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court was that the power was as inseparable from the Federal government as from the State government. That it was the, offspring of political necessity, and could be used in the same manner by the general government, over the subjects committed to it as by the State over the subjects to which its sovereignty extends.1

sustain mercantile corporations engaged in interstate commerce under Federal incorporation, yet the argument is none the less forceful to support the lat ter corporation as distinguished from the former.

The opinion in McCulloch v. Maryland is of striking emphasis when applied to the question of the power of Congress to create interstate trading corWhen, as in the foregoing language porations. power quoted, it becomes apparent that a corporation is a proper means or instrumentality to aid or carry out interstate commerce, the power to so create the same by proper legislation is plainly conferred. The wellknown canon of Marshall is here appropriate:

This would include the right to delegate such to a corporation the same as might be done by the appropriate legislation by the general assemblies of the States.

There is no longer any room for contention but that Congress has the power to create corporations as interstate carriers. That proposition could be maintained without recourse to the commerce clause which we are alone considering.

AS TO MERCANTILE OR TRADING CORPORATIONS.

In the history of the establishment of Federal power to incorporate governmental agencies, it has been claimed that the advocates of the national system for the organization of private mercantile corporations find no assistance.

"Let the thing be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are constitutional."!

The following language from the same opinion would seem to exclude all doubt regarding the question:

"That a corporation must be considered as a means not less usual, nor of higher dignity, nor more requiring a particular specification, than other means, has been sufficiently proved. If we look to the

It may be conceded that Congress has no power to create a manufacturing corporation which does not engage in interstate commerce. Manufactory, in and of itself, is local and not interstate. The transporta-origin of corporations, to the manner in which they tion of manufactured articles becomes commerce the same as the transportation of natural products may become commerce. The proceedings of the convention in which the Constitution was framed clearly indicate the purpose to vest in the Federal government full control, not merely over traffic, but over all intercommunication between the colonies themselves, or either of them, and the outside world. The power which each constituent State had over its external commercial relations passed thereby to the Federal government. Madison held that the purpose was "to empower Congress to legislate in all cases to which the separate States are incompetent, or, in which the harmony of the United States may be interrupted by the exercise of individual legislation."1 This power was yielded by the States and vested in the general government, and was the power of each constituent State over its external relations.

It was commerce itself which had the supreme consideration of the convention. The means or method employed for carrying commerce, and the instrumentalities and forms of organization by which com merce should be carried on, were merely incidental to the consideration of the main proposition which was incorporated in section 8 of Article 1.

While both commerce and the postal service, in cluding postoffices and post roads, are placed within the power of Congress, and while a Federal corporation engaged as an interstate carrier can be sustained upon added grounds to those upon which we would

1 Kohl v. U. S., 91 U. S. Rep. 367. 12d Madison's Papers, 859.

have been framed in that government from which we have derived most of our legal principles and ideas, or to the uses to which they have been applied, we find no reason to suppose that a Constitution, omitting, and wisely omitting, to enumerate all the means for carrying into execution the great powers vested in government, ought to have specified this. Had it been intended to grant this power as one which should be distinct and independent, to be exercised in any case whatever, it would have found a place among the enumerated powers of the government. But be ing considered merely as a means, to be employed only for the purpose of carrying into execution the given powers, there could be no motive for particularly mentioning it."

The report of the House committee to whom was assigned this subject in the first session of the 59th Congress, sustained this power in report No. 2,491 in the following language:

Corporations are created by the sovereign, whether the sovereign be the United States or a State. In this regard the power of Congress is limited, while the power of the State is unlimited. Whenever, under the Constitution, Congress can exercise a power, Congress can create a corporation to carry that power into execution; and to the exclusion of the States create corporations in the District of

14th Wheaton, 316; Tucker on the Constitution of the United States, 1, 361, 367; Legal tender cases, 16 Wallace, 36; Thorp on Constitution of the United States, 11, 487; Miller on Constitution of United States, 143, 144, 231, Note.

