The Constitution of the United States of America: Analysis and Interpretation
Chapter 16 : "COMMERCE" TODAY Later in his opinion Marshall qualified the word "inter

"COMMERCE" TODAY

Later in his opinion Marshall qualified the word "intercourse" with the word "commercial."[310] Today "commerce" in the sense of the Const.i.tution, and hence "interstate commerce" when it is carried on across State lines, covers every species of movement of persons and things, whether for profit or not;[311] every species of communication, every species of transmission of intelligence, whether for commercial purposes or otherwise;[312] every species of commercial negotiation which, as shown "by the established course of the business," will involve sooner or later an act of transportation of persons or things, or the flow of services or power across State lines.[313]

From time to time the Court has said that certain things were not interstate commerce, such as mining or manufacturing undertaken "with the intent" that the product shall be transported to other States;[314]

insurance transactions when carried on across State lines;[315]

exhibitions of baseball between professional teams which travel from State to State;[316] the making of contracts for the insertion of advertis.e.m.e.nts in periodicals in another State;[317] contracts for personal services to be rendered in another State.[318] Recent decisions either overturn or cast doubt on most if not all of these holdings. By one of these the gathering of news by a press a.s.sociation and its transmission to client newspapers is termed interstate commerce.[319] By another the activities of a Group Health a.s.sociation which serves only its own members are held to be "trade" within the protection of the Sherman Act and hence capable, if extended, of becoming interstate commerce.[320] By a third the business of insurance when transacted between an insurer and an insured in different States is interstate commerce.[321]

THE "NECESSARY AND PROPER" CLAUSE

In the majority of the above cases the commerce clause was involved solely as a limitation on the powers of the States. But when the clause is treated as a source of national power it is, of course, read in a.s.sociation with the power of Congress "* * * To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, * * *,"[322] with the result that, as is pointed out later, "interstate commerce" has come in recent years practically to connote both those operations which precede as well as those which follow commercial intercourse itself, provided such operations are deemed by the Court to be capable of "affecting" such intercourse.[323]

"AMONG THE SEVERAL STATES"

In Cohens _v._ Virginia, decided in 1821, Marshall had a.s.serted, "for all commercial purposes we are one nation."[324] In Gibbons _v._ Ogden, however, he conceded that the phrase commerce "among the several States"

was "not one which would probably have been selected to indicate the completely interior traffic of a State"; and added: "The genius and character of the whole government seem to be, that its action is to be applied to all external concerns of the nation, and to those internal concerns which affect the States generally; but not those which are completely within a particular State, which do not affect other States, and with which it is not necessary to interfere, for the purpose of executing some of the general powers of the government."[325]

This recognition of an "exclusively internal" commerce of a State ("intrastate commerce" today) appears at times to have been regarded as implying the existence of an area of State power which Congress was not ent.i.tled const.i.tutionally to enter.[326] This inference overlooked the fact that, in consequence of its powers under the necessary and proper clause, Congress can, as Marshall indicates in the words above quoted, interfere with the completely internal concerns of a State "for the purpose of executing its general powers," one of which is its power over foreign and interstate commerce. It is today established doctrine that "no form of State activity can const.i.tutionally thwart the regulatory power granted by the commerce clause to Congress."[327]

And while the word "among" serves to demark "the completely internal"

commerce of a State from that which "extends to or affects" other States, it also serves, as Marshall further pointed out, to emphasize the fact that "the power of Congress does not stop at the jurisdictional lines of the several States," but "must be exercised whenever [wherever?] the subject exists. * * * Commerce among the States must, of necessity, be commerce [within?] the States. * * * The power of Congress, then, whatever it may be, must be exercised within the territorial jurisdiction of the several States."[328]

"REGULATE"

Elucidating this word in his opinion for the Court in Gibbons _v._ Ogden, Chief Justice Marshall said: "We are now arrived at the inquiry--What is this power? It is the power to regulate; that is, to prescribe the rule by which commerce is to be governed. This power, like all others vested in Congress, is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the Const.i.tution. These are expressed in plain terms, and do not affect the questions which arise in this case, or which have been discussed at the bar. If, as has always been understood, the sovereignty of Congress, though limited to specified objects, is plenary as to those objects, the power over commerce with foreign nations, and among the several States, is vested in Congress as absolutely as it would be in a single government, having in its const.i.tution the same restrictions on the exercise of the power as are found in the Const.i.tution of the United States. The wisdom and the discretion of Congress, their ident.i.ty with the people, and the influence which their const.i.tuents possess at elections, are, in this, as in many other instances, as that, for example, of declaring war, the sole restraints on which they have relied, to secure them from its abuse. They are the restraints on which the people must often rely solely, in all representative governments."[329]

