and advised that commissioners be appointed by the states to meet at Philadelphia the second Monday in May, 1787,

"To take into consideration the situation of the United States, to devise such further provisions as shall appear to them necessary to render the Constitution of the Federal Government adequate to the exigencies of the Union, and to report, etc."'1

The jealous Congress of the Confederation, yielding to the necessity, resolved, February 21, 1787, to recommend that a convention be called to meet at the same time and place "for the sole and express purpose of revising the Articles of Confederation."2 Twelve states sent delegates to the convention who after four months of secret deliberation, agreed to the Constitution, among other things, "in order to promote the general welfare."

The third enumerated power-second only to the taxing and borrowing powers,-given to Congress, was. "To regulate commerce with foreign nations, and among the several states, and with the Indian tribes,'' and as Mr. Justice Miller1 has said, without such relief,

* *

“As a nation we must soon have perished * What our deranged finances, our discreditable failure to pay our debts, and the sufferings of our soldiers could not force the several states of the American Union to attempt, was brought about by a desire to be released from the evils of an unregulated and burdensome commercial intercourse, both with foreign nations and between the several states."

It is not too strong to say that one of the most fundamental reasons for the creation of our Federal Government in its present form, was to provide against the evils of an unregulated commercial \inter

course.

2. Growth of corporations: Before the adoption of the Constitution there seem to have been only 21 business corporations incorporated within the United States,-10 for canal or navigation purposes, 4 banks, 3 bridge companies, 2 trading companies, 1 manufacturing company and one other. But the Constitution "put our foreign commerce and that between the states upon a solid footing,' and before the year 1800, more than 200 more charters had been granted to business corporations, including 38 for roads, 36 for bridges, 28 for banks, 26 for improving navigation, 25 insurance, 21 waterworks, 21 canals, 12 manufacturing, 6 for commerce; 5 and general incorporation laws for certain kinds of corporations (mostly

1 Ib. 41.

Art. I, Sec. viii, par. 3.

21 Doct. Hist. of U. S. p. 8.

4 CentennialOration, Washington, Sept. 17, 1887.

5 Two Centuries Growth of American Law; Private Corporations, by Judge S. E. Baldwin, Yale Bicent. Pub. pp. 275, 296.

charitable or religious) had been enacted in New York,1 Delaware2, and Pennsylvania.3

The Constitution had provided that "No state shall pass any law impairing the obligation of contracts."4 In 1782 James Wilson had argued that the charter of the Bank of North America was a compact between the bank and the state of Pennsylvania,5 and in 1819, ten years before the steam railroad was born, the Supreme Court in the Dartmouth College case, had held that a corporate charter was a contract between the state and the corporation, protected by this provision. Although it was suggested that the state might retain control over the corporations it created by reserving in their charters a right to amend or repeal, such practice did not become common until many years later. As early as 1821 "the improvident increase of corporations" was looked upon as an evil, "which was restrictive of individual rights," and constitutional provisions requiring two-thirds votes for their creation were made, but were ineffectual. Finally, between 1830-50, because of "the confusion, corruption, partial, and inequitable legislation that was the result of allowing parties to go before the legislature and ask for a special charter," the bars were almost entirely thrown down by the passing of general incorporation laws in nearly all the states, allowing a few persons in a very simple way to obtain valuable corporate franchises and privileges subject to very slight control and supervision. Since general corporation laws have been passed, and the right to repeal or amend charters has been reserved therein, it has not been an unusual practice for corporations formed under general laws to purchase or obtain control over the charter of some earlier corporation organized under a special act, wherein such right was not retained by the state, and thereby to hold their rights and privileges under a contract the obligation of which the state may not impair. Great numbers of railroads were originally incorporated, or since have reorganized and operate, under special charters.8

Thirty years ago so conservative a writer as Judge Cooley observed:

"It is under the protection of the decision of the Dartmouth College case that the most enormous and threatening powers in our country have been created, some of the great and wealthy corporations having greater influence in the country at large, and upon the legislation of the country than the states to which they owe their existence."'

3. Power of corporations to engage in interstate commerce: By the common law a corporation was considered a person within the law, and though perhaps it could not migrate itself, it might, through its agents, do business away from home. The common law had recognized the right to bring a suit in a country other than the one in which it was incorporated.2 Such a right was recognized in the Supreme Court of the United States as early as 1809,3 and by the New York courts in 1820, although such rights had undoubtedly long been exercised before. And in 1839 when the question came before the Supreme Court,5 it was expressly held that a bank organized in one state with a general power to discount bills and notes, could exercise such power out of the state, "wherever it was found most convenient and profitable," subject to the laws of the state where exercised; and while it must dwell at home, by the comity of states, it may do business abroad. It soon after became the generally accepted practice and doctrine that a corporation might do business and own property beyond its borders if its charter did not forbid, or the laws of the state where it undertook to do business did not prevent. From these premises it naturally followed that if a corporation was a person having an inherent capacity to do business away from home, and the business done was interstate or foreign commerce over which the states had no control, then such a corporation could engage in that business in any state without the state's consent. Such was implied in Paul v. Virginia in 1868, and held in Pensacola Telegraph Co. v. Western Union Telegraph Co., and in Crutcher v. Kentucky, 10 where it was held that one state

9

1 Const. Lim. p. 279 80 n, 2d Ed. (1871.)

2 Henriques v. Dutch West India Co. 2d Ld. Raym. 1532 (1729.)

3 Bank of U. S. v. Deveaux 6 Cranch 61.

4 Silver Lake Bank v. North, 4 Johns. Ch. 370.

5 Bank of Augusta v. Earle, 13 Pet. 519.

6 Runyan v. Coster, 14 Pet. 122 (1840): Thompson v. Waters, 25 Mich. 214, 12 Am. R 243. (Reviewing Cases.

7 Merrick v. Van Santvoord, 34 N. Y. 208 (1866.)

8 8 Wall. 168.