Columbia and all territory of the United States, and in all countries subject to the jurisdiction of the United States. Otherwise, all corporations are created by the States under the reserve power of the States. At common law all public corporations are subject to the visitorial power of the Legislature, and all private corporations are subject to the visitorial power of the courts. Congress has no visitorial over corporations created by a State."

If this be an accurate presentation of the law upon this question, and many eminent lawyers were members of this committee, it further sustains the position that as to all powers committed to Congress, to which a corporation might be a necessary or proper instrumentality or agency to carry that power into execution, it lies within the constitutional authority of Congress to create the same.

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Your attention is directed to the following quoted portion of that report: "Congress has no visitorial power over corporations created by a State." If that be true, it furnishes abundant reason alone why Congress should create corporations for the purpose of interstate commerce. I submit it as a debatable question, whether Congress has visitorial power over corporations created by a State which are engaged in interstate commerce, although the contrary seems to be implied in Hale v. Henkel, 201 U. S.

By the act of Congress, February 14, 1903, entitled "An act to establish the department of commerce and labor," section 6 thereof provides for a bureau of corporations and a commissioner of corporations, as a branch of that department, in the following language:

"That there shall be in the department of Commerce and Labor a bureau to be called the Bureau of Corporations, and a commissioner of corporations who shall be the head of said bureau, to be appointed by the President, who shall receive a salary of five thousand dollars per annum. There shall also be in said bureau a deputy commissioner who shall receive a salary of three thousand five hundred dollars per annum, and who shall in the absence of the commissioner act as, and perform the duties of, the commissioner of corporations, and who shall also perform such other duties as may be assigned to him by the Secretary of Commerce and Labor or by said commissioner. There shall also be in the said bureau a chief clerk and such special agents, clerks and other employees as may be authorized by law.

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The said commissioner shall have power and au thority to make, under the direction and control of the Secretary of Commerce and Labor, diligent investigation into the organization, conduct and management of the business of any corporation, joint stock company or corporate combination engaged in commerce among the several States and with foreign nations excepting common carriers subject to 'An act to regulate commerce,' approved February 4, 1887, and to gather such information and data as

will enable the President of the United States to make recommendations to Congress for legislation for the regulation of such commerce, and to report such data to the President from time to time as he shall require, and the information so obtained or as much thereof as the President may direct shall be made public.

"In order to accomplish the purposes declared in the foregoing part of this section, the said commissioner shall have and exercise the same power and authority in respect to corporations, joint stock companies and combinations subject to the provisions hereof, as is conferred on the Interstate Commerce Commission in said 'Act to regulate commerce' and the amendments thereto in respect to common carriers so far as the same may be applicable, including the right to subpoena and compel the attendance and testimony of witnesses and the production of documentary evidence and to administer oaths. All the requirements, obligations, liabilities and immunities imposed or conferred by said 'Act to regulate commerce' and by An act in relation to testimony before the Interstate Commerce Commission,' and so forth, approved February 11, 1893, supplemental to said 'Act to regulate commerce,' shall also apply to all persons who may be subpoenaed to testify as witnesses or to produce documentary evidence in pursuance of the authority conferred by this section.

"It shall also be the province and duty of said bureau, under the direction of the Secretary of Commerce and Labor, to gather, compile, publish and supply useful information concerning corporations doing business within the limits of the United States as shall engage in interstate commerce or in commerce between the United States and any foreign country, including corporations engaged in insurance, and to attend to such other duties as may be hereafter provided by law."

In the creation of the bureau of corporations, Congress recognized its right to create a commissioner with authority to investigate the organization, conduct and management of the business of any corporation engaged in commerce among the several States, reserving from the jurisdiction of the commissioner all common carriers, for the reason that they were embraced in the interstate commerce act of Febru ary 4, 1887. Equal power is conferred upon the commissioner of corporations with regard to private corporations engaged in interstate commerce as is conferred upon the Interstate Commerce Commission with regard to common carriers. This evidences the view of Congress, at least in part, regarding its power over corporations created by States and engaged in commerce between the States. Its right to investigate into the "organization, conduct and management of any corporation," savors very strongly of visitorial powers. The bureau and commissioner of corporations have no power under this act to regulate such corporations, but their authority seems to

be limited to that of gathering "such information and data as will enable the President of the United States to make recommendations to Congress for legislation for the regulation of such commerce." These powers should be enlarged, as hereafter shown.