INTERSTATE VERSUS FOREIGN COMMERCE

There are certain later judicial dicta which urge or suggest that Congress's power to regulate interstate commerce restrictively is less than its a.n.a.logous power over foreign commerce, the argument being that whereas the latter is a branch of the nation's unlimited power over foreign relations, the former was conferred upon the National Government primarily in order to protect freedom of commerce from State interference. The four dissenting Justices in the Lottery Case (decided in 1903) endorsed this view in the following words: "It is argued that the power to regulate commerce among the several States is the same as the power to regulate commerce with foreign nations, and among the Indian tribes. But is its scope the same? * * *, the power to regulate commerce with foreign nations and the power to regulate interstate commerce, are to be taken _diverso intuitu_, for the latter was intended to secure equality and freedom in commercial intercourse as between the States, not to permit the creation of impediments to such intercourse; while the former clothes Congress with that power over international commerce, pertaining to a sovereign nation in its intercourse with foreign nations, and subject, generally speaking, to no implied or reserved power in the States. The laws which would be necessary and proper in the one case, would not be necessary or proper in the other.

* * * But that does not challenge the legislative power of a sovereign nation to exclude foreign persons or commodities, or place an embargo, perhaps not permanent, upon foreign s.h.i.+ps or manufactures. * * * The same view must be taken as to commerce with Indian tribes. There is no reservation of police powers or any other to a foreign nation or to an Indian tribe, and the scope of the power is not the same as that over interstate commerce."[330]

And twelve years later Chief Justice White, speaking for the Court, expressed the same view, as follows: "In the argument reference is made to decisions of this court dealing with the subject of the power of Congress to regulate interstate commerce, but the very postulate upon which the authority of Congress to absolutely prohibit foreign importations as expounded by the decisions of this court rests is the broad distinction which exists between the two powers and therefore the cases cited and many more which might be cited announcing the principles which they uphold have obviously no relation to the question in hand."[331]

But dicta to the contrary are much more numerous and span a far longer period of time. Thus Chief Justice Taney wrote in 1847: "The power to regulate commerce among the several States is granted to Congress in the same clause, and by the same words, as the power to regulate commerce with foreign nations, and is coextensive with it."[332] And nearly fifty years later Justice Field, speaking for the Court, said: "The power to regulate commerce among the several States was granted to Congress in terms as absolute as is the power to regulate commerce with foreign nations."[333] Today it is firmly established doctrine that the power to regulate commerce, whether with foreign nations or among the several States comprises the power to restrain or prohibit it at all times for the welfare of the public, provided only the specific limitations imposed upon Congress's powers, as by the due process clause of the Fifth Amendment, are not transgressed.[334]

Nor does the power to regulate commerce stop with, nor in fact is it most commonly exercised in, measures designed to outlaw some branch of commerce. In the words of the Court: It is the power to provide by appropriate legislation for its "protection and advancement";[335] to adopt measures "to promote its growth and insure its safety";[336] "to foster, protect, control and restrain, [commerce]."[337] This protective power has, moreover, two dimensions. In the first place, it includes the power to reach and remove every conceivable obstacle to or restriction upon interstate and foreign commerce from whatever source arising, whether it results from unfavorable conditions within the States or from State legislative policy, like the monopoly involved in Gibbons _v._ Ogden; or from both combined. In the second place, it extends--as does also the power to restrain commerce--to the instruments and agents by which commerce is carried on; nor are such instruments and agents confined to those which were known or in use when the Const.i.tution was adopted.[338]

INSTRUMENTS OF COMMERCE

The applicability of Congress's power to the agents and instruments of commerce is implied in Marshall's opinion in Gibbons _v._ Ogden,[339]

