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INTERSTATE COMMERCE
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INTERSTATE See also:COMMERCE . The phrase " interstate commerce," as used in the See also:United States, denotes commerce between the citizens of different states of the See also:Union. The words " inter-See also:state " and "intrastate " are not found in the constitution nor, until comparatively recently, in decisions of the courts or in legislative acts (probably being first used officially in 1887 in the Interstate Commerce See also:Act). The constitution of 1789 uses the phrase " commerce among the states," and the first See also:official decision interpreting the phrase says that " it may very properly be restricted to that commerce which concerns more states than one " (See also:Chief See also:Justice See also:Marshall in See also:Gibbons v.See also:Ogden, 9 See also:Wheaton 194). Commerce among the states is there distinguished from " commerce which is completely See also:internal, which is carried on between See also:man and man in a state, or between parts of the same state, and which does not extend to or affect other states." It was declared (Lehigh See also:case, 145 U.S. 102) that commerce between two persons in the same state is not interstate even when there is a temporary deviation to the See also:soil of another state; but later (See also:Hanley case, 187 U.S. 617, distinguishing the Lehigh case) it was declared that as to transportation, such commerce is inter-state. The courts have interpreted commerce to denote not merely a mutual selling or See also:traffic, but as " a See also:term of the largest import," including intercourse for the purposes of See also:trade in any and all its forms (Gibbons v. Ogden, 9 Wheaton 194, and Welton v. See also:Missouri, 91 U.S. 28o). Thus have been included not only the actions of trading, See also:navigation, transportation, and communication, but also the See also:instruments and agents employed, including even See also:telegraph messages and, in the extremest cases, lottery tickets.' The decision of the question where federal See also:control of interstate traffic ends and state control begins has been one of See also:great See also:practical difficulty. In See also:general it has been held that whenever a commodity begins to move as an See also:article of trade from one state to another, commerce in that commodity between the states has begun. See also:Mere intention to See also:ship goods does not make them subjects of interstate commerce, but they must actually be put in See also:motion or committed to the See also:carrier for that purpose (See also:Coe v. Errol, 116 U.S. 517). As a practical See also:guide in deciding when state control should be resumed, the See also:court as See also:early as 1827 (See also: See also:Louisiana, 8 How. 73), trade marks (in 1879, trade See also:mark cases, too U.S. 82), See also:insurance (in 1869, See also:Paul v. See also:Virginia, 8 Wall. 168), and manufacturing (in 1895, U.S. v. See also:Knight Co., 156 U.S. 1). In the last-named case, which concerned a See also:combination of See also:sugar refineries controlling a large proportion of the product of the See also:country, it was said that commerce succeeds manufacture and is not a See also:part of it. The relation of the manufacturer to interstate and See also:foreign commerce being thus only incidental and indirect, the business is subject to state control. By a See also:series of decisions the transportation of persons has been decided to be commerce. (In 1848, passenger cases, 7 How. 283. In 1867, See also:Crandall v. See also:Nevada 6, Wall. 35. In 1875, See also:Henderson v. the See also:Mayor of New See also:York, 92 U.S. 259, &e.).may be taxed as See also:property in See also:common with other property in the state .2 See also:Reason for Federal Control of Interstate Commerce.—Immediately after the See also:close of the See also:War of See also:American See also:Independence in 1783 appeared the separatist tendencies and local jealousies usual in a See also:confederation. The See also:Congress of the Confederation had no power to See also:levy See also:tariff duties or to regulate commerce between the states, and the See also:separate states freely and recklessly exercised their rights in this See also:matter. Though commerce at that See also:time was comparatively unimportant, the results of this restrictive policy were most unfortunate. The See also:Annapolis See also:Convention of 1786 was called by the Virginia legislature to take into See also:consideration the trade of the United States and to consider how far a See also:uniform See also:system in their commercial relations might be necessary to the common interests and their permanent See also:harmony. This See also:conference resulted in the See also:call of the See also:Philadelphia Convention of 1787, which framed the See also:present Constitution. Chief Justice Marshall, in one of the early cases on this subject (Brown v. Maryland, 12 Wheaton 419, in 1827), said in words often since quoted: " It may be doubted whether any of