Commerce cannot be carried on, at least in any large measure, without currency and credit. Hence the whole system of money and banking links itself up closely with commercial organization. Goods are bought on credit by the wholesaler, and sold on credit to the retail merchant who, in turn, often sells on credit to his customers. The banks and other credit institutions provide the money to carry on these operations of trade. So when one takes all these things into account it will be seen that a considerable proportion of the people are engaged in one or another of the various branches of commerce.
Local, interstate, and international commerce.
The Three Fields of Commerce.—In order to clarify the relations of government to commerce it is necessary, at the outset, to distinguish between three fields or types of commerce. The first is local or intra-state commerce, which comprises all the trading operations carried on within the boundaries of a single state. Goods produced in Pittsburgh and marketed in Philadelphia are said to be within the sphere of local or intra-state commerce. As such they are wholly within the jurisdiction of the state of Pennsylvania. In the second place there is a large amount of commerce which, originating in one state, crosses into another. Shoes made in Massachusetts are shipped to Indiana; cotton grown in Georgia is sent to New York to be manufactured. This is called national or inter-state commerce and it is under the jurisdiction of the federal government. Finally, trade is carried on between the United States and foreign countries and this is known as international commerce. It also is subject to regulation by the federal government.
The state governments control local commerce.
Local Commerce.—Each state makes provision for the encouragement and regulation of commerce within its own territory. The communities and the state provide the improved roads which are essential for trade between country and town. The development of motor cars, motor trucks, and suburban trolley lines has greatly increased the facility with which this trade can be carried on. Each state, again, has control over the street railways, short-line railroads, and other channels of commerce within its own borders. This control is exercised through provisions of laws made by the state legislatures, but the enforcement of these regulations is usually placed in the hands of one or more boards, commonly known as public service commissions (see pp. 480-481). It is the duty of these commissions to see that the rates charged are reasonable and that adequate service is rendered. The jurisdiction of the state authorities, it should be repeated, does not extend over any commercial operations which are not strictly local; if the commerce concerns more than a single state it can be regulated only by the national government.
Interstate Commerce and the Railroads
Interstate commerce in early days.
Interstate Commerce.—During the years which immediately followed the Revolutionary War the several states were free to make their own regulations for the encouragement and control of commerce. Accordingly they began to compete with one another for trade, each trying to increase its own prosperity at the expense of the others. This led to ill-feeling, of course, and finally to retaliation. One state would offer inducements to bring vessels into its ports; the others, in self-defence, held out even greater inducements. This rivalry soon got to the point where it looked as if some of the states might come to blows.[[160]] So, when the framers of the national constitution met at Philadelphia in 1787, they gave particular attention to the problem of ending this unwholesome rivalry by placing the regulation of all interstate and foreign commerce under a single, central authority.
The constitution places interstate commerce under federal control.
The national constitution, therefore, transferred this regulating power from the states to Congress, by vesting in it the power “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes”. This is a very important provision in the supreme law of the land, and it has had a far-reaching influence in building up the commerce of the United States. One can realize what might have happened if every state had been left at liberty to put duties upon goods imported from other states and to bestow all sorts of advantages upon its own merchants. Under such an arrangement a closely-knit, unified country would have been impossible, for freedom of trade within a nation is an indispensable factor in bringing the whole people into close and friendly relations. The adoption of this clause in the national constitution meant that all trade, from one end of the land to the other, could be carried on freely, without let or hindrance, subject only to such uniform regulations as Congress might provide.