lines. It would hardly be maintained, we think, that had the State established custom-houses on her borders, wherever a railroad or canal comes to the State line, and demanded at these houses a duty for allowing merchandise to enter or leave the State upon one of those railroads or canals, such an imposition would not have been a regulation of commerce with her sister States. Yet it is difficult to see any substantial difference between the supposed case and the one we have in hand. The goods of no citizen of New York, New Jersey, Ohio, or of any other State, may be placed upon a canal, railroad, or steamboat within the State for transportation any distance, either into or out of the State, without being subjected to the burden. Nor can it make any difference that the legislative purpose was to raise money for the support of the State government, and not to regulate transportation. It is not the purpose of the law, but its effect, which we are now considering.. Interstate transportation of passengers is beyond the reach of A tax on a State legislature. And if State taxation of persons passing from one State to another, or a State tax upon interstate transportation of passengers is unconstitutional, a fortiori, if possible, is a State tax upon the carriage of merchandise from State to State, in conflict with the Federal Constitution. Merchandise is the subject of commerce. Transportation is essential to commerce; and every burden laid upon it is pro tanto a restriction. Whatever, therefore, may be the true doctrine respecting the exclusiveness of the power vested in Congress to regulate commerce among the States, we regard it as established that no State can impose a tax upon freight transported from State to State, or upon the transporter because of such transportation.

...

passengers

is void.

But while holding this, we recognize fully the power of each Conclusion State to tax at its discretion its own internal commerce, a d the franchises, property, or business of its own corporations, so that interstate intercourse, trade, or commerce, be not embarrassed or restricted. That must remain free. The conclusion of the whole is that, in our opinion, the act of the legislature of Pennsylvania

of August 25th, 1864, so far as it applies to articles carried through the State, or articles taken up in the State and carried out of it, or articles taken up without the State and brought into it, is unconstitutional and void.

The appointment of the committee.

The complications of

the question.

146. The Condition of Transportation in 1885

Although the federal and state governments lavished aid upon railway corporations in the form of land grants, subsidies, and franchises, it was a long time before any serious attempt was made to protect the public from discriminations and exorbitant charges by common carriers. At last in 1885 an important Senate committee was appointed to investigate conditions of transportation throughout the United States and make recommendations for federal legislation. Largely on the basis of the report of this committee the Interstate Commerce Act was passed in 1887. The specific abuses against which the legislation was directed are thus stated by the Senate committee:

The committee was appointed by the President of the Senate March 21, 1885, under authority of a resolution adopted by the Senate of the United States March 17, 1885, and reading as follows:

Resolved, That a select committee of five Senators be appointed to investigate and report upon the subject of the regulation of the transportation by railroad and water routes in connection or in competition with said railroads of freight and passengers between the several States, with authority to sit during the recess of Congress, and with power to summon witnesses and to do whatever is necessary for a full examination of the subject, and report to the Senate on or before the second Monday of December next. Said committee shall have power to appoint a clerk and stenographer, and the expenses of such investigation shall be paid from the appropriation for expenses of inquiries and investigations ordered by the Senate.

The committee began its work impressed with the importance of the duty with which it had been charged, and with each step taken in prosecuting the inquiry directed has realised more fully

how serious were the obstacles to be overcome in attempting to faithfully carry out its instructions. The field opened up for investigation was so extensive, the social, economic, legal, and other questions involved so complicated, and the agricultural, commercial, industrial, and corporate interests affected so vast and varied as to require for a thorough and satisfactory examination into technical details more time and labor than could be given, with the facilities at command, during the summer recess of the Senate. . . .

The conclusion was reached that the committee would best serve the public interest and carry out the purpose of the resolution under which it was appointed by devoting its attention mainly to the consideration of the question whether any legislation to regulate the management of the transportation lines of the country is advisable, and, if so, what the scope and character of that legislation should be. This is the question that awaits the decision of the Congress....

