ered by the acts of Congress, his unauthorized action could be enjoined. No question as to the power of Congress to legislate was involved in that determination, but merely whether the Postmaster General was in fact acting under the authority actually conferred upon him.

Nor is there anything in Adair v. United States (208 U. S., 161) which affects the power of Congress to enact the legislation now proposed. There Congress assumed to exercise the power to regulate interstate commerce. In connection with legitimate legislation bearing on that subject it sought to prohibit interstate carriers from discriminating against organized labor. It was held that this legislation had no proper relation to the exercise of the constitutional power, there being no possible legal or logical connection between an employee's membership in a labor organization and the carrying on of interstate commerce. The power of Congress over interstate commerce was that of regulation merely, and it was the regulation of interstate commerce alone that was conferred. That necessarily excluded intrastate commerce. It was limited to what was technically commerce, and the power could only be exerted in conformity with the fundamental rights secured by other provisions of the Constitution.

In the case of the mails, however, the power of Congress is not circumscribed by any such limitations. It is not merely the power to regulate but to establish post offices and post roads. This involves the power to create and to discontinue, to classify, to limit, to qualify the exercise of the right to use the mails, and to withhold altogether the right to use the mails.

On the other hand, interstate commerce exists independently of Congress, and the power to regulate it is not to be extended beyond the fair purview of that term.

II.

There is nothing in subdivision (g) of the pending bill which infringes any constitutional guaranty against unreasonable searches and seizures as contained in the fourth amendment.

The power is not sought to be conferred by Congress to permit the examination of the books and records of members of a stock exchange. The legislation does not, therefore, come within the ruling in Boyd v. United States (116 U. S., 634).

The bill merely specifies various conditions which are to be contained in the charter of a stock exchange whose quotations may be sent through the mails, as indicative of the honesty and genuineness of such quotations. The legislatures of the several States which may be called upon to incorporate stock exchanges, have doubtless the right to require the members of such exchanges to keep full and accurate books of account, and to subject their books to the inspection of the officers of the exchanges, or of such examiners or other persons as they may designate for that purpose. In fact, many unincorporated stock exchanges pursuant to their constitutions and bylaws, now exercise similar power with respect to the books and records of their members.

The right of legislatures to impose any conditions that they may desire on the right to exercise corporate franchises, has in recent years. been extended so as to include, not only the limitations created by

the act of incorporation, but also those imposed under the reserved power to amend corporate charters. Tomlinson v. Jessup (15 Wall., 459); Sinking Fund Cases (99 U. S., 700, 720); Close . Glenwood Cemetery (107 U. S., 466, 476); St. Louis, Iron Mountain & St. P. Ry. Co. v. Paul (173 U. S., 404); Hatch v. Reardon (204 U. S., 152); Berea College v. Kentucky (211 U. S., 45); and N. Y. C. & H. R. R. R. Co. v. Williams (199 N. Y., 108).

For the same reason each of the other subdivisions of the bill descriptive of provisions forestalling the perpetration of fraud through stock quotations, which are to be contained in the charters of stock exchanges permitted to make use of the mails, is unquestionably valid.

III.

As to the provisions of the pending bill which relate to the use of the telegraph and the telephone for the transmission of quotations and information concerning transactions on any stock exchange, they are authorized by the power lodged in Congress to regulate commerce between the several States and with foreign countries.

The telegraph and the telephone are themselves instruments of commerce. Pensacola Tel. Co. v. W. U. Tel. Co. (96 U. S., 1), W. U. Tel. Co. v. Texas (105 U. S., 450), W. U. Tel. Co. v. Pendleton (122 U. S., 347). Batterman v. W. U. Tel. Co. (127 U. S., 411), Leloup v. Port of Mobile (127 U. S., 640).

Stock quotations are the subject matter of commerce, and their transmission from one State to another therefore comes within the legitimate purview of congressional regulation. Board of Trade . Christie Grain and Stock Co. (198 U. S., 236), New York & Chicago Grain & Stock Exchange v. Board of Trade (127 Ill., 153), Hunt 2. New York Cotton Exchange (205 U. S., 322).

Whatever doubt may have existed as to the power of Congress to prohibit commerce of any kind, in the exercise of its power to regulate it, that right can no longer be questioned since the decision in the Lottery case (188 U. S., 321).

