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a deep canal and a deepening of the ing a new barge canal running along Mississippi River. Some States are the old Erie Canal from Albany to doing great work in building new Buffalo, with a branch from Syracuse waterways. New York State is build- to Oswego.

CHAPTER VI.

1865-1912.

STATE AND LOCAL GOVERNMENT ACTIVITY IN REGULATING COMMERCE AND INDUSTRY.

Promotion of commerce and industry by the Government after the Civil War - First attempt to regulate inter

state commerce State anti-trust legislation The Missouri law The Illinois act - Railroad commissions The Granger movement - - Recent regulation of interstate commerce - The Public Service Commission.

After the close of the Civil War the the history of this period shows an policy of direct government aid in almost complete absence of State or stimulating industry was generally municipal concern for the advanceconfined to the United States as a ment of private business interests. whole. In fact, this reversal of State Abundant National aid in a protective policy began even before the war. The tariff, in land grants to railroads, in untoward experiences of many States expenditures for harbor and river imand municipalities in aiding turnpike, provements, and in other ways, was canal and railroad construction had forthcoming. An era of great busimuch to do with this change in public ness and industrial prosperity folsentiment, and the urgency of the lowed; business became stronger than great political questions that beset the the political State. It controlled legiscountry for over a decade prior to lation in many commonwealths and its 1861, kept men's minds in uncertainty interests were advanced in many ways and their thoughts on other matters by special privileges, franchises and than the future industrial develop- so on, which took the place of the oldment. Nationalism, as distinguished time bounties, subsidies, and State, from the old-time Federalism, was the county and municipal bond issues. prime outcome of the war, and that But this policy finally fell very much greatly encouraged the tendency of into disfavor by the shift of public relegating all questions of trade, com- sentiment regarding corporate wealth merce and industry to the central gov- after 1880. ernment. State rights had gone into It was not, however, until well the background, and though this toward the close of the century, when mostly affected the South, all the the problems arising from the conStates felt the change. Accordingly centration of capital in large corpor

or

a

ate enterprises began to loom large Mississippi, Ohio, Utah, Arkansas, in the public eye, that there was any Illinois, Oklahoma and South Carovery serious attempt anywhere in the lina. The States of Washington and United States at legislation at all in- Wyoming put provisions against tended in restraint of methods of trusts into their constitutions in 1889, trade. Congress made the first move and Kentucky and Missouri in 1891. in February of 1887, by passing the Ultimately Colorado, Idaho, Michigan, first act for the regulation of inter- North Dakota, South Dakota, Texas, state commerce. Soon after, individ- Connecticut, Mississippi, North Caroual States began to take action. lina, South Carolina, Tennessee and

In a little more than a decade 29 of Utah legislated to the same end. the States and Territories had legis- Naturally there was wide variance lated on trusts, passing statutes de- in the details of this legislation. In fining monopoly more definitely and most of the States the law made it a imposing penalties of an ultra-severe crime for two or more persons to encharacter, in order to meet existing ter into an agreement which should business conditions and to prevent the prevent free competition and sale, enhancing of prices, the crushing whether such agreement be reasonable of competition, and other interfer- unreasonable. Several States ences with the natural freedom of made it a criminal conspiracy for two trade. To Maine belongs the distinc- or more persons to agree to regulate tion of enacting the first anti-trust the quantity or price of any article to law put upon the statute books of any be manufactured, mined, produced or State. It was passed in 1889 and was sold, whether prices be raised or lowof a sweeping and drastic character. ered. In other States the attempt to So far, however, little has been done monopolize any commodity by two or under it. Closely following Maine, more persons in association was made Kansas, Michigan, Missouri, Ne- a criminal offence. Mississippi debraska, North Carolina, Tennessee, clared in its statute that it was a crimand Texas, and the three Territories inal conspiracy for two or more perof Idaho, Montana and North Dakota sons, not simply to regulate prices, also passed anti-trust laws. In 1890 but also to settle the price of an artiIowa, Kentucky, Louisiana and South cle between themselves or between Dakota passed similar laws and Mis- themselves and others. souri added to that already on her As various as the definitions of statute book. In the three following what constituted the crime and the years, Alabama, Minnesota, New Mex- methods of judicial procedure against ico, New York, Wisconsin and Cali- offenders were the penalties. These fornia also fell into line with legisla- took the form of imprisonment and tion, and later came Georgia, Indiana, fining of individuals, fining of firms

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and corporations, forfeiture of goods found in the protection afforded them and franchises, liability for damages, in several States, notably New Jersey, and deprivation of the right to enforce Delaware and Virginia. Those States, contracts or collect debts. Imprison- instead of following the example of ment might be as short as thirty days others in passing exacting laws, exor as long as ten years in the peniten- tended their protection by liberal cortiary. Georgia, Indiana, North Caro- poration legislation and became in lina, North Dakota, South Carolina, popular parlance " the home of the Tennessee and Texas went to the limit trusts '- especially true of New Jerof ten years. The possible fines for sey. More than 90 per cent. of the individuals ranged from $50 to $5,000, large corporations which came into Arkansas, Georgia, Illinois, Indiana, existence at that time were incorpoIowa, Kansas, Kentucky, Michigan, rated in one of these States, which Minnesota, Nebraska, New York,