II.

Has Congress power to deny to the States the creation of corporations that shall engage in interstate commerce or to prescribe that such corporations, if created by the States, must comply with the requisites of a Federal license system?

If the proposition be successfully maintained that Congress has the right to incorporate companies to engage in interstate commerce, it would seem to follow as a necessary corollary that it has the authority, if desired, to prohibit the States from doing so. There is no division of authority between the States "to regulate commerce." Such authority is vested in Congress alone. It does not permit the States to enact legislation that will in any degree hinder, interfere with or destroy such commerce.

Hamilton's view was that the government of the Union is empowered to pass all laws, and to make all regulations, which have relation to the objects committed to its charge. This must be true if the Constitution, in the language of Marshall, "be not a splendid bauble."

The exclusiveness of the jurisdiction of Congress over the interstate commerce is most strongly set forth in Gibbons v. Ogden.1 This has justly been considered to be one of the greatest of Marshall's opinions. The arguments presented were by the foremost lawyers of the country. Daniel Webster and Attorney-General William Wirt appeared for the appellant, Thomas J. Oakley and Robert Emmett appeared for the respondent. The question involved was the constitutionality of an act of the General Assembly of New York giving to Messrs. Livingston and Fulton and their assigns the exclusive right for a term of years to navigate the waters of that State by steamboats. In Webster's argument the following propositions were announced and sustained by the opinion of the learned Chief Justice:

"Some powers are holden to be exclusive in Congress, from the use of exclusive words in the grant; others, from the prohibition of the States to exercise similar powers; and others, again, from the nature of the powers themselves. It has been by this mode of reasoning that the court has adjudicated on many important questions, and the same mode is proper here. And as some powers have been holden exclusive, and others not so, under the same form of expression, from the nature of the different powers respectively; so, where the power, on any one subject is given in general words, like the powers to regulate commerce, the true method of construction 19th Wheaton Rep. I., 240.

would be, to consider of what parts the grant is composed, and which of those, from the nature of the thing, ought to be considered exclusive."

The power of commercial regulation, it was held, as a whole, incapable of division, and therefore exclusive of a like power in a co-ordinate sovereignty.

In the body of the opinion the Chief Justice used the following language:

"It has been contended by the counsel for the appellant, that as the word to 'regulate' implies in its nature, full power over the thing to be regulated, it excludes, necessarily, the action of all others that would perform the same operation on the same thing. That regulation is designed for the entire result, applying to those parts which remain as they were as well as to those which are altered. It produces a uniform whole, which is as much disturbed and deranged by changing what the regulating power designs to leave untouched, as that on which it has. operated. There is great force in this argument, and the court is not satisfied that it has been refuted." (Pages 199-209.)

In the opinion Mr. Justice Johnson concurred, using the following language:

"The power of a sovereign State over commerce, therefore, amounts to nothing more than a power to limit and restrain it at pleasure. And since the power to prescribe the limits to its freedom necessarily implies the power to determine what shall remain unrestrained, it follows, that the power must be exclusive; it can reside but in one potentate; and hence, the grant of this power carries with it the whole subject, leaving nothing for the State to act upon." (Page 227.)

The argument of Webster, the opinion of the Chief Justice, and the concurring opinion of Justice Johnson, all emphasize that the power to regulate commerce implies in its nature full and exclusive power thereover and excludes the action of all other sov ereignties, governments or persons that would attempt in any manner to regulate the same. The proposition plainly apparent is, that if necessary for the regulation of commerce, and to provide equal opportunities for all to engage therein, the power abides in Congress to create corporations as instrumentalities therefor, and to deny to the States the right to create the same; and there is no constitutional reason why each and every State can not be excluded from the creation of corporations of this nature the same as they could be excluded from in any manner regulating commerce between States.

