Congressional Control of Monopolies and
Commerce.
It may be assumed that manipulators of railroads and mo¬
nopolies who violate the existing laws and public policies of
the country and those who partake of the benefits thereof, will
be opposed to any effective law to protect the public.
This paper is not therefore prepared primarily for their
edification, but is submitted for the consideration of those
who are interested in a correct solution of one of the greatest
problems that ever confronted a people, in the hope that some
valuable idea may be suggested.
The necessity of government control of interstate com¬
merce in all its ramifications to the end that it shall be un-
trammeled by any combination and that rates for carriage
shall be uniform and fair, and that monopolies of necessaries
shall be abolished, is so obvious that the only question is one
of method.
The essential features of the measure herein presented are
to supersede the present Interstate Commerce Commission by
the creation of a judicial tribunal inferior only to the United
States Supreme Court, composed of eleven judges who shall
serve for life as other United States judges, which court shall
have power to fix rates for interstate transportation and for
carrying the mails, with power to require reports from car¬
riers and others, subject to the act, and with power to prohibit
the use of the mails and of the instrumentalities of interstate
commerce to violators of the law.
It is submitted that the proposed act is clearly within the
plenary, and supreme power of Congres.s, delegated by the
2
constitution to regulate commerce with foreign nations and
among the several states, to establish postoffices and post-
roads, to raise and support armies and a navy, to lay and
collect direct taxes according to representation and duties,
imposts and excises, by uniform laws, to establish judicial
tribunals inferior to the Supreme Court, to make all needful
rules and regulations respecting the territory belonging to
the United States, and to make all laws which shall be neces¬
sary and proper'for carrying into execution the foregoing
powers.
The power of Congress to lay special or license taxes upon
business, occupations and the like, was conceded by the Su¬
preme Court in income tax cases. Pollock vs. Farmers' Loan
and Trust Company, 157 U. S. 429 and 158 U. S., 601, at
page 637, and has uniformly been sustained by that court
being considered as duties or excises, and valid if geograph¬
ically uniform.
License Tax Cases, 5 Wall. 462, 475,
In re Kolloch, 165 U. S. 526, 537;
Patton vs. Brady, 184 U. S., 608;
Knowlton vs. Moore, 178 U. S. 41.
This act proposes to lay a small license tax upon industrial
concerns having a capital employed of one million dollars
and over, and as an aid to levying the tax requires from them
full reports to the Government to be kept as public records.
As to what is "interstate commerce," within the meaning
of the constitutional grant to Congress, is well defined by nu¬
merous decisions of the Supreme Court, including the follow¬
ing, and cases therein cited :
In re Debs, 158 U. S., 564, 600;
United States vs. E. C. Knight Co., 156 U. S., i, 46;
3
■ United States vs. Trans-Missouri Freight ; Association,
i66, U. S.; 290, 343. ,
. United States vs. Joint'Traffic Association,. 171 U. S.,
505. 578; '■ V, ^ ■
Addyston Pipe and Steel Co. vs. United States, 175 U. S.,
211, 248.
And the definition of the term "interstate commerce" in
this act is based upon those decisions.
In the Knight case, 156 U. S., 13, the Supreme Court said :
"It will be perceived how far reaching the proposition
is that the power of dealing with a monopoly directly, may
be exercised by the General Government whenever interstate
or international commerce may be ultimately affected. The
regulation of commerce applies to the subjects of commerce
and not to matters of internal police. Contracts to buy, sell
or exchange goods to be transported among the several States,
the transportation and its instrumentalities, and articles
bought, sold or exchanged for the purposes of such transit
among the States, or put in the way of transit, may be reg¬
ulated."
