for carrying into execution the foregoing
powers, and all other powers vested by this constitution in the
government of the United States, or in any department thereof." The
question before the court arose out of the attempt of the state of
Maryland to tax the United States bank, a corporation chartered by
congress. In this case the power was upheld on the ground that the bank
was necessary in the administration of the finances of the government,
that being one of the matters vested in or delegated to the general
government, the power to charter the bank was incidental to the granted
power. But on the question of the power of congress to create
corporations, Mr. Marshall says, page 167: "The creation of a
corporation, it is said, appertains to sovereignty. This is admitted.
But to what portion of sovereignty does it appertain? Does it belong to
one more than another? In America the powers of sovereignty are divided
between the government of the Union, and those of the states. They are
each sovereign with respect to the objects committed to it, and neither
sovereign with respect to the objects committed to the other. We cannot
comprehend that train of reasoning which would maintain that the extent
of power granted by the people is to be ascertained, not by the nature
and terms of the grant, but by its date. Some state constitutions were
formed before, some since that of the United States. We cannot believe
that their relation to each other is in any degree dependent upon this
circumstance. Their respective powers must, we think, be precisely the
same as if they had been formed at the same time. Had they been formed
at the same time, and had the people conferred on the general government
the power contained in the constitution and on the states the whole
residium of power, would it have been asserted that the government of
the union was not sovereign with respect to those objects which were
entrusted to it, in relation to which its laws were declared to be
supreme? If this could have been asserted, we cannot well comprehend the
process of reasoning which maintains that a power appertaining to
sovereignty cannot be connected with that vast portion of it which is
granted to the general government, so far as it is calculated to
subserve the legitimate objects of that government. The power of
creating a corporation, though appertaining to sovereignty, is not like
the power of making war, or levying taxes, or of regulating commerce, a
great substantive and independent power which cannot be implied as
incidental to other powers, or used as a means of executing them. It is
never the end for which other powers are exercised, but the means by
which these objects are accomplished. No contributions are made to
charity for the sake of an incorporation, but a corporation is created
to administer the charity. No seminary of learning is instituted in
order to be incorporated, but the corporate character is conferred to
subserve the purposes of education. No city was ever built with the sole
object of being incorporated, but it is incorporated as the best means
of being well governed. The power of creating a corporation is never
used for its own sake, but for the purpose of effecting something else.
No sufficient reason is therefore perceived why it may not pass as
incidental to those powers which are expressly given, if it be the
direct mode of executing them."
Taking the above definition of corporations, and their use, in the
administration of the government, we can have no difficulty in
distinguishing the cases in which congress can grant charters to any
company or association. It is only when some of the delegated powers
require the aid of corporate acts in their administration, that the
right exists in congress to grant charters, as incidental to the grants.
The grants of charters to railroad companies cannot be claimed as
incidental to any express delegation of power to the general government.
If railroads are private property, they cannot be chartered or
controlled by congress. If they are to be taken and treated as public
highways, then they are as exclusively under and subject to the control
of the respective state governments, as common highways. The state
legislatures have exclusive control of them in either case. If they are
treated as private corporations, then under the rights reserved to the
states, as well as by long usage, their exclusive control is retained by
the states. If they are public roads, the same local or state laws apply
to them as to all other public roads. Admit that congress has the right
to grant charters for railroads, then it follows that it can control
them. Admit that they are public roads, and that they are to be taken
and treated as common highways, and congress at once assumes the local
and police regulations of all the public roads in all of the United
States.
To this doctrine we cannot subscribe, but insist that the exclusive
power to charter and control railroad corporations remains with the
people to be exercised by and under the exclusive control of the state
governments. Nor can congress, rightfully, under the constitution,
charter railroad corporations in the territories. The power vested in
congress "to dispose of and make all needful rules respecting the
territory or other property belonging to the United States," does not
authorize the creation of private monopolies. When territorial
governments are formed, they are clothed with many of the attributes of
sovereignty. These governments are at liberty to legislate and to
provide for the well-being of the people, and subject to the provisions
of their "organic law," have the complete control of local and police
regulations. They can construct highways, erect public buildings, impose
taxes, grant charters, including charters to railroad companies. That
territorial governments can charter railroad companies, and that general
government has so acknowledged is proven by the acts of congress in
donating lands and bonds to companies chartered by territorial
legislation. This was done in the case of the Leavenworth, Pawnee, &
Western railroad company, chartered by the territorial legislature of
Kansas; and other instances are common. The power to grant charters
cannot vest in the states, and territorial governments, and at the same
time exist in the general government, for the reason that the supreme
power must exist in one or the other. If this were not so, one
government could destroy what the other had created. The privileges
acquired by a corporation under the one could be entirely annulled by
the other. Private rights would be subject to the adjudication of two
separate and distinct tribunals, created and sustained by distinct
governments, the one claiming to be supreme, because the right to
exercise the power had been granted to it, and the other denying such
grant, and because of this denial claiming the power as still remaining
with the state government. This course would be destructive of the
rights of the people, as well as of our system of government. Concede to
congress the right to charter railroad companies, and there is no limit
to the monopolies that can be forced upon the people of the whole
country. Land companies, loan, and interest companies, manufacturing
companies, and in short all conceivable projects of speculation can
obtain charters from congress, and our government becomes entirely
personal in character, without restraint or constitutional limit. The
assumption by congress of the power to create private corporations is a
fatal stab at our system of government, destructive of state rights, and
a wanton violation of the constitution.