41

the commerce clause, it is difficult to understand that any one should have attempted to exclude land transportation while including water transportation. As a matter of fact, counsel for the state in the State Freight Tax Case did resort to a somewhat more subtle method of reasoning, to the effect that the use of the word "regulate" in the commerce clause presupposed merely a rule to govern intercourse, and the tax in question was argued not to be a rule. The real reason, of course, for such refinements and differences over what are now axiomatic, is the fact that railroads were still a new thing, and laws necessarily experimented with them, just as engineers experimented with the development of the mechanical and other phases of transportation before obtaining the desired results. How little the National Government had really awakened to its power over these great arteries of commerce is emphasized by the fact that as late as 1866 Congress felt the necessity of declaring by statute that every railroad had the right by virtue of the commerce clause to carry from state to state whomever and whatever it pleased and to receive compensation therefor. The validity of this statute was confirmed seven years later.42

III. THE EXTREME STATES' RIGHTS PERIOD

We have now traced the development of the commerce clause in the light of the leading cases up to approximately the year 1876. In that year began what may properly be known as the Extreme States' Rights Period in so far as the commerce clause is concerned, because it is noteworthy as the date of a number of cases which announced a principle hitherto unknown and exceeding in the extension of state power all principles that had previously been announced. The cases are: Munn v. Illinois, Chicago, B. & Q. R. R. v. Iowa, Peik v. Chicago & N. W. Ry. Co., and Winona & St. Peter R. R. v. Blake.46 The question in each of these cases was, briefly stated, whether the authority of the state to limit by legislation the charges of common carriers within its borders was confined to the power to impose limitations in connection with grants of

41 15 Wall. (U. S.) 250-52.

43

45

2 Chic. & N. W. Ry. Co. v. Fuller, 17 Wall. (U. S.) 560 (1873).

43 94 U. S. 113.

Ibid., p. 155.

45 Ibid., p. 164.

Ibid., p. 180. See also Chicago, M. & St. P. R. R. Co. v. Ackley, 94 U. S. 179; Stone v. Wisconsin, 94 U. S. 181.

corporate privileges. The court held not, and declared that the carriers were subject to legislative control as to the amount of their charges, except when protected by contract with the state. The question was presented by acts of the legislatures of Illinois, Iowa, Wisconsin and Minnesota, passed in the years 1871 and 1874 in response to a general movement for a reduction of rates. The section of the country in which the demand arose was to a large degree homogeneous and one in which the flow of commerce was only slightly concerned with state lines. This section had begun to feel the reaction and possibilities of development following the Civil War. In the first of these cases, Munn v. Illinois, the court did not have before it railroad rates, but grain elevator charges in Chicago. Through these elevators the grain from seven or eight western states was accustomed to pass en route to the East. Besides denying the state's legislative authority to limit these charges, it was urged that the act of Illinois violated the commerce clause. But the court, through Chief Justice Waite, in an opinion replete with learning, and notable for its extension of the doctrine of "public interest," declared otherwise. In the Munn Case, and also in each of the railroad cases that followed, the court decided that intrastate rates were a matter purely of state concern. Had the decisions rested here there would have been nothing unusual about them, but in the railroad cases the opinions went further, and declared that not only may a state regulate the purely intrastate business of a railroad, but that until Congress acts in reference to its interstate rates, the state may regulate them also. The expressions of opinion in each case on this point are short and admittedly received but little consideration, and have to a large extent therefore been considered as dictum. But assuming this to be true, since they have recently been adopted, as we shall presently see, as the basis for a most radical principle, the inevitable consequences of their announcement are too far-reaching to permit of mere superficial comment. Let us consider the exact words in each case bearing upon this question of state regulation of interstate rates.

In Chicago, B. & Q. R. R. Co. v. Iowa the court said through Mr. Chief Justice Waite, "It [the railroad] is employed in state as well as in interstate commerce, and, until Congress acts, the state must be permitted to adopt such rules and regulations as may be necessary for the promotion of the general welfare of the people within

its own jurisdiction, even though in so doing those without may be indirectly affected." 47

In Peik v. Chicago & N. W. Ry. Co. the Chief Justice again spoke as follows:

"The law is confined to state commerce, or such interstate commerce as directly affects the people of Wisconsin. Until Congress acts in reference to the relations of this company to interstate commerce, it is certainly within the power of Wisconsin to regulate its fares, etc., so far as they are of domestic concern. With the people of Wisconsin this company has domestic relations. Incidentally, these may reach beyond the state. But certainly, until Congress undertakes to legislate for those who are without the state, Wisconsin may provide for those within, even though it may indirectly affect those without." 48

In Winona & St. Peter R. R. Co. v. Blake the Chief Justice rendered merely a very short opinion for the court and stated that the case fell directly within the court's ruling in the cases just considered.