In the Addyston Case, 175 U. S. 240, 241, 242, the Supreme
Court said, "that a combination simply to control manufac¬
ture was not a violation of tbe act of Congress, because such
a contract or combination did not directly control or affect
interstate commerce, but that contracts for the sale and trans¬
portation to other States of specific articles zvere proper sub¬
jects for regulation because they did form part of such com¬
merce." ;•***>!=
"As has frequently been said, interstate commerce consists
of intercourse and traffic between the citizens or inhabitants of
different States, and includes not only the transportation of
persons and property and the navigation of public waters for
that purpose, but also the purchase, sale and exchange of com¬
modities. Gloucester Ferry Co. v. Pennsylvania, 114 U. S.,
196-203; Kidd V. Pearson, 128 U. S. i, 20." * * * *
"It is the sale and delivery, of a certain kind and quality
of pipe, and not the manufacture, which is the material portion
of the contract, and a sale for delivery beyond the State makes
the transaction a part of interstate commerce."
4
It has been decided by the United States Supreme Court
that the fixing of reasonable rates for transportation is a
judicial function, requiring notice to and due opportunity to be
beard by the carrier. Chicago Railroad vs. Minnesota, 134 U.
S., 418-466, and Minneapolis Railroad vs. Minnesota, 134 U.
S., 467-482. •
The expressions in the opinions of the Supreme Court ip
Interstate Commerce Commission Cases, 162 U. S. 184, 197,
255, and 167, U. S., 479, 512, and 168 U. S., 144, 176, that
the matter of fixing of reasonable rates partakes of a legisla¬
tive function, was so far overruled in the later case of Smjdb
vs. Ames, 169 U. S., 466, 550, that the Supreme Court af¬
firmed the decree of the Circuit Court which enjoined the
State Board of Transportation of Nebraska from putting into
effect any schedule of rates until such schedule had been first
submitted to the Circuit Court, a court which has no legislative
powers.
In the more recent case of Chicago Railroad vs. Tompkins,
176 U. S., 167, 180, the court held that the question of the
reasonableness of rates was one to be determined by the courts,
and
"not by arbitrary enactment of any legislature, state or na¬
tion, without right of appeal to the courts
and in the still more recent case of Chesapeake, etc., Co. vs.
Manning, 184 U. S., the court reaffirmed that doctrine, say¬
ing that
"the reasonableness, bot! as regards the company and as re¬
gards the public is eminently a question for judicial investiga¬
tion, requiring due process of law for its determination."
As all the judicial pozuer of the United States is vested in
courts, the judges of whom are appointed to serve during good
behavior, (U. S. Const. Sec. i. Art. 3), it is clear that the
5
present Interstate Commerce Commission, whose members
serve only for a term of six years can have no judicial powers
and should give way to a constitutional court, if rates are to
be fixed, judicial hearings to be had and judgments to be en¬
forced.
The proposed measure is efficient for the end sought. The
penalties are severe enough to deter violations and the enforce¬
ment is not left solely to the United States attorneys, through
criminal prosecutions, who are often pressed with routine
work, but may be enforced by the Commerce Court through
its control of the instrumentalities of interstate commerce and
the mails.
The law will be self-supporting, a sufficient tax being pro¬
vided for, to fully execute its provisions.
The full and complete reports from industrial concerns re¬
quired as an aid to levying the proposed tax against them, will
enable Congress, the public, and the prosecuting officers of the
government, to know if the laws are being violated and will
fully inform investors of the true value of industrial securities.
By this bill the connection between the railroads and trusts
will be severed, so that one cannot operate in collusion with
the other, to further private purposes, and so that the public
may be entitled to transportation at a fair and uniform rate.
It is submitted that the proposed measure is just and fair
both towards the public and common carriers in giving the
Commerce Court power to determine what the public shall
pay and the carrier be paid for public services performed and
that the passage and enforcement of a measure along these
lines will obviate the necesäity of government ownership.
But it will hardly be contended that a government may be
too inefficient to regulate and control its railroad corporations,
yet may be strong enough to successfully acquire, own and
operate two hundred thousand miles of railroad.
6
The gross earnings of tlie railroads in this country exceed
one and a half billions of dollars a year, a sum largely in ex¬
cess of the total revenues of the United States government and
about equal to the combined revenues of the states and nation.
The rates should be as fixed, certain and just in the one case
as in the other.
The power to fix rates for transportation, which is greater
than the taxing power, must of necessity be lodged somewhere.