where the waters of the State of New York in their quality as highways of interstate and foreign transportation are held to be governed by the overruling power of Congress. Likewise, the same opinion recognizes that in "the progress of things," new and other instruments of commerce will make their appearance. When the Licensing Act of 1793 was pa.s.sed, the only craft to which it could apply were sailing vessels, but it and the power by which it was enacted were, Marshall a.s.serted, indifferent to the "principle" by which vessels were moved. Its provisions therefore reached steam vessels as well. A little over half a century later the principle embodied in this holding was given its cla.s.sic expression in the opinion of Chief Justice Waite in the case of the Pensacola Telegraph Co. _v._ Western Union Co.,[340] a case closely paralleling Gibbons _v._ Ogden in other respects also. The pa.s.sage alluded to reads as follows: "The powers thus granted are not confined to the instrumentalities of commerce, or the postal service known or in use when the Const.i.tution was adopted, but they keep pace with the progress of the country, and adapt themselves to the new developments of times and circ.u.mstances. They extend from the horse with its rider to the stage-coach, from the sailing-vessel to the steamboat, from the coach and the steamboat to the railroad, and from the railroad to the telegraph, as these new agencies are successively brought into use to meet the demands of increasing population and wealth. They were intended for the government of the business to which they relate, at all times and under all circ.u.mstances. As they were intrusted to the general government for the good of the nation, it is not only the right, but the duty, of Congress to see to it that intercourse among the States and the transmission of intelligence are not obstructed or unnecessarily enc.u.mbered by State legislation."[341] The Radio Act of 1927 whereby "all forms of interstate and foreign radio transmissions within the United States, its Territories and possessions" were brought under national control, affords another ill.u.s.tration. Thanks to the foregoing doctrine the measure met no serious const.i.tutional challenge either on the floors of Congress or in the Courts.[342]

Congressional Regulation of Waterways

NAVIGATION

In the case of Pennsylvania _v._ Wheeling & Belmont Bridge Co.,[343]

decided in 1852, the Court, on the application of the complaining State, acting as representative of the interests of its citizens, granted an injunction requiring that a bridge, erected over the Ohio under a charter from the State of Virginia, either be altered so as to admit of free navigation of the river, or else be entirely abated. The decision was justified by the Court on the basis both of the commerce clause and of a compact between Virginia and Kentucky, whereby both these States had agreed to keep the Ohio River "free and common to the citizens of the United States." The injunction was promptly rendered inoperative by an act of Congress declaring the bridge to be "a lawful structure" and requiring all vessels navigating the Ohio to be so regulated as not to interfere with it.[344] This act the Court sustained as within Congress's power under the commerce clause, saying: "So far, * * *, as this bridge created an obstruction to the free navigation of the river, in view of the previous acts of Congress, they [the said acts] are to be regarded as modified by this subsequent legislation; and, although it still may be an obstruction in fact, [it] is not so in the contemplation of law. * * * That body [Congress] having in the exercise of this power, regulated the navigation consistent with its preservation and continuation, the authority to maintain it would seem to be complete.

That authority combines the concurrent powers of both governments, State and federal, which, if not sufficient, certainly none can be found in our system of government."[345] In short, it is Congress and not the Court which is authorized by the Const.i.tution to regulate commerce.

The law and doctrine of the earlier cases with respect to the fostering and protection of navigation are well summed up in the following frequently cited pa.s.sage from the Court's opinion in Gilman _v._ Philadelphia,[346] decided in 1866. "Commerce includes navigation. The power to regulate commerce comprehends the control for that purpose, and to the extent necessary, of all the navigable waters of the United States which are accessible from a State other than those in which they lie. For this purpose they are the public property of the nation, and subject to all requisite legislation by Congress. This necessarily includes the power to keep them open and free from any obstruction to their navigation, interposed by the States or otherwise; to remove such obstructions when they exist; and to provide, by such sanctions as they may deem proper, against the occurrence of the evil and for the punishment of offenders. For these purposes, Congress possesses all the powers which existed in the States before the adoption of the national Const.i.tution, and which have always existed in the Parliament in England."[347]

Thus Congress was within its powers in vesting the Secretary of War with power to determine whether a structure of any nature in or over a navigable stream is an obstruction to navigation and to order its abatement if he so finds.[348] Nor is the United States required to compensate the owners of such structures for their loss, since they were always subject to the servitude represented by Congress's powers over commerce; and the same is true of the property of riparian owners which is damaged.[349] And while it was formerly held that lands adjoining nonnavigable streams were not subject to the above mentioned servitude,[350] this rule has been impaired by recent decisions;[351]

and at any rate it would not apply as to a stream which had been rendered navigable by improvements.[352]

