This line of argument, it is manifest, would have saved the New Hampshire act of 1816 with regard to the college charter, which contained no exemption. It is not difficult to see why the decision of 1876 differed from the decision of 1819. In 1819 the country was poor. Everybody was glad to encourage investments by foreign capitalists and by domestic capitalists. The main business of our people was to develop the resources of our great country. The unforeseen and astonishing inventions which greatly increased the business of transportation, were adjudicated upon by the court steadily, upon the principles of the College case, and it cannot be denied that this course of adjudication was largely the source of the success of the great enterprises which so much benefited the country. At the same time, and from the same influences, corporations had become enormously multiplied, and individual fortunes had thereby been increased in such a way as to impress the majority of our people with the idea that our political institutions were threatened, and to create the purpose of compelling a departure from those principles of our constitutional jurisprudence, drawn from the College case, which are supposed to, and which actually do, greatly encourage and protect the accumulation of property. Not only all statute laws, but all decisions of courts, are modified by the general sentiment of the community and the profession; and the feeling of apprehension with regard to the safety of our institutions, in the presence of corporate wealth, affected the court. Whether there is actual danger to our institutions from the power and influence of corporations, especially those engaged in the business of transportation, is a matter of opinion. I do not think there is. As long as the five great American institutions, manhood suffrage, the church, the school, the town-meeting, and the militia, remain, I do not believe that there is danger of the "liberties of the people being submerged under a sordid despotism of wealth," as feared by Mr. Justice Brown, in the Income Tax case.1 The last and final question concerning the status and tendencies of the College case, was suggested by the court in 1893, 1 Pollock v. F. L. & T. Co., 158 U. S. 695 (1895). and the settlement of that question stands postponed by the court. It is a question of extreme importance, which should be met with courage and patriotism. The question is, whether there is not implied in the grant to a carrying corporation, of the right to construct and operate, a grant of a right to collect such tolls as will enable the company to successfully operate, and return some profit to the investors. I refer to the case of Reagan v. The Farmers' Loan & Trust Co.1 Rates established by the railway commission of Texas were enjoined as unreasonable and unjust, but the power to establish rates was not denied. The holders of the shares and bonds of the company sought protection against legislative invasion and destruction of the values of their property. The State statute declared that in certain cases the rates fixed by the commission should be conclusively deemed reasonable and lawful. The principle of the Granger cases has recently been reaffirmed by the court in Budd v. New York,2 and also in Brass v. North Dakota,3 and was followed in the case of Chicago R. R. v. Minnesota. The Supreme Court of Minnesota had held that the rates fixed by the railroad commission were final and conclusive as to what charges were reasonable, and that no issue could be made on that point, and that in a proceeding by mandamus against the company to compel obedience to the order of the commission, the reasonableness of the rates could not be controverted; but the Federal Supreme Court disaffirmed this proposition with three dissenting judges. It is noticeable, in this connection, that in most recent constitutional cases the decision has been by a majority of one only. In Georgia R. R. v. Smith (further considered below), it was said that the power of the legislature was subject to the limitation that the carrier is not required to labor without reward or upon pay fixed so small as to amount to the taking of the property for public use. And in the Minnesota case the court said that the legislative power of regulation was not without limit, and is not a power to destroy. In the Michigan Passenger Rate case the 5 1 154 U. S. 362-393 middle (1893). 2 143 U. S. 517 (1892). 8 153 U. S. 391 (1893). 4 134 U. S. (1890). 6 State court (elective) sustained the power of the legislature to fix rates without any judicial interference. The Federal court, in affirming the decision, placed its opinion upon the point that the position of the railroad company could not be maintained upon the agreed statement of facts and testimony. In other words, it was held not to be shown that the rates which were in question, did not actually afford the carrier any compensation at all, and that the rates would not afford a reasonable compensation if the business should be properly managed. This latter observation lets the bars down for going anywhere. This question of rates, as the court says in the Reagan case above, is not as yet determined. It is the only question growing out of the College case still unsolved. How it will be determined, we can best inquire, perhaps, by a somewhat detailed history of the constitutional provision, and of the College case itself. When the convention was sitting in Philadelphia Congress was sitting in New York, and there was a reciprocity of influence between the two bodies. Nathan Dane procured Congress to pass his great Free Soil ordinance, declaring