York, had no anti-trust laws. There corpoNorth Dakota, Ohio, South Carolina, rations were unmolested, and their Tennessee and Texas naming the charters — and to a considerable exlarger amount. In South Dakota, tent their business

tent their business — were protected Montana and North Carolina a fine of from attack in other States under the $10,000 was possible. In Arkansas, interstate commercial comity guarGeorgia, Illinois, Indiana, Iowa, Kan- anteed by the Federal Constitution. sas, Kentucky, Minnesota, Nebraska, Nevertheless some progress was New York, North Dakota, Ohio, South made in the enforcement of the State Carolina, Tennessee and Texas the laws, and under them some court defines of corporations ran as high as cisions were rendered which added $5,000. In Montana, South Dakota, much to the distinction of American Utah and North Carolina the guilty jurisprudence. The Missouri law corporation might be mulcted to the made it a criminal conspiracy to mainamount of $10,000, and in Utah the tain a pool, combine, agreement, confine for any offence subsequent to the federation or understanding to reguthird was $15,000.

late prices or to fix the premiums for To a considerable extent, this legis- fire insurance. Under this statute aclation

successfully contested, tion was brought against the insurmostly on the ground of unconstitu- ance companies doing business in the tionality. Because they exempted cer

State and the case State vs. Firetain special industries, the first anti- men's Fund Insurance Company et al. trust laws of Illinois, Texas, Georgia, - was carried to the State Supreme Indiana, Louisiana, Michigan and Court, where it was decided to be coriTennessee were thus declared by the stitutional. Seventy-two foreign incourts to be invalid. More effectual

surance companies were convicted of defence for the corporations was combining and conspiring to fix and

was

maintain uniform premium rates and

a foreign State, and chartering a corporation to

do business in this State in violation of its laws. all were forbidden to do further busi

When these foreign corporations come into this ness in the State. In every instance, State to do business they must conform to the the sentence was changed to a fine of

laws and public policy of this State.”

“Any combination of competing corporations $1,000, which the companies paid and

for the purpose of controlling prices, or limiting continued to do business in the State production, or suppressing competition is conunder the new law. Under the same

trary to public policy and void. It makes no dif

ference whether the combination is effected act it was held that the National Lead through the instrumentality of trustees and trust Company, a holding corporation con

certificates, or whether it is effected by creating

a new corporation and converging to it all the trolling between 50 and 75 per cent.

property of the competing corporations." of the white lead in the United States, was doing business in violation of the

The decision in this case was of State law and therefore could not en- special interest and importance, in force payment for goods purchased by being one of the earliest to set forth its customers in Missouri.

clearly and strongly the legal status Statutes and cases under them in

of combinations in restraint of trade other States contributed much to the and to assert the rights of the State anti-corporation jurisprudence of this over foreign corporations. In these period. Under the Illinois Act the particulars it followed the decision of Distilling Feeding Company, a pur

the Missouri courts rendered in the chasing corporation formed to acquire insurance cases a year before. the properties previously united in In its report of 1900 the United the Distillers and Cattle Feeders

States Industrial Commission Trust, was compelled to surrender its viewed the legislation of the preceding charter in 1895. Under the same act ten years, explained the statutes that the law was enforced in 1899 against a had been passed, and presented some New Jersey corporation, the Amer- of the most important decisions by the ican Glucose Company, a constituent

United States and State courts. Commember of the Glucose Sugar Refining menting upon the subject, the ComCompany, which controlled more than mission expressed the opinion that 90 per cent. of the output of the coun

possibly at times the fear of a new try. In its decision the court forbade

form of business organization may the company to sell its properties or

have led to the extension of legal contract with the holding company,

privileges of interference with private holding it liable to the State law inas

business beyond what the public wel

fare demands. Some of the statutes, much as most of its business was done

if read literally, would seem to forbid in Illinois, adding in the opinion:

many perfectly innocent associations Citizens of Illinois cannot evade the laws of

among individuals; but the courts Illinois passed against trusts and combines and defy the public policy of the State, by going into seem invariably to have assumed that

re

66

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ingly.*

only monopoly — at least virtual mo- After the Civil War had been brought nopoly — was attacked and the de- to a close, many questions as to the cisions have been made accord- relative rights of the railroads and the

public pressed for solution. The first State legislation seeking to restrain attempt to meet the situation was or control business enterprises has made in 1869 with the establishment of concerned itself more with railroads the Massachusetts Railroad Commisthan with any other form of corporate sion. This commission had little or no property. When the modern trans- real power. It was merely supervisory portation system began in the United and its influence, which gradually beStates (in the third decade of the came considerable, was exercised enNineteenth century), no one had any tirely by an intelligent conservative conception of the magnitude this form policy of advice and direction, behind of modern enterprise would assume which grew up a strong supporting and of the abuses of power that might public opinion. In 1870 Illinois inidevelop to the public injury. The tiated a broader measure for control of only thought then was to encourage railroads by establishing a State Railthe building of railroads as rapidly as

road Commission vested with powers practicable so as to give the people to prescribe maximum rates, prohibit the quickest and greatest benefits to discrimination, and generally to regube derived from the new transporta- late the roads. In the course of time tion service, and to that end to keep similar commissions were established the enterprises as free as possible in Connecticut, Iowa, Maine, Michifrom any restrictions that might

gan, Minnesota, New Hampshire, New hinder their growth. More than a

York, Ohio, Rhode Island, Vermont, century had passed before the neces

Wisconsin, Georgia, Kansas, Kensity of a reversion of policy in this

tucky, Missouri, California and other particular began to be realized.

States. Some of these were patterned Early legislation to restrain the

upon the Massachusetts idea, but most railroads originated in the States.

of them followed Illinois. The trend Primarily it took the form of taxation, of the period was steadily toward the fixing and enforcing of liabilities, broadening and increasing the power and the supervision or control of

of the commissions. Everywhere they charges. For the most part, this legis- acquired a more positive position of

, lation was desultory, hasty and un

authority and in some instances scientific. Much of it was ill-con

notably in several Western States sidered, and, as a whole, ineffective.

their assumption of power to control

the transportation corporation was * Report of the United States Industrial Commission, vol. ii., p. 8.

little short of revolutionary. A few

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