the evils proceeding from the feebleness of the federal See also:government contributed more to that great revolution which introduced the present system than the deep and general conviction that commerce ought to be regulated by Congress." Every See also:year has increased the importance of the congressional power of regulating commerce. At the time of the See also:adoption of the Constitution, each neighbourhood supplied nearly all its needs by its own See also:industry, but improving means of transportation and communication have multiplied the commercial ties between the citizens of the various states. This See also:change went on slowly until 183o, more rapidly between 183o and 186o, and at an ever-hastening See also:pace after the See also:Civil War. Until 1824 no case involving directly the consideration of this power reached the United States Supreme Court. From 1824 to 1840 the Supreme Court decided an See also:average of one-third of a case a year; from 1841 to 186o, an average of three-fourths of a case; from 1861 to 1870, an average of one case; from 1871 to 188o, an average of nearly six cases; from 1881 to 189o, an average of more than seven cases; and from 1891 to 'goo, an average of more than ten cases. The decisions have not been entirely uniform, and there were some decisions too contradictory to be explained by any ingenuity. The Supreme Court itself has said (See also:Fargo v. See also:Michigan, 121 U.S. 230) that " it may be admitted that the court has not always employed the same See also:language, and that all of the judges of the court who have written opinions for it may not have meant precisely the same thing." Though in the See also:period just preceding the Civil War the See also:doctrine of states' rights tended to weaken somewhat the federal power, the broad outlines of the See also:interpretation by Chief Justice Marshall laid down in 1824 in Gibbons v. Ogden remain to-See also:day almost undimmed. Interstate Commerce in the Federal Constitution.—Freedom of trade, without discrimination, between the citizens of all the states was in the See also:main ensured by one brief See also:sentence, usually called the " commerce clause " of the federal constitution:—" The Congress shall have power • • . to regulate commerce with foreign nations, and among the several states, and with the See also:Indian tribes " (See also:Art.', sec.8, clause 3). Hardly less important is the power " to make all See also:laws which shall be necessary and proper for carrying into See also:execution the foregoing See also:powers, and all other powers vested by this Constitution in the government of the United States, or in any See also:department or officer thereof " (Art. 1, sec. 8, clause 18). To the same end of freedom of commerce, Congress is limited in that " no tax or See also:duty shall be laid on articles exported from any state, " and " no preference shall be given by any regulation of commerce or See also:revenue to the
2 The question arose with reference to the See also:police power of the state in those states prohibiting the liquor traffic, and in 1889 it was held (Leisy v. Hardin) that, in the See also:absence of legislation by Congress, the right to sell goods taken into a state was unrestricted. This made it impossible for a state to exclude the importation of liquors to be sold within its territory, but this difficulty was remedied by the See also: 1, sec. 1o, clause 2). " No state shall, without the consent of Congress, lay any duty of See also:tonnage " (Art. 1, sec. ro, clause 3). Thus by threefold measures of precaution was ensured domestic freedom of trade from every point in the See also:land to its farthest frontiers. Negative Working of the Commerce Provisions:—For nearly a See also:hundred years these provisions were important only in their negative effects of preventing the states from granting See also:special privileges to their citizens or taxing unequally the citizens of other states. The decision in 1824 of Gibbons v. Ogden stopped the See also:attempt of the state of New York to grant the See also:monopoly of steamboat traffic on the See also:waters of that state. Had the clear and unequivocal See also:opinion in that case been different, local ingenuity doubtless would have devised a multitude of discriminations. " The power to tax involves the power to destroy," and ever since the decision of McCulloch v. Maryland in 1819 it has been held that no agencies created by the federal government, such as See also:banks or legal See also:tender notes, are subject to state taxation, and the rule has also been laid down repeatedly by the Supreme Court (for the first time in 1886) that no See also:burden can be laid upon the act of taking goods into or out of the state, of soliciting sales, or of delivering goods even though the tax is without discrimination as between the state's own citizens and others; that is, interstate commerce " cannot be taxed at all " (Robbins v. See also:Shelby See also:County Taxing See also:District, 12o U.S. 489).1 1 However, a very important distinction is See also:drawn between taxing the commerce and taxing