If this power is exercised by Congress directly it will be con¬
stantly subject to interference by powerful lobbies, will be the
subject of political strife, and furthermore will be subject to
the objection that it involves a "taking" of private property
without a judicial hearing. This great power cannot remain
in the hands of manipulators of trusts and railroads influenced
only by selfish motives.
It is therefore proposed to vest the power in a great non¬
partisan judicial tribunal whose judges serve for life. If
such a body cannot be trusted, none can.
The passage of this act would prevent paralysis of the busi¬
ness of the country. Neither strikes of employees nor manip¬
ulations of operators could close railroads, coal mines or steel
works, engaged in interstate commerce.
A stoppage of such works would result in their being taken
possession of by the government through a receiver of the
Commerce Court, which would be greatly to the advantage, not
only of the owners, but of the public.
In conclusion it is submitted especially to the bar of the
country, that an act of Congress substantially as herein out¬
lined may be constitutionally passed by Congress without any
amendment of the constitution.
Joseph H. Call.
Los Angeles, Cab, Sept. i, 1902.
7
A Bill for
An act to establish a commerce court, to impose certain occu¬
pation taxes, to further regulate interstate commerce, and
for other purposes.
Be It Enacted by the Senate and House of Representa¬
tives of the United States of America, in Congress
Assembled.
Section i. From and after the first day of January, —,
special occupation taxes shall be and are hereby imposed, due
and payable upon the first day of January of each calendar
year, that is to say ;
Every person engaged in interstate commerce, as defined
in this act, or in manufacturing, or in smelting or refining
ores, or in handling or dealing in wheat, flour, coal, petroleum,
lumber, grain, pork, beef, wool, food, food products, clothing,
illuminating gas, medicines, or building materials, shall on or
before the first day of each calendar year, pay to the revenue
collector for the district within which the principal office or
place of business of such person may be situated, a special
occupation tax of one hundred dollars upon each one million
dollars of capital employed in such occupations, during the pre¬
ceding calendar year.
Any person failing to pay any tax hereby imposed within
ninety days after the same may become due and payable, shall
be liable for such tax, together with a penalty in treble the
amount of such tax, which may be reiovered in any United
States District Court or Circuit Court or Territorial Court, or
Supreme Court of the District of Columbia, as the case may
be, wherever the defendant may be found, or may maintain
an office or agency, which action shall be prosecuted by any
United States attorney for the proper district or territory.
Section 2. The word "person," as used in this act, shall
be held to include individuals, partnerships, and unincorporated
associations, joint stock companies, and corporations, formed
under the laws of the United States or of any state or terri¬
tory or foreign country. The term "interstate commerce,"
8
shall be held to include the shipment, transportation, or trans¬
mission for the whole or for a part of the distance, of persons,
property and telegraph and telephone messages shipped, trans¬
mitted and transported by water, railroad, wire, pipe-line or
otherwise, from one state, district or territory of the United
States into another state, district or territory or between any
state, district or territory and any foreign country, or within
any district or territory of the United States; and shall also
include the making, vending, buying or dealing in, in any state
district or territory of the United States of any article or com¬
modity to be, pursuant to any agreement, order or under¬
standing, transported to, shipped to, sent to, sold or dealt in,
in any other state, territory, district or country, and shall also
include all other commerce between the states and with for¬
eign nations. If any part of this act be adjudged to be in¬
valid, that circumstance shall not invalidate the part remain¬
ing. Nothiirg in this act shall be held to repeal any of the.
existirrg laws relating to the regulation of interstate or foreign
commerce or to the collection of internal revenue or stamp
taxes or other general law, unless in conflict with or repug-
rrant to the provisions of this act.
The passage of this act shall not affect arry pending suit or
action.
Section 3. All persons subject to taxation under this act
and all common carriers of interstate commerce as deflned in
this act, shall, during the months of July and August of each
year", prior to the time for payment of the taxes hereby im¬
posed, make under oath and file an annual report covering
the preceding fiscal year from July one to June thirtieth. Such
report shall show all the matters and things recjuired by section
twenty of the act to regulate commerce, approved February
fourth, eighteen hundred and eighty-seven, and in addition
thereto shall truly show :
(a) The actual indebtedness of such person at the end
of such fiscal year and for what purpose such indebtedness was
created.
