The Constitution of the United States of America: Analysis and Interpretation
Chapter 45 : [411] 48 Stat. 1283.[412] 295 U.S. 330 (1935).[413] Ibid. 374.[414] Ibid. 384.[415] 326

[411] 48 Stat. 1283.

[412] 295 U.S. 330 (1935).

[413] Ibid. 374.

[414] Ibid. 384.

[415] 326 U.S. 446 (1946). Indeed, in a case decided in June, 1948, Justice Rutledge, speaking for a majority of the Court, listed the Alton case as one "foredoomed to reversal," though the formal reversal has never taken place. _See_ Mandeville Is. Farms _v._ American C.S. Co., 334 U.S. 219, 230 (1948).

[416] 250 U.S. 199 (1919).

[417] Ibid. 203-204.

[418] 26 Stat. 209 (1890).

[419] 156 U.S. 1 (1895).

[420] Ibid. 13.

[421] 156 U.S. 1, 13-16 (1895). "Slight reflection will show that if the national power extends to all contracts and combinations in manufacture, agriculture, mining, and other productive industries, whose ultimate result may effect external commerce, comparatively little of business operations and affairs would be left for State control."

[422] Ibid. 17. The doctrine of the case simmered down to the proposition that commerce was transportation only; a doctrine which Justice Harlan undertook to refute in his notable dissenting opinion: "Interstate commerce does not, therefore, consist in transportation simply. It includes the purchase and sale of articles that are intended to be transported from one State to another--every species of commercial intercourse among the States and with foreign nations." (p. 22). "Any combination, therefore, that disturbs or unreasonably obstructs freedom in buying and selling articles manufactured to be sold to persons in other States or to be carried to other States--a freedom that cannot exist if the right to buy and sell is fettered by unlawful restraints that crush out compet.i.tion--affects, not incidentally, but directly, the people of all the States; and the remedy for such an evil is found only in the exercise of powers confided to a government which, this court has said, was the government of all, exercising powers delegated by all, representing all, acting for all. McCulloch _v._ Maryland, 4 Wheat. 316, 405." (p. 33). "It is said that manufacture precedes commerce and is not a part of it. But it is equally true that when manufacture ends, that which has been manufactured becomes a subject of commerce; that buying and selling succeed manufacture, come into existence after the process of manufacture is completed, precede transportation, and are as much commercial intercourse, where articles are bought _to be_ carried from one State to another, as is the manual transportation of such articles after they have been so purchased. The distinction was recognized by this court in Gibbons _v._ Ogden, where the princ.i.p.al question was whether commerce included navigation. Both the Court and counsel recognized buying and selling or barter _as included in commerce_. * * *

The power of Congress covers and protects the absolute freedom of such intercourse and trade among the States as may or must succeed manufacture and precede transportation from the place of purchase." (p.

35-36). "When I speak of trade I mean the buying and selling of articles of every kind that are recognized articles of interstate commerce.

Whatever improperly obstructs the free course of interstate intercourse and trade, as involved in the buying and selling of articles to be carried from one State to another, may be reached by Congress, under its authority to regulate commerce among the States." (p. 37). "If the national power is competent to repress _State_ action in restraint of interstate trade as it may be involved in purchases of refined sugar to be transported from one State to another State, surely it ought to be deemed sufficient to prevent unlawful restraints attempted to be imposed by combinations of corporations or individuals upon those identical purchases; otherwise, illegal combinations of corporations or individuals may--so far as national power and interstate commerce are concerned--do, with impunity, what no State can do." (p. 38). "Whatever a State may do to protect its completely interior traffic or trade against unlawful restraints, the general government is empowered to do for the protection of the people of all the States--for this purpose one people--against unlawful restraints imposed upon interstate traffic or trade in articles that are to enter into commerce among the several States." (p. 42).

[423] 175 U.S. 211 (1899).

[424] 196 U.S. 375.--The Sherman Act was applied to break up combinations of interstate carriers in United States _v._ Trans-Missouri Freight a.s.so., 166 U.S. 290 (1897); United States _v._ Joint-Traffic a.s.so., 171 U.S. 505 (1898); and Northern Securities Co. _v._ United States, 193 U.S. 197 (1904). In the first of these cases the Court was confronted with the contention that the act had been intended only for the industrial combinations, and hence was not designed to apply to the railroads, for whose governance the Interstate Commerce Act had been enacted three years prior. Justice Peckham answered the argument by saying that "to exclude agreements as to rates by competing railroads *

* * would leave [very] little for the act to take effect upon,"

referring in this connection to the decision in the Sugar Trust Case, 166 U.S. at 313.

Alluding in his opinion for the Court in Mandeville Island Farms _v._ American C.S. Co., 334 U.S. 219 (1948) to the Sugar Trust Case, Justice Rutledge said: "Like this one, that case involved the refining and interstate distribution of sugar. But because the refining was done wholly within a single state, the case was held to be one involving 'primarily' only 'production' or 'manufacturing,' although the vast part of the sugar produced was sold and s.h.i.+pped interstate, and this was the main end of the enterprise. The interstate distributing phase, however, was regarded as being only 'incidentally,' 'indirectly,' or 'remotely'

involved; and to be 'incidental,' 'indirect,' or 'remote' was to be, under the prevailing climate, beyond Congress' power to regulate, and hence outside the scope of the Sherman Act. _See_ Wickard _v._ Filburn, 317 U.S. at 119 et seq. (1942).