property employed in commerce. With the increase of interstate commerce, the states have been hard pushed to find See also:sources of revenue adequate to their increasing needs. The courts, therefore, have sought to draw a See also:line between taxes on the See also:privilege of carrying on interstate commerce and taxes on the property employed in carrying on such commerce as a part of the general See also:body of property in the state. Thus it has been held in the case of State See also:Freight Tax (1872, 15 Wall. 232) that a state could not lay a tax on freight transported from one state to another, and yet the same year the court held in State Tax on See also:Gross Receipts (15 Wall. 284) that a tax was valid when laid upon the receipts of See also:railways organized under the laws of the state, as upon a fund which had become incorporated with the general See also:mass of property. This latter decision was by a divided court (three of the nine judges dissenting), but it has since been frequently confirmed. The tax on gross receipts of all railway companies doing business in the state has been supported when levied in proportion to the mileage within as compared with the See also:total within and without the state (See also:Erie Ry. v. Pa., 21 Wall. 492). This so-called " unit rule," as applied either to gross receipts or to the entire value of an interstate railway, has been upheld in a number of decisions. The method of taxation by gross receipts, however, has not tended to increase of See also:late, but the unit rule, as applied to ad valorem taxes on property, is more and more being applied. Every case involving the distinction between a tax on commerce and a tax on property employed in commerce presents its own difficulties, yet a practical way is thus found to prevent discriminating See also:action by the several states, while leaving to them adequate sources of revenue. Federal control of interstate commerce has been interpreted by the courts to be exclusive of any control by the states. This is not self-evident in the clause, " Congress shall have power to regulate commerce among the several states." Over some other subjects the power of the federal and state governments is concurrent, the state being able to act until Congress enacts some conflicting legislation. Although the early decisions suggested that the power of Congress was exclusive, yet for nearly a See also:century no See also:positive decision was rendered and no positive action was taken by Congress. Between 187o and 1886 the states made great progress in the regulation of railways on the See also:assumption that until Congress had acted the states were free to act. The question was put beyond doubt in a series of decisions establishing the principle that the non-action of Congress indicates its will that commerce shall be free and untrammelled and that the states cannot interfere either through their police power or their taxing power.' Positive Federal Regulation.—Though the regulation of inter-state commerce up to the Civil War was mainly negative, some positive actions of the federal government had indirect effects on commerce, as, for example, the coinage of money, the See also:establishment of post-offices, the See also:charter of the first and second United States banks, and the charter of the Pacific Railroad. The power to do these things was conferred by the Constitution in some cases directly, in other cases by implication in that any means appropriate to lawful ends might be employed (as in case of charter of the United States Bank, McCulloch v. Maryland). From 1850 to 1862 the federal government had made numerous land grants in aid of railways, but always to the states, not directly to the corporations, and it had never until 1862 granted a charter to a railway, See also:canal, See also:turnpike or transportation See also:company. In 1866 Congress passed an act authorizing railway companies whose roads were operated by See also:steam to carry passengers, freight, &c., " on their way from any state to another state and to receive See also:compensation therefor and to connect with roads of other states so as to See also:form continuous lines for the transportation of the same to the See also:place of destination."3 This act, so vague and general in its terms, had very little effect, though it has been the occasion of considerable litigation to determine its See also:influence upon existing police laws of the states. In 1884 Congress established the See also:Bureau of See also:Animal Industry for preventing the exportation of diseased See also:cattle and for the extirpation of disease among domestic animals. This had little significance at the time for interstate commerce, its purpose being to meet the objections of foreign ccuntries to the importation of American See also:meat. In 1887 was passed the Interstate Commerce Act, providing a See also:national See also:commission to supervise interstate railways. In 1888 was passed an See also:Arbitration Act, replaced in 1898 by an act which provides that in case of disputes between common See also:carriers subject to the Interstate Commerce Act and their employees, conciliation shall be tried, and, in case this should fail, indicates the methods that may be used for the voluntary submission of the dispute to a See also:board of arbitration. 