(b) The number of shares of stock issued of any cor¬
poration subject to this act and the amount of money actually
paid for the original issue of all issued stock ; and if stock
shall have been issued by such corporation for property, the
value and a description of such property shall be given.
(c) The name and address of each officer, managing agent
9
and director of each such corporation and person, and the
salary and compensation of each during such fiscal year.
(d) 1 he gross amount of the operating expenses for such
fiscal year and where any item paid for such operating expenses
shall exceed in value five hundred dollars, the amount shall be
stated as well as the person to whom such payment has been
made.
(e) The number and value of shares of stock held or
owned in any other corporation, the amount paid therefor,
and the amount received upon such stock by way of dividends
or profits during such fiscal year.
(f) The gross receipts and each item thereof over five
hundred dollars, from whom received.
(g) The names of the stockholders of such corporation
and the amount held by each at the end of said fiscal year.
(h) The valuation fixed upon all property of such person
or corporation for taxation purposes in the state, district or
territory where situated, and the amount of taxes paid thereon
for the preceding year.
(i) The Commerce Court established by this act, may fur¬
ther recjuire reports under oath from any person subject to the
provisions of this act, as to the market value of any stocks,
bonds, materials used in the construction of railroads and other
matters relating to the construction and operation of railroads
and as to any other matter or fact relevant to any hearing or
matter to be determined by the court.
Such annual report, where made by a corporation, shall be
approved by its board of directors and verified by its president
and secretary, and shall truly and accurately set forth all the
matters and things as herein provided, and all such reports,
whether made by individuals or corporations, shall be by them
printed in four original copies and suitably bound in book form,
and one copy shall be by them deposited in the Congressional
Library, one in the office of the Commerce Court hereinafter
established, one in the office of the Secretary of the Treasury,
and one in the office of the revenue collector for the district
where the tax may be paid, to be kept in such respective places
as public records and subject to public inspection.
Section 4. There is hereby constituted and created a ju¬
dicial tribunal inferior to the Supreme Court, to be known
as the Commerce Court, and which shall be composed of
eleven members, learned in the law, nor more than six of
whom shall be chosen from the same political party, who shall
10
be nominated by the President and by and with the advice
and consent of the Senate, shall be by him appointed, who
shall hold their offices during good behavior.
Two terms of the Commerce Court shall be held each year
in the City of Washington, District of Columbia, commenc¬
ing on the first Mondays respectively of March and October,
and special terms at such times and places as it may deter¬
mine.
The Commerce Court shall consist of a chief justice and
ten associate justices, any seven of whom shall constitute a
quorum.
The associate justices shall have precedence according to
the dates of their commissions, or, when the commissions of
two or more of them bear the same date, according to their
ages.
In case of a vacancy in the office of chief justice, of the
Commerce Court, or of bis inability to perform the duties
and powers of his office, they shall devolve upon the associ¬
ate justice who is first in precedence, until such disability
is removed, or another chief justice is appointed and duly
qualified. This provision shall apply to every associate jus¬
tice who succeeds to the office of chief justice.
The chief justice of the Commerce Court shall receive the
sum of ten thousand five hundred dollars a year, and the as¬
sociate justice thereof shall receive the sum of ten thousand
dollars a year each, to be paid monthly.
The Commerce Court shall be a court of record, and shall
have jurisdiction of all civil cases and proceedings arising
under this act prescribed therei.n, and all proceedings and
trials shall be cognizable in equity and shall be governed by
the usages and practice in equity.
The Commerce Court shall have power, and it shall be its
duty, to appoint one attorney for said court whose salary
shall be five thousand dollars a year, and not more than three
assistant attorneys, whose salaries shall be four thousand dol¬
lars a year each ; to appoint one marshal for said court, whose
salary shall be four thousand dollars a year, and not more
than five deputy marshals, whose salaries shall be three thou¬
sand dollars a year each, and to appoint one reporter for said
court, and not more than two deputy reporters, whose sala¬
ries shall be twenty-five hundred dollars per year each, and
to appoint one clerk for said court whose salary shall be four
thousand dollars per year, and not more than two deputy
11
clerks, whose salaries shall be two thousand dollars per year
each.