that in the just preservation of rights and property, no law ought ever to be made or have force in the Northwest Territory that should, in any manner whatever, interfere with, or affect, private contracts or engagements previously formed. A month later Rufus King, in the constitutional convention, caused a like limitation on the legislative power of the States to be incorporated into the proposed constitution; and upon that limitation the College case was founded. Nothing in the discussions, or in contemporary history, indicates any prevision of the extent to which the court might carry the limitation. Indeed, historically considered, this clause, although aimed at legislative action, was intended to prevent the passage of bankruptcy laws by States, which would favor their own citizens at the expense of citizens of other States. Judge Bradley says that the contract clause, being imposed upon the States only and not upon Congress, undoubtedly had its origin in the above consideration. The Federal constitution was adopted by a narrow majority. 1 Sinking Fund cases, 99 U. S. 745 (1878). Only the great name of Washington carried it through. There is nothing which indicates that the protection of corporate rights was had in view in the contract clause. Judge Swayne said 1 that the point decided in the College case had not occurred to any one when the constitution was adopted by the people. There is no trace, said he, in the Federalist, or in any contemporaneous publication, of this point. Judge Marshall, said he, admitted the novelty of the point. Marshall said it is more than possible that preservation of rights of this description was not particularly in the view of the framers of the constitution, when the clause under consideration was introduced into the instrument. Both the States and the United States existed before the constitution. The scheme of having the new government operate directly upon the people through the Federal courts, was the distinctively new feature. This feature stamped the new government as a success. At the same time it was calculated to excite jealousies and resentments in the States. Nothing but the caution, moderation, fairness, patriotism, and high character of the Federal bench has prevented serious outbursts. In the case of Davidson v. New Orleans 3 Judge Miller says that no proposition at once perspicuous, comprehensive, and satisfactory can be given as to the relation of the Federal power of setting aside laws impairing the obligations of contracts, and the State governments, and that this can only be ascertained by the gradual process of judicial inclusion and exclusion as cases arise. This is true. Of course it is not possible to review that gradual process within the limits of this address. We can only consider a few cases, and we will first look at two cases prior to the New Hampshire case-the New Jersey Tax case and the Georgia Land case. These cases had already brought express contracts of States within the constitutional inhibition. An act passed by the colony of New Jersey, in 1758, in consideration of release of title by Indians, declared the lands purchased for them should not be taxed. This, it was held, constituted a contract which could not be impaired by a subsequent repealing act. From 1 Edwards v. Kearzey, 96 U. S. 595 (1877). 2 College case, 4 Wheaton, 644. 896 U. S. 104 (1877). 4 New Jersey v. Wilson, 7 Cranch, 164 (1812). this case, and not from the College case, is the fully established but astonishing doctrine derived that a legislature may partially abdicate its power of taxing, the main power of government, and make an irrevocable contract with a corporation for exemption from taxation. Judge Miller declared, in 1877, that he never could believe that one legislature has power to bargain away the right of a succeeding legislature to levy taxes in as full a manner as the constitution of the State will permit.1 The result of the New Jersey Tax case was never availed of, and the State collected taxes for more than sixty years upon the very lands in question; so that in 1886 it was held that a surrender of the right of exemption would be presumed. The New Jersey Tax case was submitted without argument, and was in effect a moot case. Such is the dubious origin of a doctrine which must probably some time be abandoned. Judge Bradley said in 117 U. S., above, that the decision might be questioned were the point a new one; and Judge Miller said3 that it must ultimately be retreated from. The existing doctrine is that there must be a full and explicit legislative expression to impair the taxing power of the State. 2 Shortly before the Tax case, and ten years before the College case, the Georgia Land case came up from the Circuit Court of Massachusetts.5 It arose out of the so-called Yazoo land fraud, and was an action by Fletcher for breach of a covenant in a deed made by Peck that the legislature of Georgia had authority to sell to Peck's grantor. A later legislature had annulled a previous act (authorizing the government to sell) upon the ground that it had been obtained by bribery (which seems to be a natural disease of free institutions. See N. H. in Governor Sawyer's time). Judge Johnson in his concurring opinion said, that the case on its face bore strong evidence of collusion; but he abandoned his scruples, on account of the respectability of counsel, J. Q. Adams, Story, and Luther Martin. That extraordinary man, Judge 1 New Jersey v. Yard, 95 U. S. 114. 2 Given v. Wright, 117 U. S. 648. 4 Vicksburg R. R. v. Dennis, 116 U. S. 665-8 (1885); W. & W. R. R. v. Alsbrook, 146 U. S. 279 (1892). 5 6 Cranch, 87 (1809). |