996 U. S. 1 (1877.)

10 141 U. S. 47 (1891.)

could not "prevent a corporation engaged in interstate commerce from entering that state and carrying on its business therein," the court by Mr. Justice Bradley, saying further:

"To carry on interstate commerce is not a franchise or privilege granted by the state; it is a right which every citizen of the United States is entitled to exercise under the Constitution and laws of the United States; and the accession of mere corporate facilities, as a matter of convenience in carrying on their business, cannot have the effect of depriving them of such right, unless Congress should see fit to interpose some contrary regulation on the subject."

4. Inaction of Congress. As early as 1824, the Supreme Court, overruling the Court of Errors of New York, construed the word regulate in the commerce clause to imply full power over the thing to be regulated, and to exclude the actions of all others, while Congress is regulating it; that the power "is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than such as are prescribed in the Constitution."' From this view it naturally followed, as it was afterward acted upon and finally held in 18512 and 1887,3 that

“Where the subject is national in character and admits or requires uniformity of legislation," "the absence of any law of Congress on the subject is equivalent to its declaration that commerce in that matter shall be free." Congress until very recently has allowed interstate commerce except in minor matters, to go unregulated by any action of its own. In 1887 the Interstate Commerce Commission was established, but after continuous and protracted litigation, was emasculated in 1897, into a reporting and recommending body merely, by the decision of the Supreme Court. In 1890 the anti-trust act was passed and almost immediately in the lower courts5 it was held not to apply to combinations of manufacturers, even though their products were made for and entered into interstate trade; and this view was confirmed by the Supreme Court in 1895. For a period these decisions seemed wholly to defeat the design of the act, but later decisions have in a measure redeemed its efficiency. The act of last winter establish

1 Gibbons v. Ogden, 9 Wheat. 1, 1 Kent. Comm. 432.

2 Cooley v. Port Wardens, 12 How. 299.

3 Robbins v. Shelby Taxing District, 120 U. S. 489, 59 Am. R. 267.

4 Interstate Commerce Com. v. Cin. N. O. & T. P. Co. 167 U. S. 479.

5 U. S. v. Greenhut, 51 Fed. 205, 213 (1892); In re Greene, 52 Fed. 104.

6 U. S. v. E. C. Knight Co., 156 U. S. 1.

7 U. S. v. Trans.-Mo. Frt, Assn. 166 U. S. 290 (1897); U. S. v. Joint Traffic Association 171 U. S. 505 (1898); U. S. v. Addyston Pipe & Steel Co. 78 Fed. 712, 85 Fed. 271, 175 U. S. 211 (1899) :: U. S. v. Northern Securities Co. 120 Fed. R. 721 (1903.)

ing a Department of Commerce with a Commissioner of Corporations, gives an investigating, reporting, and advisory authority only, and its powers in these particulars are already reported to have been challenged by the Standard Oil Company.

5. The best summary I have seen upon the questions involved in this and the preceding section, of the propositions "which have been adjudicated so often as to be no longer open to discussion," with the cases supporting them is that of Mr. Justice Brewer in Atlantic and Pacific Telegraph Co. v. Philadelphia,' as follows:

First: "The Constitution of the United States having given to Congress the power to regulate commerce, not only with foreign nations, but among the several states, that power is necessarily exclusive wherever the subjects of it are national in their character, or admit only of one uniform system or plan of regulation."

Second; "No state can compel a party, individual, or corporation to pay L for the privilege of engaging in interstate commerce."

Third: "This immunity does not prevent a state from imposing ordinary property taxes upon property having a situs within its territory and employed in interstate commerce."

Fourth: "The franchise of a corporation, although that franchise is the business of interstate commerce, is, as a part of its property, subject to state taxation, providing at least the franchise is not derived from the United States."

Fifth: "No corporation, even though engaged in interstate commerce can appropriate to its own use property, public or private, without liability to charge therefor."

III. The problem. 1. In general the problem is how to regulate the national commerce of the large state-created corporations. The actual regulation, taken from the states by the Constitution, and not exercised by the National Government, has practically passed into the control of state-created corporations, and the question is, shall it be left there without further regulation? Whether or not it should be further regulated is a political and economic question; if it should be further regulated, the manner thereof is largely a legal question.

The problem is before us because of the inaction, or inadequate action, of Congress to meet the conditions. In this regard it is analogous to the conditions existing before the National banking law was enacted. The Constitution says "No state shall coin money, emit bills of credit, or make anything but gold and silver coin a legal tender in payment of debts."2 As early as 1837 it was held that

1 190 U. S. 160, on 162 (1902.)

2 Art. I. Sec. X, cl.l).