The committee recognizes the justice of this demand, and believes that action by Congress looking to the regulation of interstate transportation is necessary and expedient, for the following

reasons:

Purpose of the investi

gation.

master of the situa

1. The public interest demands regulation of the business of The carrier, transportation because, in the absence of such regulation, the carrier is practically and actually the sole and final arbiter upon all tion. disputed questions that arise between shipper and carrier as to whether rates are reasonable or unjust discrimination has been practiced. . . .

2. It is the duty of Congress to undertake the regulation of the business of transportation, because of admitted abuses in its management and of acknowledged discriminations between persons and places in its practical operation — evils which it is possible to reach and remedy only through the exercise of the powers granted by the Constitution to Congress, and against which the citizen is entitled to the protection and relief the national authority can. alone afford. . . .

...

4. National legislation is also necessary, because the business of

Transportation is national.

The

complaints

transportation is essentially of a nature which requires that uniform system and method of regulation which the national authority can alone prescribe. . .

5. The failure of Congress to act is an excuse for the attempts made by the railroads to regulate the commerce of the country in their own way and in their own interests by whatever combinations and methods they are able to put into operation.

The complaints against the railroad system of the United States against the expressed to the committee are based upon the following charges: 1. That local rates are unreasonably high, compared with through rates.

railways.

High rates.

Discriminations.

Rebates.

2. That both local and through rates are unreasonably high at non-competing points, either from the absence of competition or in consequence of pooling agreements that restrict its operation.

3. That rates are established without apparent regard to the actual cost of the service performed, and are based largely on "what the traffic will bear."

4. That unjustifiable discriminations are constantly made between individuals in the rates charged for like service under similar circumstances.

5. That improper discriminations are made between articles of freight and branches of business of a like character, and between different quantities of the same class of freight.

6. That unreasonable discriminations are made between localities similarly situated.

7. That the effect of the prevailing policy of railroad management is, by an elaborate system of secret special rates, rebates, drawbacks, and concessions, to foster monopoly, to enrich favorite shippers, and to prevent free competition in many lines of trade in which the item of transportation is an important factor.

8. That such favoritism and secrecy introduce an element of uncertainty into legitimate business that greatly retards the development of our industries and commerce.

9. That the secret cutting of rates and the sudden fluctuations that constantly take place are demoralizing to all business except

that of a purely speculative character, and frequently occasion great injustice and heavy losses.

of respon

10. That, in the absence of national and uniform legislation, the Avoidance railroads are able by various devices to avoid their responsibility sibility. as carriers, especially on shipments over more than one road or from one State to another, and that shippers find great difficulty in recovering damages for the loss of property or injury thereto.

II. That railroads refuse to be bound by their own contracts, and arbitrarily collect large sums in the shape of overcharges in addition to the-rates agreed upon at the time of shipment.

12. That railroads often refuse to recognize or be responsible for the acts of dishonest agents acting under their authority.

13. That the common law fails to afford a remedy for such grievances, and that in cases of dispute the shipper is compelled to submit to the decision of the railroad manager or pool commissioner, or run the risk of incurring further losses by greater discriminations.

14. That the differences in the classifications in use in various parts of the country, and sometimes for shipments over the same roads in different directions, are a fruitful source of misunderstandings, and are often made a means of extortion.

15. That a privileged class is created by the granting of passes, Free passes and that the cost of the passenger service is largely increased by the extent of this abuse.

16. That the capitalization and bonded indebtedness of the roads largely exceed the actual cost of their construction or their present value, and that unreasonable rates are charged in the effort to pay dividends on watered stock and interest on bonds improperly issued.

17. That railroad corporations have improperly engaged in lines of business entirely distinct from that of transportation, and that undue advantages have been afforded to business enterprises in which railroad officials were interested.

18. That the management of the railroad business is extravagant and wasteful, and that a needless tax is imposed upon the

Overcapitaliza

tion.