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In this case it was admitted by the demurrer that the plaintiff was the selling agent of a combination of wall paper manufacturers and that the defendants were virtually compelled to sign a jobbers agreement which bound them to buy from the plaintiff at fixed prices the paper needed by them, and not to sell the same at lower prices or upon better terms than these or upon which the plaintiff sold to dealers other than jobbers."

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§ 368. The Commodities Clause of the Hepburn Act of 1906. By section 1 of the so-called Hepburn Railway Rate Act of 1906 it is provided that " From and after May first, nineteen hundred and eight, it shall be unlawful for any railroad company to transport from any State, Territory, or the District of Columbia, to any other State, Territory, or the District of Columbia, or to any foreign country, any article of commodity, other than timber and the manufactured products thereof, manufactured, mined, or produced by it, or under its authority, or which it may own in whole, or in part, or in which it may have any interest, direct or indirect, except such articles or commodities as may be necessary and intended for its use in the conduct of its business as a common carrier."

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56 The court quote with approval the following language of the lower court: "The conspiring mills were situated in many States. The consumers [of wall paper] embraced the whole citizenship of the United States. The jobbers and wholesalers, who were to be coerced into contracts to buy their entire demands from the Continental Wall Paper Company or be driven out of business, were in every State. Before the combination each of the combining companies was engaged in both state and interstate commerce. The freedom of each, with respect to prices and terms, was restrained by the agreement, and interstate commerce directly affected thereby, as well as by the enhancement of prices which resulted. A more complete monopoly in an article of universal use has probably never been brought about. It may be that the wit of man may yet devise a more complete scheme to accomplish the stifling of competition. But none of the shifts resorted to for suppressing freedom of commerce and securing undue prices, shown by the reported cases, is half so complete in its details. None of the schemes with which this may be compared is more certain in results, more widespread in its operation, and more evil in its purposes. It must fall within the definition of a restraint of trade,' whether we confine ourselves to the common-law interpretation of that term, or apply that given to the term as used in the federal act.”

57 U. S. Stat. at L. 585.

The constitutionality of this "Commodities Clause" was sustained by the Supreme Court in United States v. Delaware & H. Co., decided May 3, 1909.57a The objections that it was in violation of the Fifth Amendment to the Constitution and that it attempted the regulation of a matter not directly concerned with interstate commerce were overruled. It was, however, declared that the ownership by a railway carrier of stock in bona fide corporations manufacturing, producing or owning the commodity carried, is not the "interest direct or indirect" in such commodity, forbidden by the Hepburn Act.

§ 369. Federal Control of Corporations Under the Commerce Clause.

The Federal Government has the undoubted power itself to own and operate, or to incorporate companies for the construction and operation of roads, bridges, and other instrumentalities of interstate commerce.58 This authority is derived not only from the Commerce Clause but from the authority of the Federal Government to establish post-offices and post-roads, and from its military powers. And, incidental to the exercise of these powers, the right of eminent domain may be exercised by the Federal Government or by corporations chartered by it, within the States and Territories.59

In California v. Central Pacific Ry. Co. the court, after reviewing legislative and judicial precedents, say: "It cannot at the present day be doubted that Congress, under the power to regulate commerce among the several States, as well as to provide for the postal accommodations and military exigencies, had authority to pass these laws. The power to construct, or to authorize individuals or corporations to construct national highways and bridges from State to State, is essential to the complete control

57a 213 U. S. 366; 29 Sup. Ct. Rep. 527; 53 L. ed. 836.

58 California v. Central Pacific Ry. Co., 127 U. S. 1; 8 Sup. Ct. Rep. 1073; 32 L. ed. 150; Monongahela Navigation Co. v. United States, 148 U. S. 312; 13 Sup. Ct. Rep. 622; 37 L. ed. 463; Luxton v. North River Bridge Co., 153 U. S. 525; 14 Sup. Ct. Rep. 891; 38 L. ed. 808.

59 Kohl v. United States, 91 U. S. 367; 23 L. ed. 449. 60 127 U. S. 1; 8 Sup. Ct. Rep. 1073; 32 L. ed. 150.

and regulation of interstate commerce. Without authority in Congress to establish and maintain such highways and bridges, it would be without authority to regulate one of the most important adjuncts of commerce." This language is quoted with approval in Luxton v. North River Bridge Co.61

In Wilson v. Shaw62 the authority of the United States to construct the interoceanic canal across the territory ceded by the Republic of Panama, is declared.

§ 370. Power of the Federal Government to Charter Companies to Do a Manufacturing Business Within the States.

