The first of the "Granger cases," as they were termed by Justice Field in a dissenting opinion, was not a railroad case primarily but grew out of warehouse legislation which the farmers of Illinois secured in 1871. This act established maximum charges for grain storage and required all warehousemen to publish their rates for each year during the first week in January and to refrain from increasing these rates during the year and from discriminating between customers. In an endeavor to enforce this law the railroad and warehouse commission brought suit against Munn and Scott, a warehouse firm in Chicago, for failure to take out the license required by the act. The suit, known as Munn vs. Illinois, finally came to the United States Supreme Court and was decided in favor of the State, two of the justices dissenting. ¹ The opinion of the court in this case, delivered by Chief Justice Waite, laid down the principles which were followed in the railroad cases. The attorneys for the warehousemen had argued that the act in question, by assuming to limit charges, amounted to a deprivation of property without due process of law and was thus repugnant to the Fourteenth Amendment to the Constitution of the United States. But the court declared that it had long been customary both in England and America to regulate by law any business in which the public has an interest, such as ferries, common carriers, bakers, or millers, and that the warehouse business in question was undoubtedly clothed with such a public interest. Further, it was asserted that this right to regulate implied the right to fix maximum charges, and that what those charges should be was a legislative and not a judicial question.
¹ 94 United States Reports, 113.
In deciding the railroad cases the courts applied the same general principles, the public nature of the railroad business having already been established by a decision in 1872. ¹ Another point was involved, however, because of the contention of the attorneys for the companies that the railway charters were contracts and that the enforcement of the laws would amount to an impairment of contracts, which was forbidden by the Constitution. The court admitted that the charters were contracts but denied that state regulation could be considered an impairment of contracts unless the terms of the charter were specific. Moreover, it was pointed out that contracts must be interpreted in the light of rights reserved to the State in its constitution and in the light of its general laws of incorporation under which the charters were granted.
¹ Olcott vs. The Supervisors, 16 Wallace, 678.
These court decisions established principles which even now are of vital concern to business and politics. From that time to this no one has denied the right of States to fix maximum charges for any business which is public in its nature or which has been clothed with a public interest; nor has the inclusion of the railroad and warehouse businesses in that class been questioned. The opinion, however, that this right of the States is unlimited, and therefore not subject to judicial review, has been practically reversed. In 1890 the Supreme Court declared a Minnesota law invalid because it denied a judicial hearing as to the reasonableness of rates; ¹ and the courts now assume it to be their right and duty to determine whether or not rates fixed by legislation are so low as to amount to a deprivation of property without due process of law. In spite of this later limitation upon the power of the States, the Granger decisions have furnished the legal basis for state regulation of railroads down to the present day. They are the most significant achievements of the anti-monopoly movement of the seventies.
¹ 134 United States Reports, 418.
[CHAPTER V.]
The Collapse of the Granger Movement