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Carriers, Courts, and the Commodities Clause
Published online by Cambridge University Press: 24 July 2012
Abstract
The contradictory and inconsistent history of the origin, interpretation, and enforcement of the “commodities clause” of the Hepburn Act of 1906 is the basis for this analysis of one aspect of government-business relations in the American transportation industry.
- Type
- Research Article
- Information
- Business History Review , Volume 39 , Issue 1: Special Transportation Issue , Spring 1965 , pp. 57 - 73
- Copyright
- Copyright © The President and Fellows of Harvard College 1965
References
1 Act of June 29, 1906, ch. 3591; Par. (6) of Sect. 1, 34 Statutes at Large, 584; 49 USC, sect. 1, par. 8.
2 Blum, John M., The Republican Roosevelt (Cambridge, Mass., 1954), p. 89.Google Scholar See also Blum's essay in Morison, Elting E. and others (eds.), The Letters of Theodore Roosevelt (8 vols., Cambridge, Mass., 1951–1954), vol. VI, pp. 1558–71.Google Scholar In the general literature of the period and in general economic histories of the United States, the commodities clause is treated vaguely if at all. Exceptional is Hacker, Louis M. and Kendriek, Benjamin B., The United States Since 1865 (4th ed., New York, 1949), pp. 347–48.Google Scholar
3 “The primary duty to enforce the Interstate Commerce Act in behalf of the public rests upon the Interstate Commerce Commission.” Ketchum v. Denver & R.G.R. Co., 248 F. 106 (1917). The I.C.C. takes the position that it is the duty of the Attorney General to enforce the law. “It may be that some of these lines are operating in violation of the commodities clause … but proceedings under that clause of the law are under the jurisdiction of the Department of Justice.” Second Industrial Railways Case, 34 I.C.C. 596 (1915). It may be added that the I.C.C. has consistently refused to entertain complaints of violation on the theory that a private party has no standing to demand enforcement. Thus acknowledged is the significant reality that the penalties of the law are unrelated to any private injury.
4 Jones, Eliot, The Anthracite Coal Combination in the United States (Cambridge, Mass., 1914), p. 106.Google Scholar
5 Roosevelt to William B. Allison, May 14, 1906, Morison (ed.), Letters of Theodore Roosevelt, vol. V, pp. 270–72. Two weeks later Roosevelt expressed the hope that the House of Representatives would accept the commodities clause. Roosevelt to William P. Hepburn, May 29, 1906, ibid., vol. 5, p. 291.
6 Congressional Record, 59 Cong., 1 Sess., vol. 39, pp. 6455–61, 6493–6500, 6551–70, 7011–14. The legislative history of the clause is fully related in two early works, Kibler, Thomas L., The Commodities Clause (Washington, 1915)Google Scholar and Jones, Anthracite Coal Combination.
7 Stoek, H. H., “The Pennsylvania Anthracite Coal Field,” United States Geological Survey, Twenty-second Annual Report, pt. 3, p. 103 (Washington, 1902).Google Scholar
8 New York, New Haven to Hartford Railroad Co. v. I.C.C. and I.C.C. v. Chesapeake to Ohio Railway Co., 200 U.S. 361 (1906). In this matter the C. & O. had agreed to sell coal to the New Haven at prices lower than the sum of published freight rates and cost at the mine. The courts found that the practice embodied an illegal rebate and permanently enjoined the C. & O. from carrying out the contract.
9 Rates for Transportation of Anthracite Coal, 35 I.C.C. 220 (1915).
10 United States v. Delaware & Hudson Co., et al., 164 Fed. 215 (1908).
11 Biddle, Francis, In Brief Authority (Garden City, 1962), p. 83.Google Scholar
12 Hipolite Egg Co. v. United States, 220 U.S. 45 (1911).
13 Louisville Joint Stock Bank v. Radford, 295 U.S. 555 (1935).
14 United States v. Delaware & Hudson Co., et al., 213 U.S. 366 (1909). Other defendants were the Lehigh Valley, the Erie, the Pennsylvania, the Central of New Jersey, the Reading, and the Delaware Lackawanna & Western.
15 Pullman's Palace Car Co. v. Missouri Pacific Railway Co., et al., 115 U.S. 587 (1885) and Conley v. Mathieson Alkali Works, 190 U.S. 406 (1903).
16 United States v. Delaware & Hudson Co., et al., 213 U.S. 366 at 406 (1909).
17 United States v. The William, 28 Fed. Cases, No. 16,700 (1808).
18 Champion v. Ames (The Lottery Cases) 188 U.S. 321 (1903).
19 The federal Constitution neither defines property nor authorizes the political branches to do so. The Supreme Court has repeatedly held that in federal law the word “property” will obtain its content from state law. United States v. Powelson, 319 U.S. 266, 279 (1943). Under state law the railroad corporations had an enforcible right to move their own property.
