This control is now very extensive.
In the days when the national constitution was adopted, the carriers of commerce were few and primitive. Trade between different states was conducted by wagon and sailing vessels; there were no railroads, steamships, street cars, motor trucks, telegraphs, telephones, or parcels post. The cost of transporting goods was so great that it did not pay to ship them far. Goods were made almost wholly for the local market. But when the constitution endowed Congress with the power “to regulate commerce” it gave to this body a right which has been sufficiently broad to cover all the great developments of the past hundred years. Whatever comes within the term “commerce”, no matter howsoever carried on, is within the purview of Congress if it concerns more than a single state.
A large part of the commerce of the United States today does concern more than a single state. The great railroads traverse several states, sometimes a dozen or more of them. Goods sent from New York to Los Angeles pass through ten or twelve states on their journey. Even street car lines sometimes cross the state boundaries. To the trader a state boundary means nothing; it is only a mark on the map. Trade moves wherever the chance of profit appears. It pays no attention to political divisions within the country.
What interstate commerce includes.
Interstate commerce, then, includes all agencies of trade among the states: steamships, sailing vessels, railroads, street railways, motor trucks, telegraphs, telephone systems, oil pipelines, power lines, and all passengers, goods, messages, or anything else carried by them. All persons who have to do with such things are engaged in interstate commerce. But interstate commerce does not include the manufacture of goods in any state, even though they be intended for sale in other states. Commerce does not begin until the product is finished and started on its way. Once started on their way, with a destination in another state, the goods pass under the supervision of the national government. Passengers traveling from Chicago to St. Louis, or goods shipped from one of these cities to the other, or messages exchanged between them by telegraph, for example, are under the supervision of the national government from start to finish. Illinois and Missouri have nothing to do with them.
Railroads and steamships were at first not regulated.
How Interstate Commerce is Regulated.—For many years after the constitution was adopted there was no need for the regulation of interstate commerce because so little of it was carried on. Not until the era of steamships and railroads did commerce develop to a point where any strict regulation was necessary. The earliest railroads, moreover, were short lines constructed and operated wholly within single states. They were built by corporations under charters granted by the states. Frequently these charters were given for an indefinite term, and they placed no limits upon the rates which the railroad might charge for the transportation of passengers and goods. The chief concern of the people in those days was to get railroads built. As time went on, however, the state authorities became more strict in granting charters for the construction of railroads and, finally, most of them established commissions to protect passengers and shippers from unreasonable rates.
Meanwhile, however, another development was going on, namely, the consolidation of these small railroads into trunk lines or long stretches of railway. The reason for this consolidation was the opportunity to make larger earnings from through traffic and at the same time to give better service. The opening-up of the West led to the building of new trunk lines and to further consolidations, especially during the years immediately following the Civil War. In this way single railroads spread themselves far outside the territory of a single state; their tracks ran into many states. |But this freedom from control was abused.| The corporations controlling such trunk lines became big and powerful. They fixed rates to suit themselves and often favored one section of the country at the expense of others, or gave to large shippers an undue advantage over the smaller.[[161]] Where there was but one railroad in any district everyone was at its mercy. Exorbitant rates could be charged. On the other hand, where there were competing lines between two cities the rivalry of the roads often forced the rates down to a point where goods were carried at a loss. Sometimes the competing roads, realizing the folly of this competition, formed a “pool” or agreement to share the traffic proportionately, and then each put up its rates to a high level. These practices were inimical to the best interests of commerce. They gave rise to so much complaint that Congress eventually responded by placing the interstate railroads under government regulation. This it did by the Interstate Commerce Act of 1887.
The beginnings of federal regulation.
The Interstate Commerce Act of 1887.—By the provisions of this act and the various amendments which have been made to it during the past thirty-five years, all corporations engaged in interstate commerce (which includes not only railroad companies, but express, sleeping car, telegraph, and telephone companies) must maintain reasonable rates; must make these rates public; and must not discriminate in favor of any locality or shipper. The formation of “pools” is illegal; the granting of free passes to other than railroad officials is forbidden; and all the important activities of the railroads are subject to governmental supervision. These various provisions were not all enacted in 1887. The legislation of that date merely made a substantial beginning. Several amending laws, passed from time to time during the past thirty-five years, have steadily extended the scope of regulation and have also endeavored to secure greater safety in the operation of the railroads.