It shall be the duty of said attorney for the Commerce
Court, and his assistants, to prepare, present and prosecute
all hearings, proceedings and trials before said court, except
as otherwise provided herein, which shall be so conducted in
the name of the United States, and the marshal of said court
and his deputies, and the clerk and his deputies, and the re¬
porter and his deputies, shall respectively have similar duties
and powers as clerks of the Supreme Court and as marshals
of the United States, and reporters of the Supreme Court,
respectively, but writs and process of said Commerce Court
may be served by the marshal thereof, and his deputies, any¬
where within the jurisdiction of the United States.
. The said Commerce Court hereby created shall have the
jurisdiction and powers of the Interstate Commerce Commis¬
sion, conferred by former laws, and, in addition thereto,
shall have the jurisdiction and powers conferred by the present
act; and shall have power to make rules and regulations re¬
specting proceedings before such court, including the taking
and return of testimony before masters and examiners to be
appointed by the court and the giving of reasonable notice by
publication or otherwise and opportunity for interested parties
to be heard in all matters of a judicial nature, and shall have
like powers as circuit and district courts to enforce its orders,
rules, regulations and decrees by proceedings in contempt.
Section eleven of the act of Congress approved February
4, 1887, entitled "An Act to Regulate Commerce," so far as
it relates to the creation and appointment of the "Interstate
Commerce Commission," is hereby repealed.
Section 5. It shall be the duty of the Commerce Court
and it is hereby empowered, to annually, and by the first day
of December of each year, to estimate and determine the
amount of capital employed during the preceding fiscal year
by each person subject to taxation under the provisions of
this act and to further establish and fix for the ensuing year
commencing January one, a schedule of rates to be charged
and received by every person being a common carrier engaged
in interstate commerce as defined in this act and general and
special regulations covering the interchange of traffic and
commerce between them. And it shall be unlawful for any
person, directly or indirectly, to take, exact or demand any
12
greater or less compensation than shall be fixed in such sched¬
ule, or refuse such transportation at the rate so fixed.
After such schedule of rates shall be fixed by the Commerce
Court all contracts respecting the transportation or trans¬
mission of interstate commerce as herein defined, whether
theretofore or thereafter executed, except those made in ac¬
cordance with such schedule, and except those made with the
United States, shall be void, and the making or carrying out
of such contracts is hereby forbidden, and no such contract
shall hereafter be made without first being submitted to and
approved by said Commerce Court, and whenever any such
contract shall have been made and so approved, any other
person shall be entitled to like transportation, benefits and
advantages as shall be provided for in such contract.
Section 6. Every person who shall violate any of the
provisions of this act, shall, in addition to any other penal¬
ties prescribed in this act, be subject, upon conviction, to im¬
prisonment for not less than five years for each offense, and
each day of such violation shall constitute a separate offense
which may be prosecuted in any United States IDistrict Court
or Circuit Court, Supreme Court of the District of Columbia,
or territorial court, within the jurisdiction of which such of¬
fense may have been wholly or partly committed, which shall
be prosecuted in the name of the United States, by the dis¬
trict attorney thereof, and the defendant may be served with
process wherever found.
Section 7. In fixing such schedule of rates and making
such regulations, the Commerce Court shall take into con¬
sideration the reports filed by such persons, as aforesaid, and
such other facts as they may ascertain. The rates so fixed
shall be reasonable and just, and shall be fixed only upon
interstate commerce, as herein defined, and not upon com¬
merce wholly within any state, except that whenever, in the
opinion of the President, the public interest may require it,
and upon his request the Commerce Court shall from time
to time fix and establish schedules of rates for transporting
the mails of the United States or any part of the army, navy,
officers, agents and property of the United States, and tele¬
graph and telephone messages sent or received by the United
States or by its officers or agents upon one or more lines of
railroad, electric road, vessel, steamship, telegraph or tele¬
phone in the United States, districts, or territories, which rates
13
may for sufficient reasons be changed by the court, and which
rates shall he reasonable and just.
