The question arises whether such an exclusion would not violate the freedom of the press, since newspapers and other publications could not use the mails if they contained any information, however harmless and valuable, concerning any transactions (to which Congress might have no objection) of the exchange which has refused to accept regulations which the general government had no power directly to impose. Newspapers would be unable to circulate truth on matters of public concern if the published information as to stock quotations, although harmless in its nature, concerned an institution whose practices Congress was indirectly attempting to check. If the law were carefully confined to the prohibition of the circulation of publications which contained matter relating to gambling transactions, there would be no abridgment of the guarantee of the First Amendment. The exclusion would be similar to that of lottery advertisements, or matter designed to aid in defrauding recipients. But as proposed by the Pujo Committee, the law would, at least in part, if not as a whole, operate as an abridgment of the freedom of the press.
Apart from this consideration, however, the theory of the law, differently stated, is that Congress, under its power to exclude from the mails gambling contracts and matter designed to defraud recipients, may go farther and exclude harmless matter because this seems a necessary and adequate means of compelling the exchanges to take out state charters, a concession thought by Congress to be desirable in order to prevent the gambling and other harmful practices, over which there is no direct national control.
Still other proposals would extend federal authority in a similar manner. It is urged, for example, that Congress prohibit the use of the mails by fire insurance companies which at present are, by means of the postoffice, able to do business in states where they could not, if they used local agents.[428] And to give a third example, it was argued that an efficient means of prohibiting trading in cotton futures would be to deny the use of the mails for the furtherance of such transactions.[429] The extent to which the Supreme Court has thus far recognized in Congress authority of this character, is only to sanction the refusal to lend federal aid, by furnishing postal facilities to the furtherance or consummation of gambling and fraudulent schemes.
One measure of a character somewhat analogous to those proposals which we have been considering, has, however, already been sustained by the Supreme Court of the United States. I refer to the recent so-called “Newspaper Publicity Law” which requires publications entered as second-class matter (with a few exceptions) to furnish the postoffice department with, and publish, a sworn statement giving the names and addresses of the owners, editors, and business managers, and, in the case of daily newspapers, circulation figures. It is provided that “any such publication shall be denied the privileges of the mail if it shall fail to comply with the provisions of this paragraph within ten days after notice by registered letter of such failure.”[430]
As claimed in the defendants’ brief, when the law went before the Supreme Court, Congress had, in effect, attempted “to regulate journalism.” Relying upon its power over the postoffice, Congress had threatened those publications which enjoy second-class rates with a denial of this privilege should they refuse to comply with the conditions; and it was, moreover, made a crime to continue to use the mails and violate the stipulation that all reading matter for the publication of which a valuable consideration is received, “shall be plainly marked ‘advertisement.’” Such regulations, without any reference to the use of the mails, would be obviously outside the constitutional power of Congress.
By a narrow, but nevertheless a convincing line of reasoning, the Supreme Court, through Chief Justice White, was able to justify the law without being put to the necessity of making any definite declaration as to the limits to which Congress may go in its exercise of what, lacking a better phrase, we may call “indirect regulation under the postal power.”
The Court’s opinion shows that in the classification of mail matter there has been no attempt at uniformity and that periodical publications have enjoyed special favors by reason of legislative adherence to what has been described as the “historic policy of encouraging by low postal rates the dissemination of current intelligence.”[431] It is shown that as a condition precedent to being “entered as second class mail matter” and enjoying the low rates which are maintained at a loss, the government demands an answer to a score of questions concerning ownership, editorial direction, advertising discrimination, specimen copies, and circulation. To the Third Assistant Postmaster General is given the authority of accepting or rejecting applications of entry at the second-class rate.[432] The Supreme Court simply considered the law as laying down new conditions, compliance with which will continue the right “to enjoy great privileges and advantages at the public expense.” In its opinion the Court says:
“As the right to consider the character of the publication as an advertising medium was previously deemed to be incidental to the exercise of the power to classify for the purpose of the second class mail, it is impossible in reason to perceive why the new condition as to marking matter, which is paid for as an advertisement, is not equally incidental to the right to classify.
“And the additional exactions as to disclosure of stockholders, principals, creditors, etc., also are clearly incidental to the power to classify as are the requirements as to disclosure of ownership, editors, etc., which for so many years formed the basis of the right of admission to the classification. We say this because of the intimate relation which exists between ownership and debt....
“Considered intrinsically, no completer statement of the relation which the newly exacted conditions bear to the great public purpose which induced Congress to continue in favor of the publishers of newspapers at vast public expense the low postal rate as well as other privileges accorded by the second class mail classification, can be made than was expressed in the report of the Senate Committee stating the intent of the legislation—that is, to secure to the public ‘in the dissemination of knowledge of current events’ by means of newspapers, the names, not only of the apparent, but of what might prove to be the real and substantial owners of the publications and to enable the public to know whether the matter which was published was what it purported to be, or was in substance a paid advertisement.