20 Monongahela Navigation Co. v. United States, 148 U.S. 312 (1893).
21 United States v. Lee, 106 U.S. 196 (1882).
22 United States v. Ohio Oil Co. (The Pipe Lines Cases) 234 U.S. 584 at 563 (1914).
23 In September, 1913, the Pennsylvania Railroad announced that it had decided to dispose of its anthracite interests, and in 1917 they were sold to a subsidiary of the M.A. Hanna Co. Schlotter, H. W., The Growth and Development of the Pennsylvania Railroad Company (Philadelphia, 1927), pp. 334–35, 353.Google Scholar The Pennsylvania retained, however, its interests in certain corporations that produced other commodities for transportation on the Pennsylvania Railroad.
24 Moody's Transportation Manual, 1961, p. 585.
25 Moody's Transportation Manual, 1962, pp. 405, 422. Correspondence of the author with Pennsylvania Coal Co., 1964.
26 Hand, Learned, “The Commodities Clause and the Fifth Amendment,” 22 Harvard Law Review (1909), pp. 250–65.CrossRefGoogle Scholar
27 United States v. Delaware, Lackawanna & Western Railroad Co., 238 U.S. 516 (1915). While requiring modification of the contract, the Supreme Court did not condemn, under either the Sherman or Hepburn act, the identity of stockholding. The Southern Pacific also adopted this device of community of interest. Venner v. Southern Pacific Co., 279 Fed. 832 (1922).
28 Delaware, Lackawanna & Western Railroad Co. v. United States, 231 U.S. 363 (1913).
29 As the government did not move to amend its petitions against defendants other than the Lehigh Valley, the Circuit Court inferred that it did not choose to do so and, in accordance with the decision of the Supreme Court, dismissed absolutely the complaints against the Pennsylvania, the Erie, and the Central of New Jersey. The court must have been astonished, therefore, when its routine action was appealed to the Supreme Court by the Attorney General. His appeal was tersely rejected. 220 U.S. 275 (1911).
30 This decision is unreported, but its import can be inferred from the content of the opinion reversing it. 220 U.S. 257.
31 United States v. Lehigh Valley Railroad Co., 220 U.S. 257 (1911).
32 Howe, Mark D. (ed.), Holmes-Laski Letters (Cambridge, Mass., 1953), p. 294.Google Scholar
33 Meeker v. Lehigh Valley Railroad Co. 21 I.C.C. 129 (1911); same parties, 23 I.C.C. 480; reversed by U.S. District Court (not reported); reversed, 211 F. 785; reversed 236 U.S. 412 (1915). Meeker v. Lehigh Valley Railroad Co. 175 F. 320; reversed, 183 F. 584.
34 United States v. Lehigh Valley Railroad Co., et al., 225 F. 399 (1914).
35 United States v. Lehigh Valley Railroad Co., et al., 254 U.S. 255 (1920).
36 The Lehigh Valley companies filed with the U.S. District Court their proposed plan for disunity of stockholders and for segregation of coal from railroad interests on February 7, 1923. An outline of the plan will be found in Commercial and Financial Chronicle, vol. 116, pp. 576–77 (Feb. 10, 1923). On March 3, 1923, the plan was approved by the court. Ibid., p. 1049 (March 10, 1923).
37 United States v. Reading Co., et al., 183 F. 427 (1910); 35 l.C.C. 225.
38 United States v. Reading Co., et al., 183 F. 427 (1910); 226 U.S. 324 (1912).
39 United States v. Reading Co., et al., 226 F. 229 (1915).
40 United States v. Reading Co., et al., 253 U.S. 26 (1920). On the terms of the final decree see United States v. Reading Co., et al., 273 F. 848 (1921). It is interesting to note that the headnotes to this report contain no intimation that the commodities clause was involved, or that the clause authorizes dissolution proceedings.
41 Unsigned case comment, 50 Harvard Law Review 322 (1937).
42 United States v. Elgin, Joliet & Eastern Ry. Co., 11 F. Supp. 435 (1935).
43 United States v. Elgin, Joliet & Eastern Ry. Co., 298 U.S. 492, 512 (1936). At the instance of the I.C.C. another suit was brought in 1943 to determine whether the Supreme Court, after intervening changes in personnel, would adhere to the Elgin Rule. The suit failed. United States v. South Buffalo Ry. Co., 333 U.S. 711 (1948).