complying with the prescribed regulations a legal right or franchise to carry on their interstate and international commerce throughout the United States, free from restrictions imposed by the several states.

Congress has power to require corporations and other associations engaged in interstate or international commerce to file reports as to their organization, powers, and financial condition. Congress also may provide for the appointment of officers and commissions to act as police of interstate commerce and to administer and enforce all constitutional regulations prescribed by law. Congress, therefore, may vest in a national commission or in some public officer all necessary powers for the enforcement of any constitutional regulations enacted by Congress with respect to trading corporations engaged in interstate or international commerce. Such a commission or public officer may be required by law to issue to every corporation that shall have complied with the prescribed regulations a certificate of such compliance in the form of a license; and there seems to be no good reason why such certificates should not be made prima facie evidence of compliance with the prescribed regulations, or why corporations should not be prohibited from engaging in interstate or international commerce until they shall have obtained such certificates.

The power of Congress to enact such legislation would not be based upon the theory that the right to transact interstate and international commerce through a corporate organization was derived from Congress or was conferred by national license, or upon the theory that Congress has power to regulate the organization, powers, or management of state corporations. It would be based upon the theory that a corporate organization is but a means of transacting commerce, and that under its power to regulate interstate and international commerce Congress can prohibit the transaction of such commerce by means of any corporate organization which in its opinion is unsafe or otherwise prejudicial to the interstate commerce of the public.

An attempt on the part of Congress to control or regulate state corporations by means of the imposition of prohibitory excise taxes should not be countenanced. It has been asserted that a legislature may use its taxing power not only as a means of raising revenue, but also as a means of securing by indirection results which the legislature could not constitutionally attain by direct legislation; and in support of this assertion reference has been made to the dictum of Chief Justice Marshall that "the power to tax involves the power to destroy." This dictum, like other striking phrases of that great jurist, has sometimes been quoted without reference to its context and in

1 See the Interstate Commerce Act of February 4, 1887, with its amendments, and the Act of February 14, 1903, establishing the Department of Commerce and Labor and providing for the appointment of a Commissioner of Corporations.

2 See the Interstate Commerce Act of February 4, 1887, and its amendments. M'Culloch vs. Maryland, 4 Wheat. (U.S.) 316, 431 (1819).

support of doctrines which it does not justify. The statement that "the power to tax involves the power to destroy" was made in support of the conclusion that a state could not tax the operations of an instrument of the national government and thus control its constitutional measures; but Chief Justice Marshall certainly did not mean to imply that the taxing power could constitutionally be used as a pretext for the accomplishment of an unconstitutional object. That this was not his meaning is apparent from his statement in the same case that "should Congress, under the pretext of executing its powers, pass laws for the accomplishment of objects not intrusted to the government, it would become the painful duty of this tribunal, should a case requiring such a decision come before it, to say that such an act was not the law of the land." Undoubtedly, the courts would not be justified in scrutinizing the reasonableness of a tax, or the wisdom or motive of Congress in imposing it; but if it should appear plainly that a law nominally imposing a tax was not really a revenue measure, but in fact was an act of confiscation, or a mere pretext for the accomplishment of some purpose not warranted by the Constitution, the Supreme Court could not sustain such a law without abdicating its highest function and permitting the practical nullification of the Constitution itself.1

THE CASE OF THE MONOPOLIES

SOME OF ITS

RESULTS AND SUGGESTIONS

BY SIDNEY T. MILLER OF THE DETROIT BAR

(From the Michigan Law Review, November, 1907)

The most prodigious form the corporation has assumed is the trust or monopoly. The trust problem is not the whole of the corporation problem, by any means, although, in the popular conception, it seems to be so. It is only the most immediate phase, the most imminent phase, of the whole question of how to organize business, allowing it necessary freedom, without endangering the community. The literature on the trust problem is vast. Only three articles are presented here: Professor Frederic Jesup Stimson's setting forth the law of combined action and possession; Mr Miller's article dealing with the historic case of the monopolies, which