"The _Knight_ decision made the statute a dead letter for more than a decade and, had its full force remained unmodified, the Act today would be a weak instrument, as would also the power of Congress, to reach evils in all the vast operations of our gigantic national industrial system antecedent to interstate sale and transportation of manufactured products. Indeed, it and succeeding decisions, embracing the same artificially drawn lines, produced a series of consequences for the exercise of national power over industry conducted on a national scale which the evolving nature of our industrialism foredoomed to reversal."

Ibid. 229-230.

[425] Swift & Co. _v._ United States, 196 U.S. 375, 396 (1905).

[426] 196 U.S. at 398-399.

[427] Ibid. 399-401.

[428] Ibid. 400.

[429] Loewe _v._ Lawlor, 208 U.S. 274 (1908); Duplex Printing Press Co.

_v._ Deering, 254 U.S. 443 (1921); Coronado Coal Co. _v._ United Mine Workers of America, 268 U.S. 295 (1925); United States _v._ Brime, 272 U.S. 549 (1926); Bedford Co. _v._ Stone Cutters a.s.sn., 274 U.S. 37 (1927); Local 167 _v._ United States, 291 U.S. 293 (1934); Allen Bradley Co. _v._ Union, 325 U.S. 797 (1945).

[430] 42 Stat. 159.

[431] Ibid. 998 (1922).

[432] 258 U.S. 495 (1922).

[433] Ibid. 514.

[434] Ibid. 515-516. _See also_ Lemke _v._ Farmers' Grain Co., 258 U.S.

50 (1922); Minnesota _v._ Blasius, 290 U.S. 1 (1933).

[435] 262 U.S. 1 (1923).

[436] Ibid. 35.

[437] Ibid. 40.

[438] 258 U.S. at 521; 262 U.S. at 37.

[439] 48 Stat. 881.

[440] 49 Stat. 803.

[441] Electric Bond Co. _v._ Comm'n., 303 U.S. 419 (1938); North American Co. _v._ S.E.C., 327 U.S. 686 (1946); American Power & Light Co. _v._ S.E.C., 329 U.S. 90 (1946).

[442] "The Bond and Share system, including American and Electric, possesses an undeniable interstate character which makes it properly subject, from the statutory standpoint, to the provisions of -- 11 (b) (2). This vast system embraces utility properties in no fewer than 32 States, from New Jersey to Oregon and from Minnesota to Florida, as well as in 12 foreign countries. Bond and Share dominates and controls this system from its headquarters in New York City. * * * the proper control and functioning of such an extensive multi-state network of corporations necessitates continuous and substantial use of the mails and the instrumentalities of interstate commerce. Only in that way can Bond and Share, or its subholding companies or service subsidiary, market and distribute securities, control and influence the various operating companies, negotiate inter-system loans, acquire or exchange property, perform service contracts, or reap the benefits of stock owners.h.i.+p. * *

* Moreover, many of the operating companies on the lower echelon sell and transmit electric energy or gas in interstate commerce to an extent that cannot be described as spasmodic or insignificant. * * * Congress, of course, has undoubted power under the commerce clause to impose relevant conditions and requirements on those who use the channels of interstate commerce so that those channels will not be conduits for promoting or perpetuating economic evils. * * * Thus to the extent that corporate business is transacted through such channels, affecting commerce in more States than one, Congress may act directly with respect to that business to protect what it conceives to be the national welfare. * * * It may compel changes in the voting rights and other privileges of stockholders. It may order the divestment or rearrangement of properties. It may order the reorganization or dissolution of corporations. In short, Congress is completely uninhibited by the commerce clause in selecting the means considered necessary for bringing about the desired conditions in the channels of interstate commerce. Any limitations are to be found in other sections of the Const.i.tution.

Gibbons _v._ Ogden, 9 Wheat. 1, 196." American Power & Light Co. _v._ S.E.C., 329 U.S. 90, 98-100 (1946).

[443] Appalachian Coals, Inc. _v._ United States, 288 U.S. 344, 372 (1933).

[444] 48 Stat. 195.

[445] 295 U.S. 495 (1935).

[446] Ibid. 548. _See also_ Ibid. 546.

[447] In United States _v._ Sullivan, 332 U.S. 689 (1948), the Court interpreted the Federal Food, Drug, and Cosmetics Act of 1938 as applying to the sale by a retailer of drugs purchased from his wholesaler within the State nine months after their interstate s.h.i.+pment had been completed. The Court, speaking by Justice Black, cited United States _v._ Walsh, 331 U.S. 432 (1947); Wickard _v._ Filburn, 317 U.S.

111 (1942); United States _v._ Wrightwood Dairy Co., 315 U.S. 110 (1942); United States _v._ Darby, 312 U.S. 100 (1941). The last three of these cases are discussed below. _See_ pp. 155, 159. Justice Frankfurter dissented on the basis of Federal Trade Commission _v._ Bunte Bros., 312 U.S. 349 (1941). It is apparent that the Schechter case has been thoroughly repudiated so far as the distinction "direct" and "indirect"

effects is concerned. _See also_ McDermott _v._ Wisconsin, 228 U.S. 115 (1913), which preceded the Schechter decision by more than two decades.

The N.I.R.A., however, was found to have several other const.i.tutional infirmities besides its disregard, as ill.u.s.trated by the Live Poultry Code, of the "fundamental" distinction between "direct" and "indirect"

effects, namely, the delegation of unca.n.a.lized legislative power; the absence of any administrative procedural safeguards; the absence of judicial review; and the dominant role played by private groups in the general scheme of regulation. These objections are dealt with elsewhere in this volume. _Supra_, pp. 75, 78, 80.

[448] 48 Stat 31 (1933).

[449] United States _v._ Butler, 297 U.S. 1, 63-64, 68 (1936).

[450] 49 Stat. 991.