As heretofore shown, when the government of the Union was brought into existence it found a system existing, whereby the thirteen sovereign States were engaged, under appropriate legislation, in creating corporations for various purposes. Among other purposes were mercantile and trading pursuits. These,

19th Wheaton.

as heretofore shown, were not limited in their sphere of operations to the respective States creating them, but carried on their pursuits, practices and commerce between the States and even with foreign nations. The failure of Congress to adopt any measure looking toward a denial of the right in the States to create such corporations does not argue the inability or lack of authority in Congress so to do. It has left this subject with the States permissibly, until it should think proper to interpose. This could not operate as an acknowledgment on the part of Congress that a State may rightfully regulate commerce, or that it could continue to exercise the authority to create corporations to engage in a Federal purpose after Congress had denied the right so to do. The power so exercised is very similar to that announced by the Supreme Court of the United States, of the power of the States to enact and enforce quarantine laws for the safety and protection of the health of their inhabitants.1

In that case the court said:

"The power exists (in the States) until Congress has acted, to incidentally regulate by health and quarantine laws, even though interstate and foreign commerce is affected. When Congress has acted the legislation thus provided for by the States becomes null and void."

Again it was said by the great chief in Gibbons v. Ogden, as pertinent to this question:

"It is obvious that the government of the Union, in the exercise of its express powers, that, for example, of regulating commerce with foreign nations and among the States, may use means that may also be employed by a State in the exercise of its acknowledged powers; that, for example, of regulating commerce within the State. If Congress license vessels to sail from one port to another in the same State, the act is supposed to be necessarily incidental to the power expressly granted to Congress, and implies no claim of a direct power to regulate the purely internal commerce of a State, or to act directly on its system of police. So, if a State, in passing laws on subjects acknowledged to be within its control, and with a view to those subjects, shall adopt a measure of the same character with one which Congress may adopt, it does not derive its authority from the particular power which has been granted, but from some other which remains with the State, and may be executed by the same means. All expe

rience shows that the same measures, or measures scarcely distinguishable from each other, may flow from distinct powers; but this does not prove that the powers themselves are identical. Although the means used in their execution may sometimes approach each other so nearly as to be confounded,

1 Compagnie Francaise, etc., v. Board of Health, 186 U. S. 380.

there are other situations in which they are sufficiently distinct to establish their individuality."

There is as manifest inconsistency in leaving the power to create corporations, which may engage in interstate commerce, to be exercised by the States, as there would be in leaving to them the effective powers by which "the general defense" is to be provided for. To approach the proposition from another point of view, we have as an existing law upon the statute books of this State, statutes authorizing banks to issue, having authority to issue "bonds, notes and bills payable to bearer or payable to order" to circulate as money. Congress imposed a tax upon such circulation which left the power still unchallenged but made it unprofitable for banks of that character to any longer operate under such franchise. It drove from circulation all "wild cat" currency, and supplanted it with a currency that can say, in the language of Colonel Ingersoll, "I know that my Redeemer liveth." Does any one deny the power or authority of Congress to enact similar legislation with regard to "wild cat" corporations engaged in interstate commerce?

the incorporation of the Bank of the United States, It has been urged, as it was urged in the case of that it was the intention of Congress to leave the organization of trading or commercial companies exclusively with the States, and that the fathers never intended that Congress should have the power to create such companies. This would deprive the general government of using the corporation as an instrumentality in interstate commerce unless it left the creation thereof with the States, and thereby make the general government dependent upon the State government for the agency most beneficial to such commerce. It seems to me that the answer that Marshall has given to this proposition in McCulloch v. Maryland, in its essence and in its potentiality, must be regarded as the climax of pure reasoning.

"To impose on it (the Federal government) the necessity of resorting to means it could not control, which another government (the States) may furnish or withhold, would render its course precarious, the result of its measures uncertain, and create a dependency on other governments which might disappoint its most important designs and is incompatible with the language of the Constitution."

Aud further, speaking of what he considered the view of the authors of the Federalist as to the su premacy of the general government, said:

"Had the authors of those excellent essays been asked whether they contended for that con truction of the Constitution which would place within the reach of the State those measures which the government might adopt for the execution of its powers, no man who has read their instructive pages will hesi

1 Prentice's Federal Power over Carriers and Corporations, p. 146.

tate to admit that their answer must have been in realize dividends thereon from operations is a fraudthe negative."