There, after determining that lottery tickets are subjects of traffic and therefore subjects of commerce, and that the regulation of the carriage of such tickets from State to State constitutes a regulation of commerce among the States, Mr. Justice Harlan said:

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"But it is said that the statute in question does not regulate the carrying of lottery tickets from State to State, but by punishing those who cause them to be so carried Congress in effect prohibits such carrying; that in respect of the carrying from one State to another of articles or things that are, in fact, or according to usage in business, the subjects of commerce, the authority given Congress was not to prohibit, but only to regulate. * It is to be remarked that the Constitution does no define what is to be deemed a legitimate regulation of interstate commerce. In Gibbons v. Ogdon it was said that the power to regulate such commerce is the power to prescribe the rule by which it is to be governed. But this general observation leaves it to be determined, when the question comes before the court, whether Congress in prescribing a particular rule has exceeded its power under the Constitution. While our Government must be acknowledged by all to be one of enumerated powers, McCulloch v. Maryland (4 Wheat., 316, 405, 407), the Constitution does not attempt to set forth all the means by which such powers may be carried into execution. It leaves to Congress a large discretion as to the means that may be employed in executing a given power. The sound construction of the Constitution, this court has said. "must allow to the national legislature that discretion, with respect to the means by which the powers it

E

confers are to be carried into execution, which will enable that body to perform the high duties assigned to it, in the manner most beneficial to the people. Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibitive, but consist with the letter and spirit of the Constitution, are constitutional." (4 Wheat., 421.)

We have said that the carrying from State to State of lottery tickets constitutes interstate commerce, and that the regulation of such commerce is within the power of Congress under the Constitution. a provision which is, in effect, a prohibition of the carriage of such articles Are we prepared to say that from State to State is not a fit or appropriate mode for the regulation of that particular kind of commerce? commerce, is a matter of which Congress may take cognizance and over which If lottery traffic, carried on through interstate its power may be exerted, can it be possible that it must tolerate the traffic, and simply regulate the manner in which it may be carried on? Or may not Congress, for the protection of the people of all the States, and under the power to regulate interstate commerce, devise such means, within the scope of the Constitution, and not prohibited by it, as will drive that traffic out of commerce among the States?

If a State, when considering legislation for the suppression of lotteries within its own limits, may properly take into view the evils that inhere in the raising of money in that mode, why may not Congress, invested with the power to regulate commerce among the several States, provide that such commerce shall not be polluted by the carrying of lottery tickets from one State to another? In this connection it must not be forgotten that the power of Congress to regulate commerce among the States is plenary, is complete in itself, and is subject to no limitations except such as may be found in the Constitution. What provision in that instrument can be regarded as limiting the exercise of the power granted? What clause can be cited which, in any degree, countenances the suggestion that one may, of right, carry or cause to be carried from one State to another that which will harm the public morals? We can not think of any clause of that instrument that could possibly be invoked by those who assert their right to send lottery tickets from State to State except the one providing that no person shall be deprived of his liberty without due process of law. ** But surely it will not be said to be a part of anyone's liberty, as recognized by the supreme law of the land, that he shall be allowed to introduce into commerce among the States an element that will be confessedly injurious to the public morals.

* * *

That regulation may sometimes appropriately assume the form of prohibition is also illustrated by the case of diseased cattle transported from one State to another. *

*

The act of July 2, 1890, known as the Sherman Antitrust Act, and which is based upon the power of Congress to regulate commerce among the States, is an illustration of the proposition that regulation may take the form of prohibition. That regulation may sometimes take the form or have the effect of prohibition is also illustrated in the case of In re Rahrer (140 U. S., 545).

In Hoke v. United States (227 U. S., 308) the white-slave traffic. act of June 25, 1910, which prohibited the transportation of women. for purposes of prostitution from one State to another, was held to come within the commerce clause. In the course of his opinion Mr. Justice McKenna said:

*

Commerce among the States, we have said, consists of intercourse and traffic between their citizens, and includes the transportation of persons and property. There may be, therefore, a movement of persons as well as of property; that is, a person may move or be moved in interstate commerce. act condemns is transportation obtained or aided or transportation induced in What the interstate commerce for the immoral purposes mentioned. made and urged with earnestness. It is said that it is the right and privilege But an objection is of a person to move between States, and that such being the right, another can not be made guilty of the crime of inducing or assisting or aiding in the exercise of it and "that the motive or intention of the passenger, either before beginning the journey, or during or after completing it, is not a matter of interstate commerce." The contentions confound things important to be distinguished. It urges a right exercised in morality to sustain a right to be. exercised in immorality. It is the same right which attacked the law of Con

gress whch prohibits the carrying of obscene literature and articles designed for indecent and immoral use from one State to another. (United States v. Popper, 98 Fed. Rep., 423.) It is the same right which was excluded as an element as affecting the constitutionality of the act for the suppression of lottery traffic through national and interstate commerce. (Lottery case, 188 U. S., 321, 357.) It is the right given for beneficial exercise which is attempted to be perverted to and justify baneful exercise as in the instance stated and which finds further illustration in Reid v. Colorado (187 U. S., 137). This constitutes the supreme fallacy of plaintiff's error. It pervades and vitiates their contentions.

