The Power to Regulate Corporations and Commerce

of "working the institutions of the country," — i.e. by putting into effective operation the existing machinery of the Government. The author aims to show that activity in investigation and prosecution by executive departments and administrative commissions, coöperation therewith and support thereof by the legislative, and confident resort to the courts by individuals and public officers for the protection of rights under statutes, the common law, and the Constitution, will result in the regulation of corporations and commerce to the satisfaction of commercial and financial interests and of the public, but that unconstitutional legislation and the attempt of the executive and legislative to reduce the efficiency of the courts and to prevent resort to them will delay the solution of present problems and aggravate them in the future. In short, it is not the restraint of all commerce in ill-judged efforts to prevent restraint by dishonest commercial methods that is sought, but the free development of all honestly transacted commerce of whatever scope or importance.

The great problem consists, first, in the control of corporations, and second, in the regulation of rates to be charged by those exercising a public calling. Governments should be as unfailing in the protection of honestly vested interests as in the exposure of the assertion of rights falsely said to be vested against the public. The value of corporate property is based upon three things-the right to be, the right to have, and the right to act. The first of these rights is, of itself, an empty one; it arises from the policy of the law. For the State governments to base their power of regulating corporations upon the gift of the shell of

corporate existence rather than upon the police power inherent in self-government is to grasp the shadow and abandon the substance. The policy of the law of incorporation is and should be national. Every certificate of incorporation contains potentially a restraint of interstate commerce. But the second right, the right to have, is subject to the power of the States, within the limits of the Constitution of the United States, to control the use of property and, if it is public property, to contract with regard to its possession and use. And the right of a corporation to act, so far as its service within a State is concerned, is, likewise within constitutional limits, subject to the power of the States to regulate, restrict, or wholly to deny. But no State has the power to grant to a corporation the right to act within another State without the consent of that State, and, the right to withhold such consent being limited by the Constitution of the United States, the right of a corporation to act in all the States, as well as the right to engage in interstate commerce, exists under the protection of the Constitution of the United States and is subject to acts of Congress necessary or proper to secure that right generally, even if such acts prescribe a license to corporations to engage in interstate commerce only upon compliance with statutory requirements. This right to act is the life of a corporation. It can never become vested as against the public, and the grant of the right to act can never justify unlawful restraint of trade or other illegal acts. That is beyond the power of government. A grant beneficial to the public may be made by special or general laws with or without compensation from the grantee, and the right to

exercise the franchise, or right to act, thus granted, vests in the grantee but subject to the constitutional limitation that the grantee has no more power thereby to take private property for public use or without just compensation than has the government. And so far as corporate value is based upon a capitalization by anticipation of the right in the future to receive from the public more than a reasonable compensation for the use of its property devoted to a public service or a capitalization of the prospective profitable continuance of unlawful acts, the destruction of that value by the government is as truly the rightful exercise of constitutional power as is the prevention of the confiscation by legislative enactment of honestly vested corporate property. The existence of these swollen values is the heart of the corporation problem, and to their reduction all the energies of the three departments of government in the States and in the United States should be directed, not by impatiently straining the limits of constitutional power but by working, not spasmodically but continuously, and thus making effective the regular institutions of the country. Ours is a government not of men but of laws; yet we depend upon men to enforce the laws. And so, unless officials perform their full duty, even the present laws are useless. New laws are always demanded when there is a default in the performance of public duty. Yet in a free country the existence of a remedy for every wrong does not depend so much upon statutory expression as upon the use by judges of their full power to do justice under broad and universally admitted principles of right and FRANK HENDRICK.

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