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5 per cent. cut in the compensation; that the fund merely sugarcoated this law for a few railways running out from New York City. The amendment was lost by a vote of 29 to 91.80

The appropriation bill only passed the Senate with several amendments, among which was a provision for a $185,000 special facilities fund.31 The House non-concurred ;32 but finally, having conceded minor points, and after several conferences, the bill was passed as amended by the Senate 33

Another important question concerned payment for mail transportation on subsidized railways. Sometime previously a law had been passed providing that land-grant railways should receive but 80 per cent. of the usual rate of payment for carrying the mail. In the case of the Union Pacific and Central Pacific railways, however, the supreme court had decided that the law did not apply; so these roads were receiving credit for high rates. After considerable discussion the House passed an amendment to the effect that all acts authorizing railways which had received aid by loans or guarantee of bonds in addition to land grants,-i. e., the Union and Central Pacific railways,should be so altered that the rates of compensation for mail service should be fixed by the postmaster-general; and they should not exceed those fixed by him or allowed by law for other roads of the same class which the United States had aided by land grants or otherwise.34 The Senate, however, amended the House bill by striking out this provision and the House was ultimately forced to concur. So the Senate defeated the majority of the House on both these hotly contested points; and, on the whole, we may say that the railway interests won.

SUMMARY

The foregoing is perhaps sufficient to give a fairly adequate idea of the more important relations existing between Congress and railways in the mail service point of contact,—though there were many other bills and reports concerning the basis for compensation, securing facilities, preventing delays, classifying railway employees, etc.

30 Ibid., p. 377.

a1 Ibid., p. 1384. (This was the amount actually paid by the postmastergeneral for special railway facilities the previous year.)

* Tid., p. 1804. 23 Ibid., p. 3592. 84 Ibid., p. 487.

Two general conclusions have become clear and are noteworthy. In the first place, since 1850 the mail service relation has ceased to be one predominantly of aid, and has become one of regulation. In the second place, the importance of this subject to the history of railway regulation in general is apparent. Congress was trained in regulation ; expression was found for an attitude of hostility towards railways and their abuses. This attitude was plainly aggravated by the independent action of the railways; and the act regulating inter-state commerce with which the period now under discussion closed was to some extent due to the folly of the railways in not settling down to a realization that, in so far as the mail service was concerned at least, they were the servants of the public,—that cheap and speedy postal arrangements must be had.

The fact that the railways of the United States are the carriers of the nation's mail has contributed to their control by the nation is evidenced by the titles of such bills as, “a bill to facilitate commercial, postal, and military communication"which became a law in 1866,—"a bill to promote commerce among the states and to cheapen the transportation of mails and of military and naval stores," and a bill for "regulating fares

on all railroads or stage lines carrying the United States mails.

The above sketch affords, by way of analogy, an argument against the idea that the commerce clause of the constitution does not justify railway regulation. This idea was held by some congressmen as late as 1880, and recently a recrudescence has appeared.36 Practically no doubt has been raised as to the application of the post-roads clause to railways even from the earliest times; and surely interstate exchange and intercourse by railway are as much “commerce” as a railway is a “postroad." Both clauses of the constitution were written before

935

35 Cong. Globe, 1871-72, p. 499. 36 Prentice, Federal Power Orer Carriers and Corporations, 1908.

the railway era; and in both capacities the railway is simply a new and developed instrument.

While there can be no doubt that the fact that the railways carry mails has contributed to their regulation, yet there is little support in history for a more direct general regulation on that ground. With the exception of a few mere propositions like those of Jackson and the Senate committee nothing approaching general regulation has directly resulted; while it is apparent that even these propositions were called forth by specific abuses in the mail service, their one object being to do away with such abuses. Indirectly more or less control might be exerted over railway operation through regulation of the mail service; but the power to establish post-roads does not seem sufficient basis for a general regulation of carriers as such.

PART II

THE APPLICATION OF THE “COMMERCE CLAUSE”

CHAPTER XVII

CONGRESS AND STATE MONOPOLIES: NEGATIVE

REGULATION OF INTERSTATE COMMERCE

The early history of the United States is characterized by a looseness of federation and a commercial jealousy of one another which we, living in a period of rapid centralization, find it somewhat hard to realize. Massachusetts and New York, as though unrelated and independent sovereignties, levied taxes on aliens arriving in their ports; and Pennsylvania and Virginia claimed the right to regulate traffic across the Ohio river. This condition found expression in the monopolies that were granted to private interests by certain states: New York, for example, gave a monopoly of transportation over the Catskill-Unadilla road which restricted such interstate commerce as passed over it, and another of steamboat transportation to Livingston and Fulton in 1803; and, in 1813, New Jersey retaliated by conferring similar privileges upon Ogden and Dod. Connecticut monopolized trade between New York and New England. Moreover, the years following 1830 were marked, in their political aspect, by a tendency of the states to react against the nationalistic trend which came after the War of 1812 and to extend the scope of their sovereignty.

Down till about 1850, when general or "free" railway laws began to be passed, the jealousy of the states in guarding their own interests was frequently expressed by refusing charters to railways which would have benefited rivals.

1 Act of March 28, 1805, ch. 49, p. 70. » See Perrin vs. Sikes, 1 Day 19, Conn., 1802.

THE CAMDEN AND AMBOY MONOPOLY

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This tendency had its important economic results. In line with the times was the action of New Jersey in 1832 when she passed a law concerning the Camden and Amboy railway which contained the following provision: "That it shall not be lawful, at any time during the said railroad charter, to construct any other railroad or railroads in this state, without the consent of the said companies, which shall be intended or used for the transportation of passengers or merchandise between the cities of New York and Philadelphia, or to compete in business with the railroad authorized by the act to which this supplement is relative.''

By these words New Jersey riveted upon herself a monopoly from which she suffered much and long, receiving relatively little in return;—but it is not to be forgotten that her action was according to the spirit of the time, nor that great inducement was necessary to cause capital to take up such a venture. For nearly twenty years this monopoly maintained itself by wholesale corruption, and even force, almost unchallenged ;* and only in the early Sixties, when the war made its operations a national grievance were important steps taken to abolish it.

So firmly was the monopoly seated in the state that the only hope seemed to lie in national action, and such action might plainly be sought on several grounds: either the power to establish post-roads, military necessity, or the commerce clause might be invoked.

THE HOUSE VOTES TO BREAK THE MONOPOLY

A bill which came up for discussion in 1864 in the House was, by its title, based on all three of these grounds. Its purpose

3 See Ringwalt, Trans. Systs, in the U. S., p. 148.

* See North American Review, 107 : 428-476 for full account; and Bul. of U. of W., Econ, and Pol. Sci. Series, 3 : 244, and note ; reprint, vol. I, p. 78. 5 Corg. Globe, 1863-64, p. 1165.

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