21873, State Freight Tax, 15 Wall. 232; 1887, Robbins v. Shelby County Taxing District, 120 U.S. 489; See also:Wabash R. R. Company v. See also:Illinois, 118 U S. 557. The last-named case arose out of the attempts of the state of Illinois to prevent discrimination between two shippers, both being its own citizens and within its own See also:borders, one of whom was being charged more than the other for a shorter shipment on the same line and in the same direction, from a point outside the state. The court, applying the established See also:definition of interstate commerce with verbal formality of See also:logic, decided that the state could do nothing, for even in such a case all regulation of interstate commerce, from the beginning to the end of a shipment, was confided to Congress exclusively. Thus a clause whose clear purpose was to prevent one state from burdening unequally the citizens of other states was successfully invoked by a private See also:corporation to forbid the state securing equality of treatment for its own citizens as regards such parts of shipments as lay within its own borders. Most railway traffic was by this decision declared to be subject to legislation by Congress but Congress had not acted. The impossibility of this situation was so evident that the Interstate Commerce Act, long under discussion, became a See also:law a few months later.
This was probably aimed at the discriminating between New York and Philadelphia (see speech of See also: In 1905 the See also:President was authorized to grant medals of See also:honour to persons who by their daring See also:save See also:life or prevent See also:accident on railways. In 1906 the Interstate Commerce Act was amended in important particulars (specified below). In 1906 were passed pure See also:food laws, greatly enlarging the duties of the Department of Agriculture in reference to inspection of foods prepared for interstate commerce. The Interstate Commerce Act.—The period of positive action by Congress in the regulating of interstate commerce practically begins, therefore, with the enactment of the Interstate Commerce Act of February 1887, the outcome of fully seventeen years of agitation and discussion. The law was modelled in large part upon See also:English acts. It applied to common carriers wholly by railway, and partly by railway and partly by See also:water when both are used under a common arrangement for continuous shipment; forbade unjust discrimination and undue and unreasonable preference; made it unlawful to See also:charge more for a shorter than for a longer distance over the same line in the same direction, the shorter being included within the longer distance (though a carrier might be freed by the Commission from the working of this See also:provision); and forbade pooling and See also:division of earnings. The administration of the law was entrusted to a Commission of five members, appointed by the President. From this act much was expected, but eighteen years of its operation gave as net results little more than a greater uniformity of railway accounting and much better understanding by the public of the nature of the railway problem. Discrimination and See also:secret rebates continued. The anti-pooling clause (See also:pretty generally recognized by the well-informed to be a See also:mistake) prevented open but not secret agreements between carriers, and probably hastened the movement toward consolidation. The long and See also:short haul clause was made meaningless by the judicial interpretation that any competition, even that of other carriers subject to the act, justified the railway in charging more for a shorter than for a longer haul. The effectiveness of the Commission was destroyed by the judicial decision that it had no power to See also:fix rates for the future. Until 1897, the Commission, when it adjudged a See also:rate unreasonable, usually declared what rate was reasonable, and directed the carrier to reduce the rate by a given date to the designated maximum. Of 135 orders made in decisions rendered in the first ten years of the Commission, 68 prescribed a maximum rate for the future. In 1897 it was finally decided in the See also:Cincinnati Freight Bureau Case (167 U.S. 479) that Congress had not conferred upon the Commission the power to prescribe any rate for the future. The court said that Congress might fix the rate itself or authorize a sub-tribunal to do so, but that Congress had not yet given that tut hori ty. The need of further legislation had been See also:felt from the beginning by many, and after 1903 the agitation became very active. The position taken by President See also:Roosevelt in his See also:message to Congress in 1904 made the See also:amendment of the Interstate Commerce Act the See also:principal See also:political issue before Congress in the sessions of 1905 and of 1906. After the most remarkable senatorial debates