In exercising its power to foster and protect navigation Congress legislates primarily on things external to the act of navigation. But that act itself and the instruments by which it is accomplished are also subject to Congress's power if and when they enter into or form a part of "commerce among the several States." When does this happen? Words quoted above from the Court's opinion in the Gilman case answered this question to some extent; but the decisive answer to it was returned five years later in the case of The "Daniel Ball."[353] Here the question at issue was whether an act of Congress, pa.s.sed in 1838 and amended in 1852, which required that steam vessels engaged in transporting pa.s.sengers or merchandise upon the "bays, lakes, rivers, or other navigable waters of the United States," applied to the case of a vessel which navigated only the waters of the Grand River, a stream which lies entirely in the State of Michigan. Argued counsel for the vessel: "The navigable rivers of the United States pa.s.s through States, they form their boundary lines, they are not in any one State, nor the exclusive property of any one, but are common to all. To make waters navigable waters of the United States, some other incident must attach to them besides the territorial and the capability for public use. This term contrasts with _domestic_ waters of the United States, and implies, not simply that the waters are public and within the Union, but that they have attached to them some circ.u.mstance that brings them within the scope of the sovereignty of the United States as defined by the Const.i.tution." Then as a sort of _reductio ad absurdum_ counsel added: "* * * if merely because a stream is a highway it becomes a navigable water of the United States, in a sense that attaches to it and to the vessels trading upon it the regulating control of Congress, then every highway must be regarded as a highway of the United States, and the vehicles upon _it_ must be subject to the same control. But this will not be a.s.serted on the part of the Government."[354] The Court answered: "In this case it is admitted that the steamer was engaged in s.h.i.+pping and transporting down Grand River, goods destined and marked for other States than Michigan, and in receiving and transporting up the river goods brought within the State from without its limits; * * * So far as she was employed in transporting goods destined for other States, or goods brought from without the limits of Michigan and destined to places within that State, she was engaged in commerce between the States, and however limited that commerce may have been, she was, so far as it went, subject to the legislation of Congress. She was employed as an instrument of that commerce; for whenever a commodity has begun to move as an article of trade from one State to another, commerce in that commodity between the States has commenced."[355] Turning then to counsel's _reductio ad absurdum_, the Court added: "We answer that the present case relates to transportation on the navigable waters of the United States, and we are not called upon to express an opinion upon the power of Congress over interstate commerce when carried on by land transportation. And we answer further, that we are unable to draw any clear and distinct line between the authority of Congress to regulate an agency employed in commerce between the States, when the agency extends through two or more States, and when it is confined in its action entirely within the limits of a single State. If its authority does not extend to an agency in such commerce, when that agency is confined within the limits of a State, its entire authority over interstate commerce may be defeated. Several agencies combining, each taking up the commodity transported at the boundary line at one end of a State, and leaving it at the boundary line at the other end, the Federal jurisdiction would be entirely ousted, and the const.i.tutional provision would become a dead letter."[356] In short, it was admitted inferentially, that the principle of the decision would apply to land transportation; but the actual demonstration of the fact still awaited some years.[357] See _infra_.

HYDROELECTRIC POWER

As a consequence, in part, of its power to forbid or remove obstructions to navigation in the navigable waters of the United States, Congress has acquired the right to develop hydroelectric power, and the ancillary right to sell it to all takers. By a long-standing doctrine of Const.i.tutional Law the States possess dominion over the beds of all navigable streams within their borders,[358] but on account of the servitude which Congress's power to regulate commerce imposes upon such streams, they are practically unable, without the a.s.sent of Congress, to utilize their prerogative for power development purposes. Sensing, no doubt, that controlling power to this end must be attributed to some government in the United States and that "in such matters there can be no divided empire,"[359] the Court held, in 1913, in United States _v._ Chandler-Dunbar Co.,[360] that in constructing works for the improvement of the navigability of a stream, Congress was ent.i.tled, as a part of a general plan, to authorize the lease or sale of such excess water power as might result from the conservation of the flow of the stream. "If the primary purpose is legitimate," it said, "we can see no sound objection to leasing any excess of power over the needs of the government. The practice is not unusual in respect to similar public works constructed by State governments."[361]

Congress's Jurisdiction Over Navigable Streams Today

Since the Chandler-Dunbar case the Court has come, in effect, to hold that it will sustain any act of Congress which purports to be for the improvement of navigation whatever other purposes it may also embody; nor does the stream involved have to be one which is "navigable in its natural state." Such, at least, seems to be the algebraic sum of its holdings in Arizona _v._ California,[362] decided in 1931, and in the United States _v._ Appalachian Electric Power Co.,[363] decided in 1940.

