heard against it is from those who wish through some form of combination or agreement, to raise prices or restrict competition. When the pending suits against the great combinations are terminated, I believe no abnormally large combinations will be left intact, and the businesses and property now held by them will be distributed among a sufficient number of separate and distinct companies to remove all possible fear of undue influence by them over the business of the country. If their future activities are restricted by injunctive provisions in adequately drawn decrees, and the government law department is vigilant in seeing that they are complied with, it is my hope that no further legislation will be necessary to protect against undue restraints of interstate commerce.

IN

XI

FEDERAL CONTROL OF STOCK AND BOND ISSUES BY INTER

STATE CARRIERS1

'N a special message to Congress in January, 1910, the President recommended the enactment of a law regulating the issue of stocks and bonds by railroad companies subject to the Interstate Commerce Act, for any purpose connected with or relating to any part of its business governed by that act. The Republican platform of 1908 had declared in favor of such legislation. The President expressed his opinion that it would be plainly within the jurisdiction of Congress. The bills for the amendment of the Interstate Commerce Act, in accordance with the President's recommendations, introduced into each House of Congress, contained provisions prescribing the conditions under which stocks and bonds should be issued. The necessity of expressing such regulations in negative and restrictive form, because applied to corporations deriving their corporate life and powers from State

'An address delivered before the Illinois State Bar Association, at Chicago, June 24, 1910.

laws, resulted in complicated provisions not easily understood by those unfamiliar with the subjects involved. Partly on this account, partly on account of doubts as to the constitutionality of such legislation entertained by most Democrats and by some Republicans, the provisions dealing with that subject were dropped from the bill, but a clause was inserted authorizing the President to appoint a Commission to investigate "questions pertaining to the issuance of stocks and bonds by railroad corporations subject to the provisions of the Act to Regulate Commerce, and the power of Congress to regulate the same.

The first question arising in the consideration of this matter will be, necessarily, the power of Congress to legislate in the premises, and it has therefore seemed to me that a discussion of that subject would be of timely interest.

The authority of Congress over the issue of stocks and bonds by State railroad corporations engaged in interstate commerce must rest upon the provisions of Section 8 of Article I. of the Constitution, granting to the Congress power—

To regulate commerce with foreign nations, and among the several States, and with the Indian tribes, [and] .

To make all laws which shall be necessary and proper for carrying into execution the foregoing powers. .

This grant vested in the Congress a power in its nature sovereign and exclusive over such commerce,

to be exercised in such manner as Congress in its wisdom should deem fit, provided the means adopted should be in some respect appropriate or adapted to carrying into execution the powers so conferred. But the relationship between the means and the end need not be direct and immediate.1

No better definition of this power, and no clearer statement of the principles governing its construction and exercise, ever has been formulated than the opinion of Alexander Hamilton on the constitutionality of a national bank law, rendered February 23, 1791. Thomas Jefferson, then Secretary of State, and Edmund Randolph, the Attorney-General, had united in advising President Washington that Congress was without power to establish a national bank, their objections being founded on a general denial of the authority of the United States to erect corporations. But Hamilton asserted that the national government was empowered to create corporations whenever the Congress deemed such action necessary or proper to carry out more effectually any power conferred by the Constitution; that such power was "inherent in the very definition of government, and essential to every step of the progress to be made by that of the United States."

Every power vested in a government [he maintained] is in its nature sovereign and includes by force

I Legal Tender Cases, 12 Wall., 457, 543.

of the term a right to employ all the means requisite and fairly applicable to the attainment of the ends of such power and which are not precluded by restrictions and exceptions specified in the Constitution, or not immoral, or not contrary to the essential ends of political society. .

The circumstance that the powers of sovereignty are in this country divided between the National and State governments does not afford the distinction which makes this principle inapplicable to the United States.

It does not follow from this, that each of the portion of powers delegated to the one or to the other, is not sovereign with regard to its proper objects. It will only follow from it, that each has sovereign power as to certain things, and not as to other things.

He held the power to erect corporations to be unquestionably incident to sovereign power, and consequently to that of the United States "in relation to the objects entrusted to the management of the Government."

The difference is this: where the authority of the Government is general, it can create corporations in all cases; where it is confined to certain branches of legislation it can create corporations only in those

cases.

The only question to be considered was whether the means to be employed, or the corporation to be erected, has any natural relation to any acknowledged objects or lawful ends of the government.