heard at See also:Washington in years, followed with close See also:interest by the country, a number of amendments became law on the 29th of See also:June 1906. The act was strengthened to a degree hardly expected by the most See also:earnest See also:advocates of revision. A number of See also:minor changes made in the See also:light of experience were: increasing the number of commissioners to seven and their pay to $10,000; facilitating See also:procedure and the taking of See also:evidence; requiring See also:thirty days See also:notice of a change of rates; requiring See also:appeal from the Commission's decision to be taken within thirty days; empowering the Commission to establish See also:joint rates and to See also:order switches to be built. The following are generally thought to be still more important changes: (I) Including within the application of the act See also:pipe lines (particularly for oil), See also:express and sleeping See also:car companies, and all the facilities and services in connexion with goods transported; (2) giving publicity to railway business by empowering the Commission to prescribe all forms of accounts and to examine the books at all times, and by forbidding any other accounts or memoranda to be kept by the companies; and (3) empowering the Commission to prescribe reasonable maximumsrates to take effect within not less than thirty days and to continue not over two years unless set aside by the courts. The Anti-Trust Act of .r 89o.-The growth of large corporations with some degree of monopoly power, the so-called See also:trusts, had called forth in a number of the states anti-trust laws before 189o. When it became evident that the states were not succeeding in dealing with the problem, public sentiment found expression in the Sherman Anti-Trust Act, approved on the 2nd of See also:July 18go. This act declared illegal and criminal, punishable by See also:fine or imprisonment or both, every contract in restraint of trade or commerce among the several states or with foreign nations. The See also:statute thus changed the common law wherein such See also:con-tracts were merely unenforceable but not criminal. This act was at first construed by the Supreme Court as applying to any con-See also:tract in restraint of interstate commerce, whether reasonable or unreasonable (Trans-Missouri Freight Association, 166 U.S. 331), but later, in 1905 (Stock Yards case, 25 Supreme Court Reporter 276) it was held that the act did not apply to agreements for the better conduct of business which incidentally affected interstate commerce.' The act has been interpreted to apply to transportation (Freight Association case, 166 U.S. 290, and See also:Northern Securities case), with results felt even by some of the advocates of railway regulation to be unfortunate. It applies to unlawful combinations of manufacturers to See also:divide the territory and regulate the prices (Addyston Pipe Trust Case,175 U.S. 211). In the Sugar Trust case (1895 U.S. v. Knight Co. 156 U.S.) it was declared that the statute did not apply to a manufacturing company which had acquired nearly See also:complete control of the manufacture of refined sugar by means of the See also:purchase of stock of other refining companies. The See also:Attorney-General submitted to the Senate, in June 1906, a statement of the results of all suits instituted by the Department of Justice under the anti-trust law, the Interstate Commerce Act and the Elkins Act, in the period from 1887 to June 1906 inclusive. Thirty-six suits were still pending; of the 250 which had been disposed of in some manner 186 ended in dismissal, . non-See also:prosecution or acquittal, and 64 were successful in securing in whole or in large part the object of the suit (in 30 cases conviction, in 34 cases the granting of a See also:petition or an See also:injunction, &c.). In addition to these results of federal efforts to regulate industry must be counted the cases in which carriers complied
' In the Northern Securities case, Justice See also:Brewer, who had toncurred in the opinion in the Trans-Missouri Freight Association case, took occasion to say that while he still believed the former case had been correctly decided, he thought that the reasons given for the See also:judgment were in some respects faulty, and that the ruling should have been that the contracts there considered were unreasonable restraints and as such were forbidden by the act
with the orders of the Interstate Commerce Commission without suit; but even then the total by 1906 was somewhat meagre.
The establishment of the Bureau of Corporations in 1903, and the considerable See also:extension of the powers of inspection of the Department of Agriculture are See also:recent changes of which the results cannot yet be fairly judged. The aim of the Bureau of Corporations is to ensure publicity in the management of corporations engaged in interstate and foreign commerce. The first See also:commissioner, Mr See also: (F. A. Additional information and CommentsThere are no comments yet for this article.
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