This new principle was not to survive long, for in 1886 the court had occasion to consider in a very important case the revolutionary effect that the language of the Granger Cases, if sustained, would necessarily have upon the power of Congress to regulate interstate commerce. As we have seen, in the second or States' Rights Period, which began in 1829 and ended in 1876 with these cases, the principle was developed of a dormant congressional power in local matters which when exercised meant the exclusion of state power from the same subject, but never had any of the cases gone to the extent of saying that in matters the regulation of which from their very nature rested in Congress, the states could interfere in the absence of Congressional action. In short, the Granger Cases represent not simply an extension of the principle of concurrent power finally established by the case of Cooley v. Board of Wardens, but amount in effect to an overruling of that first and fundamental principle which we found to have been foretold, if not actually established by Gibbons v. Ogden, namely, that the power of Congress in those matters requiring uniformity of regulation because national in their nature was exclusive from the very grant of the power, and was not dependent upon actual exercise of the power.

47 94 U. S. 163.

48 Ibid., pp. 177–78.

IV. THE FEDERALISTIC PERIOD

It was in Wabash, St. L. & P. Ry. Co. v. Illinois 49 that the court hastened to retract from its position maintained in the Granger Cases, and while emphatically maintaining that there was no question of the state's authority to regulate rates for transportation wholly intrastate, such authority went no further. In this case there was before the court a statute of Illinois which enacted that if any railroad company should charge or receive for transporting passengers or freight of the same class within the state the same or a greater sum for any distance than it did for a longer distance in the same direction, it should be liable to a penalty for unjust discrimination. The defendant railroad made such discrimination in regard to goods transported from Peoria, Illinois, and from Gilman, Illinois, to New York, charging more for the same class of goods carried from Gilman than from Peoria, the former being eighty-six miles nearer to the city of New York than the latter, this difference being in the length of the lines in the State of Illinois. The court held the statute invalid as a regulation of interstate commerce. Mr. Justice Miller, in delivering the opinion of the court, expressed some doubt as to whether the Illinois court's construction of the statute was correct in making it apply to commerce among the states, but said that the Supreme Court was bound by that construction.

Continuing, he explained that of the members of the court who had concurred in the dictum of the Granger Cases, there being two dissentients, but three remained, and that he, as one of them, was prepared to take his share of the responsibility. Then, after a thorough, analytical discussion of various cases 50 that had been decided since the Granger Cases, showing the radical language of the latter to have been at least indirectly repudiated, the court concluded:

"We must, therefore, hold that it is not, and never has been, the deliberate opinion of the majority of this court that a statute of a state

49 118 U. S. 557 (1886).

50 See County of Mobile v. Kimball, 102 U. S. 691 (1880); Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196 (1885); Pickard v. Pullman Southern Car Co., 117 U. S. 34 (1886); Stone v. The Farmers' Loan & Trust Co., 116 U. S. 307 (1886).

which attempts to regulate the fares and charges by railroad companies within its limits, for a transportation which constitutes a part of commerce among the states, is a valid law." 51

It is difficult to see any error in this decision, although three Justices dissented. There can be no questioning the fact that the rate sought to be regulated was an interstate rate. Obviously, if such transportation is not to be treated in its entirety, but as divisible by each state, then there would be not only utter confusion in rate-making, but the power of Congress over interstate commerce would be absolutely vitiated.

Pursuing our chronological consideration of cases, we find that by this time it had become a rather common practice for the states to create commissions, as agencies of state supervision and regulation, with rate-making power.52 It is not necessary to analyze the numerous cases that defined this power. It is sufficient to name the more prominent ones in which the principles again established by the Wabash Case were reaffirmed: Dow v. Beidelman,53 Reagan v. Farmers' Loan & Trust Co.,54 and Reagan v. Mercantile Trust Company.55

The effect of intrastate rates upon interstate rates was seriously urged in Smyth v. Ames,56 a case especially noteworthy as first announcing the true doctrine of due process of law, as required by the Constitution, in relation to railroad rates. Mr. Justice Brewer heard the cases in the lower court, and his pronouncement of the plenary powers of the states over their own local rates (the only phase of the case with which we are here concerned) was affirmed in the highest court by Mr. Justice Harlan.

Fourteen years later, however, trouble arose. In the case of Louisville & Nashville R. R. Company v. Eubank 57 the long and short haul clause of the Kentucky constitution was in issue. It had just been held in the same year in the case of Louisville & Nashville R. R. Co. v. Kentucky that this same section of the Kentucky constitution when applied to places, all of which were within the state, violated no provision of the Federal Constitution. But in

51 118 U. S. 575.

52 See, for a summary of this legislation, Interstate Commerce Commission v. Cinc. N. O. & T. P. Ry. Co., 167 U. S. 479, 495-500 (1897).