1 See, however, the opinion of Mr. Justice White in McCray vs. United States, 195 U.S. 27 (1903). In this case the Supreme Court refused to declare unconstitutional a tax on the manufacture of artificially colored oleomargarine, though the tax obviously was not a revenue measure, and held that the right to manufacture artificially colored oleomargarine was not protected by the Constitution. The decision of the Supreme Court in Veazie vs. Fenno, 8 Wall. (U.S.) 533 (1869) that the imposition by Congress of a prohibitory tax upon state bank notes was constitutional may be sustained on the ground that Congress could absolutely prohibit the issue of such bank notes as a necessary incident to the creation of the national banking and currency system.

ushered in such platoons of legal adversaries; and Professor Wilgus's wellknown analysis of the Standard Oil decision, which was the culmination of our attempt to apply the Sherman Law to the greatest of modern monopolies. - EDITOR'S NOTE.

1

Apparently the monopolistic idea is as old as the history of man. That great and good man, Job, may be counted as the earliest recorded "trust-buster," 1 if we read between the lines of his story, and Solomon said, "He that withholdeth corn, the people shall curse him; but blessing shall be upon the head of him that selleth it."

Doubtless, by exhaustive search, we could find some record of attempts to monopolize during each century from Biblical days to the time of printing, and as surely there must have been a countermovement.

But not until the last five hundred years of English history have the pros and cons crystallized in such a way as to be of intelligent use to us. In legal records, the "Case of the Monopolies" is the first meeting, head-on and with a clear field, of the monopolists and antimonopolists, and it therefore seems worthy of close scrutiny. If we uncover the reasons for this particular quarrel we shall find something like this:

I

In the early days of England, kings, like common folk, often were in straits for money. In olden times, when the "divine right" was part of the religion of the nation, a short cut to relief for the empty purse was found by a war of conquest. If the ruler were not powerful enough for this he resorted to petty measures, confiscating the property of his wealthier subjects on trumped-up charges of treason, or by levying taxes.

But by the latter part of the reign of Elizabeth the people had become a power. Whether the crown wished or not, they had to be consulted in matters of taxation. Parliament, too, had some say about attainders for treason, and confiscation. The old short cuts were shut off; new expedients must be found, therefore, for helping the treasury.

Whatever else may be said of the ancestors of our nation we must admire the way the lawyers met any emergency which arose. Some poor bailiff ran off with the funds of his lord, — instead of sighing for the sweet old days when he might have chased him with bloodhounds and have strung him up when caught, the good baron who was robbed took himself to the law a new remedy must be devised, and lo, the writ of capias was born. Again, a cleric declined to give

1 Job, 29.

2 Proverbs, 11: 26. See also Genesis, chap. xlvii, for an account of Pharaoh's monopoly.

up a fat living. He was not clapped in a town jail, or taken to the tower and branded. Those methods had gone out of fashion. The law must rule if it did not reach the case, stretch it a little and devise a new writ. So the clerics became responsible for the writ of quo warranto. The remedies sprang full-armed from the courts, fathered by the inventive genius of the old English bar.

So to some shrewd counselor of the earlier days must be attributed the idea of formally granting special privileges to favored mortals as a means of revenue to the crown or as a reward for services rendered. These grants grew until they became in most cases monopolies, and were in fact styled "monopolies" or "purveyances." The scheme was a ready and easy makeshift, to enable the sovereign to obtain coin when needed.

The practice reached its climax while Elizabeth was in power. A list of her grants includes patents giving the sole rights to sell or manufacture currants, salt, iron, powder, cards, calf-skins, fells, pouldavies, ox-shin bones, train-oil, lists of cloth, potashes, aniseseed, vinegar, sea-coals, steel, aqua-vitæ, brushes, pots, saltpeter, bottles, lead, accidences, oil, calamine-stone, oil-of-blubber, glasses, paper, starch, tin, sulphur, new drapery, dried pilchards, beer, horn, leather, Irish yarn, importation of Spanish wool, and transportation of iron ordinance.1 These monopolists were less merciful than their successors of to-day, as it is noted that they raised the price of salt from sixteen. pence a bushel to fourteen or fifteen shillings.2

The Virgin Queen also distinguished herself by chartering the East India Company, then called the "Governor and Company of London trading to the East Indies," which was a fine pattern of monopoly. This was in the last year of the sixteenth century and

1 To golf enthusiasts this may be of interest.

On June 26th, 1626, William and Thomas Dickson, makers of "gowffe" balls in Leith, complained to the Privy Council that James Melville, quartermaster of Lord Morton's regiment, pretends that he had a gift from James VI for excluding a certain import on golf balls and for exacting "an import off every gowffe ball made within this kingdom," which their lordships had never ratified on Feb. 20th, Melville sent "lawless soldiours" who took from Dickson's house a great number of "gowffe balls," which they had made for his majesty's use.