III.

The results to be obtained by the adoption of either a Federal incorporation act or Federal license plan. If the proposition as to the power of Congress has been established the remainder becomes a mere question of expediency. This brings us to the consideration of corporate control of interstate commerce and the inability of the individual States to effectively regulate such corporations. Vices have grown up attendant upon such corporations, which are undoubtedly a burden upon commerce, and in the attempted regulation of these creatures of other State governments than our own State, we are met with the denial of right to forbid them to do business within our borders, because such right would be an interference with interstate commerce, which is beyond the jurisdiction of the State to control. They thus shield themselves under the commerce, laws from the process of the State other than the one creating them, and override the boundaries of States with greater privileges than are conceded to domestic corporations.

The President, in his speech delivered at Harrisburg on the 4th of last October, speaking of certain evils of this character, expressed the following view:

"In some cases this governmental action must be exercised in the several States. In yet others it has become increasingly evident that no efficient State action is possible, and that we need, through execu tive action, through legislation and through judicial interpretation, a construction of law to increase the power of the Federal government."

I would not summon to our assistance "judicial interpretation and construction of law" in order to increase the power of the Federal government, but I would rely entirely upon the legislative branch, which, in its true relation to government, must always be the source and measure of power.

The conspicuous features of the corporations of which I speak are these: over-capitalization, lack of publicity of operation, discrimination in prices to destroy competition, insufficient personal responsibility of officers who direct the corporate management, tendency to monopoly and lack of appreciation in their management of their true relations to the people for whose benefit they are permitted to exist.

Excessive capitalization is the greatest of these evils, it is the possibility of it that furnishes the temptations and opportunities for most of the others. Over-capitalization does not necessarily mean large capitalization or capitalization adequate for the greatest undertaking. It is the imposition upon an undertaking of a liability without corresponding assets to represent it. Therefore, over-capitalization is a fraud upon those who contribute the real capital, either originally or by purchase, and the efforts to

ulent imposition of a burden upon commerce in which they are engaged.

When a property is capitalized at ten times its value and sold to the public, it is rational to suppose that its purchasers will exert every effort to keep its earnings up to the basis of its capitalization. The over-capitalized securities entering into the general budget of the country are bought and sold, rise and fall, and they fluctuate between wider ranges, and are more sensitive in proportion as they are removed from real values, and are liable to be storm centers of financial disturbances of far-reaching consequence. They also, in the same proportion, increase the temptation to mismanagement and manipulation by corporate administrators.

Corporations depending upon any statutory law for their existence or privileges, trading between the States, should thus be required by some Federal system to do business in each State and locality upon precisely the same terms and conditions. There should be no discrimination in prices, in preferences or in service.

Such corporations could be and should be compelled to keep the avenues of commerce free and open to all upon the same terms and to observe the law against stifling competition. Those corporations upon which the people depend for the necessaries of life should be required to conduct their business so as to regularly and reasonably supply the public needs. They could by such Federal system be made subject to visitorial supervision and compelled to yield full and accurate information as to their operations. These should be made regularly at reasonable intervals, as now required of national banks. Secrecy in the conduct and results of operations being unfair to the minority or the non-managing stockholders, should be prohibited by law.

The President, in his Decoration Day address at Indianapolis, demanded that more ample power be vested in the Interstate Commerce Commission or other Federal body, and what he has said with regard to the railways doing an interstate business is likewise true with regard to the corporations engaged in interstate commerce:

It

"There must be vested in the Federal government a full power of supervision and control over the railways doing interstate business; a power in many respects analogous to and as complete as that the government exercises over the national banks. must possess the power to exercise supervision over the future issuance of stocks and bonds, either through a national incorporation (which I should prefer) or in some similar fashion, such supervision to include the frank publicity of everything which would-be investors and the public at large have a right to know. The Federal government will thus be able to prevent all over-capitalization in the future; to prevent any man hereafter from plundering others

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