the carrier are to the State in which it operates, and that Congress is concerned only in the exercise of one function, and with the carrier because of, and to the extent of this function. In any other aspect the double relations of interstate carriers, to the States on the one hand, and to Congress on the other, is unintelligible. The Texas & Pacific Railway Company, for example, though chartered by Congress as an interstate road with the sanction of the State of Texas, was constructed between points in Texas only. Even advocates of the extension of Federal power do not yet claim that Congress may authorize the building of such a road, and yet in fact the relation which the Texas & Pacific sustains to the State of Texas, is not different from the relation which every carrier sustains to the communities in which it operates. The function of interstate transportation is the same in all the States. Extension of Federal power, then, means the assumption of those direct and primary relations to the carrier itself, outside of and beyond this function, which hitherto have belonged to the States alone.

Incorporation within the territories. Over Federal territories, including the District of Columbia, Congress has jurisdiction in all cases whatever. Under its municipal jurisdiction of this nature, it has organized corporations of every description, but it has never chartered under national powers a mercantile corporation, and when a corporation created in 1866, by statute enacted under local powers but in general terms, attempted to establish its principal office outside the District of

Columbia, its action in this respect was repudiated by Congress.1

In the foregoing history is to be found the extent, and the limitations, upon the Federal power of incorporation. The authority to charter mercantile companies to engage in commerce among the States, is a power which was not granted by the Constitution, which Congress has never claimed, and which finds no support in constitutional history. If the general phrases of the Constitution are not thus interpreted "and powers so extensive and important" as the organization of corporations "are derived from them, it would be ridiculous to consider the jurisdiction of Congress restricted.” 2

1 Act of April 22, 1870, 16 Stat. 93, Cong. Globe, 41st Cong., 2d Sess., p. 1028.

2 Burwell, in House of Representatives, Jan. 16, 1811. Annals 11th Cong., 3d Sess., 581.

CHAPTER VII

THE ANTI-TRUST ACT

THE Federal Anti-trust Act was formed under influences tending strongly in opposite directions - the desire to afford relief for a condition which seemed to threaten a great public mischief, and the constitutional limitations, which seemed to make effectual Federal legislation upon the subject impossible.

The mischief to be remedied. Many charges are made against great corporations, but the source of the general antagonism, the feature which excites popular apprehension, is their tendency toward monopoly. The danger of this tendency, and the obligation of government to provide a remedy, is stated in emphatic terms.

"Our government springs from and was made for the people not the people for the Government. To them it owes allegiance; from them it must derive its courage, strength, and wisdom. But while the Government is thus bound to defer to the people, from whom it derives its existence, it should, from the very consideration of its origin, be strong in its power of resistance to the establishment of inequalities. Monopolies, perpetuities, and class legislation are contrary to the genius of free government, and ought not to be allowed. Here there is no room for favored classes nor monopolies; the principle of our Government is that of equal laws and freedom of industry. Wherever monopoly attains a foothold, it is sure to be a source of danger, discord, and trouble." 1

1 First Annual Message of President Johnson. As to authorship of this message, see article in 11 American Historical Review, 574; id. 951.

Most persons, in viewing commercial affairs from the standpoint of complete individualism, would probably agree with Harrington that "equality of estates causes equality of power, and equality of power is the liberty, not only of the commonwealth, but of every man, or in the briefer phrase, which Algernon Sidney suggests, that equality is part of liberty. A reasonable degree of equality, both of power and of right, seems from such a standpoint to be part of safety, and in this country, until very recent times, has existed. Nature has so limited the life and strength of every individual, that while natural conditions continue, great inequalities are not likely to arise nor long to endure. A man's life ends and in time, under the legal rules which forbid perpetuities and trusts for accumulation, his property is divided.

By the organization of corporations, great institutions are created which are not subject to these laws. A corporation is itself a perpetuity, either by charter or by the facility of renewal. Officers and directors pass, individual stockholdings are divided, but the corporation continues, and its power of acquisition is unrestricted. The laws which formerly secured equal conditions among men are still in force, but that which they forbid is now permitted if effected by other methods. Property may now be held and accumulated indefinitely, if this be accomplished in corporate form.

It is clear that the old laws could not forever continue. The inventions of steam and electricity demand great agencies, and with the growth of centres of population

1 Oceana (Routledge & Sons), p. 27.

the demand increases for larger, still larger, and cheaper supply. Permanent organizations have become necessary to furnish permanent means of supply on a great scale. Railroads, steamships, factories, mines, must do vastly more and better work than was possible under the old system, and must take advantage of every economy which great organization makes possible. Society has developed beyond the point where its needs can be satisfied by individual exertions, in other words, beyond the old standards of commercial equality.

Changes, such as these, owe but little to the conscious volition and purpose of the race. They are more like the changes made by great laws of evolution, beyond human control, partly even beyond observation; bringing many ameliorations, but bringing also much which is welcomed by none, limitations upon individual initiative, and personal dependence upon the community in place of personal freedom. The truth of Harrington's remark that equality of estates is the liberty of every man, is now in a qualified sense a matter of common experience, but it means no more than that under present conditions much may be done by combination which individuals could not do at all, or could not do as well. From these fields of industry individuals are excluded, - not by law, or by restraint upon their trade, but by the inefficiency inherent in the method.

Individuals are now, as they have been, equal before the law. Competition is what it has been. There is no relaxation in the rules which forbid restraint of trade. Every person may engage in trade as he desires, and