Dicksons were fined five pounds, and one hundred pounds, "caution,"

See "Sphere," February 22, 1902. "Privy Council of Scotland."

2 Hume's History of England, Vol. IV, p. 209; some of the things named are strange to us: pouldavies, a coarse canvas; calamine-stone, a kind of zinc-silicate; pilchards, a small herring-like fish.

3 For a graphic introduction to the possibilities of this company see Macaulay's History of England, Vol. IV, p. 104, et seq. Sir Josiah Child's career is a curious parallel of many a self-made man's rise in our contemporary "Trusts." The charter for the company was granted in 1599, and its rights were practically unchallenged for nearly a century. It is noteworthy, too, that under Elizabeth were ratified letters patent granted by Henry VIII in 1534 to the University of Cambridge licensing it to appoint three printers to print and sell all books approved by the Chancellor and three Doctors. This was a monopoly limited geographically, but is interesting as a forerunner of the famous "Stationers' Company," which so long held all writers in its strong grasp. See Birrell's Law and History of Copyright, p. 56.

before the nation had expressed any formally pronounced disapproval of the grants.

But the fruit which was sweet to the favored few was bitter to the taste of the many. In 1597 unsuccessful protests had been made in Parliament, and in 1601 a list of monopolies was made out and it was proposed to abolish them by law. Sharp discussion followed: Francis Bacon took the side of the royal prerogative, and Sergeant Heyle asserted that the queen could take what she pleased from the subject of her regal right.1 The discontent of the people nerved the Parliamentary opponents of the grants, however, and they stood firm. As Macaulay says (Vol. I, p. 49, of his History of England) :

It was in 1601 that the opposition which had, during forty years, been silently gathering and husbanding strength, fought its first great battle and won its first victory. The ground was well chosen. The English sovereigns had always been intrusted with the supreme direction of commercial police. It was their undoubted prerogative to regulate coin, weights and measures, and to appoint fairs, markets and ports. The line which bounded their authority over trade had, as usual, been but loosely drawn. They therefore, as usual, encroached on the province which rightfully belonged to the legislature. The encroachment was, as usual, patiently borne, till it became serious. But at length the queen took upon herself to grant patents of monopoly by scores. Iron, oil, vinegar, coal, etc., etc., could be bought only at exorbitant prices. The House of Commons met in an angry and determined mood. There seemed for a moment some danger that the long and glorious reign of Elizabeth would have a shameful and disastrous end. She, however, with admirable judgment and temper, declined the contest, put herself at the head of the reforms, redressed the grievance, thanked the Commons, etc., etc.

This was a popular triumph but was comparatively barren of results. A great number of the hated gifts of the crown still remained in force. It seemed to many that they had been tricked and the spirit of discontent was not downed. Encouraged by the strength shown in Parliament a case was pressed to test the legality of the grants. That was the famous Case of the Monopolies, reported in XI Coke, page 85, under the title of Darcy vs. Allein, and decided in 1602, 44th Elizabeth. The plaintiff was a groom of the queen's privy chamber; the defendant a haberdasher in London. The action was

1 See Skottowe's Short History of the English Parliament, p. 54.

2 Campbell, Puritan in Holland, England and America, Vol. II, p. 175. Green says that all obnoxious grants were canceled, "she (the queen) acted with her usual ability, declared her previous ignorance of the existence of the evil, thanked the House for its interference, and quashed at a single blow every monopoly that she had granted." Short History of the English People, Vol. II, p. 813. Either this statement is wrong or else some of the grants were speedily renewed. Green (Vol. III, p. 1072) says they were revived under Charles I, but it would seem that some of them not only had been spared by Elizabeth but had actually struggled through the Act of Parliament passed under James I to officially extinguish them.