Plaintiffs in error admit that the States may control the immoralities of their citizens. Indeed, this is their chief insistence, and they especially condemn the act under review as a subterfuge and an attempt to interfere with the police power of the States to regulate the morals of their citizens and assert that it is in consequence an invasion of the reserved powers of the States. There is unquestionably a control in the States over the morals of their citizens, and, it may be admitted, it extends to making prostitution a crime. It is a control, however, which can be exercised only within the jurisdiction of the States, but there is a domain which the States can not reach and over which Congress alone has power; and if such power be exerted to control what the States can not it is an argument for-not against-its legality. Its exertion does not encroach upon the jurisdiction of the States. We have cited examples; others may be adduced. The pure food and drugs act is a conspicuous instance. In all of the instances a clash of national legislation with the power of the States was urged, and in all rejected.

*

This is the aim of the law expressed in broad generalization; and motives are made of determining consequence. Motives executed by actions may make it the concern of Government to exert its powers. Right purpose and fair trading need no restrictive regulation, but let them be transgressed and penalties and prohibitions must be applied. We may illustrate again by the pure food and drugs act. Let an article be debased by adulteration, let it be misrepresented by false branding, and Congress may exercise its prohibitive power. It may be that Congress could not prohibit the manufacture of the article in a State. It may be that Congress could not prohibit in all of its conditions its sale within a State; but Congress may prohibit its transportation between the States, and by that means defeat the motive and evils of its manufacture. How far-reaching are the power and the means which may be used to secure its complete exercise we have expressed in Hipolite Egg Co. v. United States (220 U. S.. 45).

In McDermott v. Wisconsin (228 U. S., 115), Mr. Justice Day, referring to the pure food and drugs act, said:

That Congress has ample power in this connection is no longer open to ques tion. That body has the right not only to pass laws which shall regulate legitimate commerce among the States and with foreign nations, but has full power to keep the channels of such commerce free from the transportation of illicit or harmful articles, to make such as are injurious to the public health outlaws of such commerce and to bar them from the facilities and privileges thereof. Congress may itself determine the means appropriate to this purpose, and so long as they do no violence to other provisions of the Constitution it is itself the judge of the means to be employed in exercising the powers conferred upon it in this respect.

The purpose of the pending bill, in so far as it relates to the transmission of stock quotations over the telegraph and telephone, is the prevention of fraud and deceit, which tend to bring about the infliction of public injury of a character as insidious as, but more extensive than, that accomplished through lotteries or similar devices. If Congress may altogether prohibit the carriage of lottery tickets, or the transportation of impure or adulterated food or drugs. or of a prostitute, from one State to another, it certainly possesses the right to prohibit the transmission of information pertaining to stock quotations, unless the genuineness and honesty of such quotations are so safeguarded as to eliminate those conditions which tend to make them fraudulent, and which enable them to be used for purposes of chicanery and deceit.

Respectfully submitted.

SAMUEL UNTERMYER.
LOUIS MARSHALL.

PERSONAL EXPLANATION IN CONNECTION WITH THE STOCK EXCHANGE BILL.

To the Senate Committee on Banking and Currency:

In connection with the accompanying brief I feel that it is my right and duty in the public interest as affected by the fate of this bill to burden you with a personal explanation of extraneous matters that were injected into the hearing before you and spread broadcast through the newspapers.

The transaction in question about which I was interrogated and on account of which the discussion on the bill was suspended occurred 23 years ago. It had reference to my relations and those of my then law firm with the organization and flotation of the securities of the Columbia Straw Paper Co. in 1891. It had not the remotest bearing to the subject matter of the bill, which I appeared before you to explain at the request of your chairman.

The announced purpose of converting the hearing on the bill into an investigation of this ancient transaction was to endeavor to show that my position in now urging this reform was in some unexplained way inconsistent with my attitude of 23 years ago in the case referred to; that whilst I am now championing legislation to require rigid supervision of the sale of securities on stock exchanges, there were court decisions showing that 23 years ago I or the law firm of which I was then a member had been engaged as counsel in organizing the Straw Paper Co., which was said to have been overcapitalized, and that in return for a large personal investment made by me in the bonds of the company and for services connected with its organization I had been paid a stock bonus with the bonds for which we paid at par. It would not have been strange to find one's views on corporate and economic questions affecting stock issues undergoing some slight change in the course of a quarter of a century. I assume that is true of most of us, but it so happens that there is not the slightest inconsistency between my relations to that transaction and my contentions here.

Apart from the fact that there was nothing wrong, irregular, unusual, or the subject of just criticism connected with the business referred to and that, based upon the representations upon which my money was secured and upon the amounts that were paid to the owners of the property, the capital was more moderate and the stock issued for good will was less than in almost any of the companies organized during that period and since that time, my connection with the business consisted of my having been cheated out of a large sum of money by fraudulent representations as to the property. Both the bonds, for which I paid par in cash, and the stock bonus that went with them proved worthless, and I and my partners lost over $400,000 of our money, besides our pay for services which we had elected to take in bonds and stocks instead of cash.