In the former the Court, speaking through Justice Brandeis, said that it was not free to inquire into the motives "which induced members of Congress to enact the Boulder Canyon Project Act," adding: "As the river is navigable and the means which the Act provides are not unrelated to the control of navigation, * * *, the erection and maintenance of such dam and reservoir are clearly within the powers conferred upon Congress.

Whether the particular structures proposed are reasonably necessary, is not for this Court to determine. * * * And the fact that purposes other than navigation will also be served could not invalidate the exercise of the authority conferred, even if those other purposes would not alone have justified an exercise of congressional power."[364] And in the Appalachian Electric Power case, the Court, abandoning previous holdings which had laid down the doctrine that to be subject to Congress's power to regulate commerce a stream must be "navigable in fact," said: "A waterway, otherwise suitable for navigation, is not barred from that cla.s.sification merely because artificial aids must make the highway suitable for use before commercial navigation may be undertaken,"

provided there must be a "balance between cost and need at a time when the improvement would be useful. * * * Nor is it necessary that the improvements should be actually completed or even authorized. The power of Congress over commerce is not to be hampered because of the necessity for reasonable improvements to make an interstate waterway available for traffic. * * * Nor is it necessary for navigability that the use should be continuous. * * * Even absence of use over long periods of years, because of changed conditions, * * * does not affect the navigability of rivers in the const.i.tutional sense."[365]

Purposes for Which Power May be Exercised

Furthermore, the Court defined the purposes for which Congress may regulate navigation in the broadest terms, as follows: "It cannot properly be said that the const.i.tutional power of the United States over its waters is limited to control for navigation. * * * That authority is as broad as the needs of commerce. * * * Flood protection, watershed development, recovery of the cost of improvements through utilization of power are likewise parts of commerce control."[366] These views the Court has since reiterated.[367] Nor is it by virtue of Congress's power over navigation alone that the National Government may develop super-power. Its war powers and power of expenditure in furtherance of the common defense and the general welfare supplement its powers over commerce in this respect.[368]

Congressional Regulation of Land Transportation

EARLY ACTS; FEDERAL PROVISION FOR HIGHWAYS

The acquisition and settlement of California stimulated Congress some years before the Civil War to authorize surveys of possible routes for railway lines to the Pacific; but it was not until 1862, in the midst of war, with its menace of a general dissolution of the Union, that more decisive action was taken. That year Congress voted aid in the construction of a line from Missouri River to the Pacific; and four years later it chartered the Union Pacific Company.[369] First and last, litigation growing out of this type of legislation has resulted in the establishment in judicial decision of the following propositions: _First_, that Congress may provide highways for interstate transportation (earlier, as well as today, this result might have followed from Congress's power of spending, independently of the commerce clause, as well as from its war and postal powers, which were also invoked by the Court in this connection); _second_, that it may charter private corporations for the purpose of doing the same thing; _third_, that it may vest such corporations with the power of eminent domain in the States; and _fourth_, that it may exempt their franchises from State taxation.[370]

BEGINNINGS OF FEDERAL RAILWAY REGULATION

Congress began regulating the railroads of the country in a more positive sense in 1866. By the so-called Garfield Act of that year "every railroad company in the United States, whose road is operated by steam," was authorized by Congress "* * * to connect with roads of other States so as to form continuous lines for the transportation of pa.s.sengers, freight, troops, governmental supplies, and mails, to their destination";[371] while by an act pa.s.sed on July 24 of the same year it was ordered, "in the interest of commerce and the convenient transmission of intelligence * * * by the government of the United States and its citizens, that the erection of telegraph lines shall, so far as State interference is concerned, be free to all who will submit to the conditions imposed by Congress, and that corporations organized under the laws of one State for constructing and operating telegraph lines shall not be excluded by another from prosecuting their business within its jurisdiction, if they accept the terms proposed by the National Government for this national privilege."[372]

Another act of the same period provided that "no railroad company within the United States whose road forms any part of a line of road over which cattle, sheep, swine, or other animals are conveyed from one State to another, or the owners or masters of steam, sailing, or other vessels carrying or transporting cattle, sheep, swine, or other animals from one State to another, shall confine the same in cars, boats, or vessels of any description, for a longer period than twenty-eight consecutive hours, without unloading the same for rest, water, and feeding, for a period of at least five consecutive hours, unless prevented from so unloading by storm or other accidental causes."[373]

REGULATION OF RAILROAD RATES: THE INTERSTATE COMMERCE COMMISSION