In its complete control over the postal service Congress may exclude lottery advertisements or any other matter objectionable on grounds of public policy.[204] An order requiring return to the senders of all letters addressed to a concern engaged in a fraudulent enterprise, or to its officers as such was held reasonable and valid because an order limited to matter obviously connected with the enterprise would be a practical nullity.[205] Such an order may be issued by the Postmaster General "upon evidence satisfactory to him,"[206] but if issued under a "mistake of law" as to what facts may properly be deemed to constitute fraud, it will be enjoined by the courts.[207] A hearing upon revocation of second-class mailing privileges by an assistant Postmaster General upon notice, at which relator was heard and evidence received was due process.[208]
Congressional Regulation of Public Utilities
Inasmuch as Congress, in giving federal agencies jurisdiction over various public utilities, usually has prescribed standards substantially identical with those by which the Supreme Court has tested the validity of State action, the review of their orders seldom has turned on constitutional issues. In two cases, however, maximum rates for stockyard companies prescribed by the Secretary of Agriculture were sustained only after detailed consideration of numerous items excluded from the rate base or from operating expenses, apparently on the assumption that error with respect to any such item would render the rates confiscatory and void.[209] A few years later, in Federal Power Commission v. Hope Natural Gas Co.,[210] the Court adopted an entirely different approach. It took the position that the validity of the Commission's order depended upon whether the impact or total effect of the order is just and reasonable, rather than upon the method of computing the rate base. Rates which enable a company to operate successfully, to maintain its financial integrity, to attract capital, and to compensate its investors for the risks assumed cannot be condemned as unjust and unreasonable even though they might produce only a meager return in a rate base computed by the "present fair value" method.[211]
Orders prescribing the form and contents of accounts kept by public utility companies,[212] and statutes requiring a private carrier to furnish information for valuing its property to the Interstate Commerce Commission[213] have been sustained against the objection that they were arbitrary and invalid. An order of the Secretary of Commerce directed to a single common carrier by water requiring it to file a summary of its books and records pertaining to its rates was held not to violate the Fifth Amendment.[214]
Congressional Regulation of Railroads
Legislation or administrative orders pertaining to railroads have been challenged repeatedly under the due process clause but seldom with success. Orders of the Interstate Commerce Commission establishing through routes and joint rates have been sustained,[215] as has its division of joint rates to give a weaker group of carriers a greater share of such rates where the proportion allotted to the stronger group was adequate to avoid confiscation.[216] The recapture of one half of the earnings of railroads in excess of a fair net operating income, such recaptured earnings to be available as a revolving fund for loans to weaker roads, was held valid on the ground that any carrier earning an excess held it as trustee.[217] An order enjoining certain steam railroads from discriminating against an electric railroad by denying it reciprocal switching privileges did not violate the Fifth Amendment even though its practical effect was to admit the electric road to a part of the business being adequately handled by the steam roads.[218] Similarly, the fact that a rule concerning the allotment of coal cars operated to restrict the use of private cars did not amount to a taking of property.[219] Railroad companies were not denied due process of law by a statute forbidding them to transport in interstate commerce commodities which have been manufactured, mined or produced by them.[220] An order approving a lease of one railroad by another, upon condition that displaced employees of the lessor should receive partial compensation for the loss suffered by reason of the lease[221] is consonant with due process of law. A law prohibiting the issuance of free passes was held constitutional even as applied to abolish rights created by a prior agreement whereby the carrier bound itself to issue such passes annually for life, in settlement of a claim for personal injuries.[222]
Occasionally, however, regulatory action has been held invalid under the due process clause. An order issued by the Interstate Commerce Commission relieving short line railroads from the obligation to pay the usual fixed sum per day rental for cars used on foreign roads, for a space of two days was arbitrary and invalid.[223] A retirement act which made eligible for pensions all persons who had been in the service of any railroad within one year prior to the adoption of the law, counted past unconnected service of an employee toward the requirement for a pension without any contribution therefor, and treated all carriers as a single employer and pooled their assets, without regard to their individual obligations, was held unconstitutional.[224]
TAXATION
In laying taxes, the Federal Government is less narrowly restricted by the Fifth Amendment than are the States by the Fourteenth. It may tax property belonging to its citizens, even if such property is never situated within the jurisdiction of the United States,[225] or the income of a citizen resident abroad, which is derived from property located at his residence.[226] The difference is explained by the fact that the protection of the Federal Government follows the citizen wherever he goes, whereas the benefits of State government accrue only to persons and property within the State's borders. The Supreme Court has said that, in the absence of an equal protection clause, "a claim of unreasonable classification or inequality in the incidence or application of a tax raises no question under the Fifth Amendment, * * *"[227] It has sustained, over charges of unfair differentiation between persons, a graduated income tax;[228] a higher tax on oleomargarine than on butter;[229] an excise tax on "puts" but not on "calls";[230] a tax on the income of businesses operated by corporations but not on similar enterprises carried on by individuals;[231] an income tax on foreign corporations, based on their income from sources within the United States, while domestic corporations are taxed on income from all sources;[232] a tax on foreign-built but not upon domestic yachts;[233] a tax on employers of eight or more persons, with exemptions for agricultural labor and domestic service;[234] a gift tax law embodying a plan of graduations and exemptions under which donors of the same amount might be liable for different sums;[235] an Alaska statute imposing license taxes only on nonresident fisherman;[236] an act which taxed the manufacture of oil and fertilizer from herring at a higher rate than similar processing of other fish or fish offal;[237] an excess profits tax which defined "invested capital" with reference to the original cost of the property rather than to its present value;[238] and an undistributed profits tax in the computation of which special credits were allowed to certain taxpayers;[239] an estate tax upon the estate of a deceased spouse in respect of the moiety of the surviving spouse where the effect of the dissolution of the community is to enhance the value of the survivor's moiety.[240]