It has been argued that the Federal Government has the constitutional power to charter companies not only to do an interstate carrier business, but, as incidental thereto, to manufacture and produce the goods which they transport. Some support for the doctrine is claimed from the cases in which it has been held that the National Banks chartered primarily to serve a federal function, may also be authorized, as incidental thereto, to do a general banking business within the States. But it is by no means sure that these bank cases will be held to furnish this support. In the case of the National Banks it will be remembered that it was held that it was not practicable for them to exist as banks and to perform the federal functions which they were created to perform, unless, at the same time, they were permitted to do a general banking business. As to interstate carrier companies, however, it would seem that there is not the same necessity that they should be permitted to carry on a manufacturing business. Indeed, by the federal Hepburn Act of 1906, interstate railways are expressly forbidden to have a direct or indirect interest in the commodities which they transport.

It would seem, however, that federally incorporated interstate carrier companies may be authorized to carry on also an intrastate carrier business. Here the connection between the two would seem to be as close as that between the general banking business and the purely federal functions of the National Banks.

61 153 U. S. 525; 14 Sup. Ct. Rep. 891; 38 L. ed. 808. 62 204 U. S. 24; 27 Sup. Ct. Rep. 233; 51 L. ed. 351.

It was argued by Mr. Garfield, when Commissioner of Corporations, that Congress may grant charters to manufacturing companies whose only connection with interstate commerce would be that their products would become articles of interstate commerce, the reasoning being that though, as established by the Knight case, the production of goods intended for interstate commerce, has no direct connection with and does not imply interstate commerce, it does not follow that interstate commerce does not imply production. "On the contrary, it is submitted," declares Commissioner Garfield, " "that it does imply production to such an extent that the power to produce is a necessary constitutional incident of the powers of such proposed interstate commerce corporations. Production is an indispensable prerequisite of commerce, whether interstate or otherwise. Production may exist without commerce, certainly without a specified form of commerce, such as interstate On the other hand interstate commerce cannot exist without production. . . All the powers for the transaction of commerce might be granted by federal franchise, and yet they would be wholly null, valueless, and inoperative unless there were also means of bringing into existence the subjects upon which such powers shall act." This being taken as established, Mr. Garfield has no difficulty in declaring that the States would be without the constitutional power to prohibit or interfere with production by such companies.

commerce.

Certainly the reasoning here is by no means convincing. Upon the same ground it might be argued that because paper and ink, pencils and pens, are necessary for the writing of letters, and letters are necessary if there is to be first-class mail matter, the Federal Government may control the manufacture of paper and ink, pencils and pens. And by a similar argument the authority of the Federal Government could be extended over the entire manufacturing and industrial interests of the country.

The case of the National Banks furnishes no support whatever for Mr. Garfield's position. The efficiency of interstate carrier companies, as transportation agencies, is wholly independent of the conditions under which, or the persons or corporations by

which, the goods which they carry are produced. Of course, if no goods are produced there will be no interstate transportation. But this will be so because there will be no need for such transportation. Goods are not produced in order that commerce may exist. Commerce, in short, is not an end in itself.

According to Mr. Garfield's argument which treats commerce as an end in itself it might be argued that the production of commodities should be increased not so that a need for them as articles of consumption could be satisfied, but simply and solely to supply larger train-loads for the interstate carrier companies. The absurdity of this is manifest.

§ 371. Federal Permission to State Manufacturing Companies to Engage in Interstate Commerce.

The denial to Congress of the power to charter companies empowered to do a manufacturing business within the States does not carry with it the denial of a power to require of individuals. or of state-chartered companies a federal permission to engage in interstate commerce whether as carriers or as shippers of goods across state borders. The right to engage in interstate commerce or to make use of interstate commercial instrumentalities is a federal right, and, it would seem, the plenitude of control which the Constitution grants to Congress with respect to the regulation of this right carries with it the authority to attach such conditions to its enjoyment as may be found fit. The case of Champion v. Ames has illustrated the extent of this federal power to exclude commodities from interstate trade. Thus while Congress may not be able to charter manufacturing companies, which the States may not exclude from their borders, it may refuse to individuals or state-chartered concerns the right to ship their products across state lines except upon certain conditions, which conditions may be so stated as to bring the companies and the individuals, so far as they make use of interstate commerce agencies, within a rigorous federal control.63

63 Cf. Veazie Bank v. Fenno, 8 Wall. 533; 19 L. ed. 482; United States v. Marigold, 9 How. 560; 13 L. ed. 257; United States v. Joint Traffic Associa tion, 171 U. S. 505; 19 Sup. Ct. Rep. 25; 43 L. ed. 259; Champion v. Ames, 188 U. S. 321; 23 Sup. Ct. Rep. 321; 47 L. ed. 492.

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