Section 8. Whenever it shall he made to appear to the
Commerce Court that any person being a common carrier of
interstate commerce as defined in this act, has negligently
failed or wilfully refused to operate any line of railroad, tel¬
egraph, steamship or telephone, or other public conveyance
in his control, by reason of any strike or dispute with em¬
ployees, or if it shall appear to the Commerce Court that any
person engaged in interstate commerce as herein defined has
wilfully violated any of the provisions of this act, or any law¬
ful order, decree, rule or regulation of the Commerce Court
hereby created, it sliall he the duty of such Commerce Court,
upon reasonable notice and hearing, to prohibit such person
and all persons acting through or under him from engaging
in any interstate commerce as defined in this act until' other¬
wise ordered by the court, and thereupon to appoint a receiver
for all of the property of such person used in or connected
with such interstate commerce, which receiver shall, under
the orders and rules of the court, have the care, possession
and operation of such property, and the expenses for the care,
operation, maintenance, secured debts and unsecured debts,
shall, in the order here stated, be a charge against the prop¬
erty, and whenever it shall appear to the court that the in¬
come is insufficient to meet such expenses and charges, the
property may, under a proper decree, be sold and the pro¬
ceeds applied as aforesaid, and the remainder, if any, shall
be paid to said former owner
Whenever, prior to the sale of such property, it shall be
made tó appear to the court that the expenses of receivership,
and other debts due and owing, have been, or will be paid,
and that the said property of such person will be operated
in accordance with law and the rules and orders of the Com¬
merce Court, such receivership shall, upon such payments be¬
ing made, and such showing to the court, be discharged, and
such property shall be returned to the possession and control
of the owner.
All proceedings before the Commerce Court for receiver¬
ships shall be upon petition filed by the attorney of the court,
and in accordance with the rules established by the court, and
shall be heard and determined speedily.
Section 9. Whenever it shall be made to appear to the
Commerce Court that any person has used the mails, or any
14
post route, postoffice, letter box, or other instrumentality of the
United States for carrying the mails or any instrumentality for
carrying on any interstate commerce as herein defined, in fur¬
therance of any scheme to defraud, or to carry on or engage in
any lottery or in furtherance of any scheme, combination or
conspiracy to restrain or monopolize any interstate commerce,
as defined in this act or in furtherance of any scheme, combi¬
nation or conspiracy to violate or subvert any law of the
United States, or in furtherance of any scheme, combination
or conspiracy to enhance or regulate the price of any com¬
modity, or to restrain or to monopolize any trade, manufac¬
ture, commerce or business, it shall be the duty of the Com¬
merce Court to make an order or decree enjoining or forbid¬
ding the use by any such person, and of all persons acting
through or under him, of all the instrumentalities for carry¬
ing the mails, and for carrying on interstate com¬
merce for such time, not less than one year, as may be deter¬
mined by the court and pendng a final hearing and upon cause
shown may temporarily enjoin and restrain such use, and
all officers and agents of the United States connected with the
operation of said instrumentalities shall aid in the enforce¬
ment of such orders and decrees.
Section io. The judgments, orders, decrees, rules and
regulations and proceedings of the Commerce Court shall not
be reviewed by the Supreme Court, or any other court, by
appeal, writ of error or otherwise, except in the Supreme Court
by certiorari for an abuse of power or want of jurisdiction,
and during the pendency of any such certiorari proceeding,
the judgments, orders and decrees, rules, regulations and pro¬
ceedings of the Commerce Court shall not be stayed or sus¬
pended, nor shall they be affected by any prosecution under
section six (6) of this act.
Section ii. The Commerce Court shall cause its final
orders, decisions, decrees, rules, regulations and schedules of
rates to be printed and bound in suitable volumes and dis¬
tributed in like manner as reports of the United States Su¬
preme Court, and the contents of such printed volumes shall
be presumptive evidence of the matters therein shown, with
like effect as the original records.