both: "The statute in question is within the power expressly given to Congress if considered only as to its immediate effects; if invalid it is so only upon some collateral ground." The majority concentrated their attention on the collateral ground which the minority thought was not within the competence of the court to consider, pointing out that previously the court had "excluded any inquiry into the purpose of an act which apart from that purpose was within the power of Congress.' In dealing with the precedents which had sanctioned congressional prohibitions of interstate transportation, Mr. Justice Day declared that "in each of these instances the use of interstate transportation was necessary to the accomplishment of harmful results," whereas the products of child labor "are in themselves harmless." To this, Mr. Justice Holmes answered: "It does not matter whether the supposed evil precedes or follows the transportation. It is enough that in the opinion of Congress the transportation encourages the evil.”

As to the Tenth Amendment, the majority insisted that the act regulated manufacture and that the regulation of manufacture was one of the reserved powers of the states. The answer of the minority was as follows:

"The Act does not meddle with anything belonging to the States. They may regulate their internal affairs and their domestic commerce as they like. But when they seek to send their products across the State line they are no longer within their rights. If there were no Constitution and no Congress their power to cross the line would depend upon their neighbors. Under the Constitution such commerce belongs not to the States. but to Congress to regulate. It may carry out its views of public policy whatever indirect effect they may have upon the activities of the States. Instead of being encountered by a prohibitive tariff at her boundaries, the State encounters the public policy of the United States which it is for Congress to express." In his dissent in the Child Labor case, Mr. Justice Holmes. cites Weeks v. United States' for the point that the federal Pure Food and Drug Act had been held to apply "not merely to arti

(1918) 245 U. S. 618.

cles that the changing opinions of the time condemn as intrinsically harmful but to others innocent in themselves simply on the ground that the order for them was procured by preliminary fraud." The Weeks case involved the shipment in interstate commerce of an article labeled "Special Lemon, Lemon Terpene and Citral." The circuit court of appeals had reversed the conviction of the defendant on the count which charged him with shipping goods bearing a false and misleading label, but sustained that on the second count charging the shipment of articles misbranded by reason of being "offered for sale under the distinctive name of another article." To sustain this count, evidence had been offered showing that the defendant's solicitor had secured the order by falsely representing that the article was pure lemon oil, though of second quality, and by exhibiting a sample bottle labeled merely "Special Lemon." These representations made in the intended state of destination were declared by the Supreme Court to be acts of interstate commerce and to make the shipment of articles that did not conform to the representations a violation of the act.

The constitutional questions involved in St. Louis Southwestern Ry. v. United States are somewhat difficult to disentangle from those of statutory construction. The interstate commerce commission had found that Paducah, Kentucky, was discriminated against in favor of Cairo, Illinois, by reason of the facts that shipments of lumber from the South, instead of being sent by the shortest route to Paducah, were routed by way of Cairo, and the local rate from Cairo to Paducah added to the rates from the South to Cairo. The commission ordered the roads to reduce the Paducah rate to the level of the Cairo rate, leaving them free, however, to ship by the longer or shorter route. One road which participated in the traffic, but which did not reach the points of ultimate destination, contended that the order was not a regulation of interstate commerce and was wanting in due process because it compelled it to enter against its will into a partnership with other roads. But the court answered that the road was left free to pick any connecting carrier

it chose and therefore could still choose its partners, that it was not compelled to undertake any interstate commerce other than that in which it was already engaged, that it was discriminating against Paducah as effectively as if its own rails reached that point, and that its acts were therefore within the commerce power of Congress.

Illinois Central Railroad Co. v. Public Utilities Commission," though concerned chiefly with matters of procedure and issues of fact, touches constitutional questions obliquely through the reasoning in the opinion. The decision reaffirmed federal power to prevent discrimination in interstate rates by ordering the raising of intrastate rates; but, on account of the vagueness of the order of the interstate commerce commission relied on, it applied the principle that it should never be held that a federal authority "intends to supersede or suspend the exercise of the reserved powers of a state, even where that may be done, unless, and except so far as, its purpose to do so is clearly manifested."

THE COMMERCE CLAUSE AND THE POWERS OF THE STATES

A. State Taxation and Interstate Commerce

The cases in which it is urged that state taxes are unwarranted regulations of interstate commerce fall into two main groups. In the first group the issue is whether the complaining taxpayer entirely exempt because the tax is imposed directly on interstate commerce.

is

of

York Mfg. Co. v. Colley' held that the installation and testing

an ice-manufacturing plant in pursuance of a contract for the

sale thereof was so essential to the sale as to be regarded as interstate commerce when the sale was interstate. No permit therefore could be required by a state of a company whose only business within the state was such necessary adjustment of a product shipped from without the state.

view

(1918) 245 U. S. 493. See 18 Columbia Law Review 270, 31 Harvard Law Re1031, and 16 Michigan Law Review 379.

(1918) 247 U. S. 21. See 27 Yale Law Journal 1094.

But General Railway Signal Co. v. Virginia3 passed a different judgment on the work of inaugurating a signal system brought from without the state. The work of digging ditches for conduits, and of constructing and painting concrete foundations, which was necessary to the adjustment of the apparatus, was thought to be sufficiently distinct from the interstate part of the entire transaction as to subject the contractor to the taxing power of the state.

So in Dalton Adding Machine Co. v. Virginia' no immunity was granted to a corporation that kept in the state a stock of machines for exhibition and trial, exchanged and rented machines located in the state, sold repair parts and accessories from local stock, maintained a repair department and occasionally sold machines from local stock. The opinion of Mr. Justice McReynolds contented itself with stating that a material part of the business was intrastate, without passing judgment on each of the several elements.

In Cheney Brothers Co. v. Massachusetts10 a state was forbidden to impose a license tax on a foreign corporation that made no local sales but merely maintained an office as headquarters for salesmen and as a place of storage for samples. All orders obtained in Massachusetts were filled from stock in Connecticut, and no orders were binding until accepted in Connecticut.

Five other corporations dealt with in this case were all held to be engaged in independent, intrastate business. The Copper Range Co. and the Champion Copper Co. conducted their fiscal affairs within the state. The Lanston Monotype Co. kept in the state a stock of material necessary for repair work, which it sold and attached when repairs were called for. The Locomobile Company did the same and also exchanged and sold secondhand cars. The Northwestern Consolidated Milling Co. kept agents in Massachusetts who solicited business from Massachusetts retailers and turned the orders over to Massachusetts

▪ (1918) 246 U. S. 500. See 87 Central Law Journal 4.

• (1918) 246 U. S. 498.

wholesalers to be filled from Massachusetts stock. The fact that the solicitors were not agents of the local wholesalers but acted for the manufacturers without the state was held not important. The other group of cases deals with complaints that taxes on proper subjects are assessed by methods which involve regulation of interstate commerce."1

In Looney v. Crane Co.,12 International Paper Co. v. Massachusetts, 13 and Locomobile Co. of America v. Massachusetts,14 it was held that excises on foreign corporations which combine local manufacture or local sales with interstate sales cannot be measured by total capital stock. This had previously been established in respect to foreign corporations engaged in combined local and interstate transportation, and some of the opinions had seemed to rely especially on the economic integration of such local and interstate business. But the court now regards this element as immaterial. In the International Paper case, Mr. Justice Van Devanter observes: "True, those were cases where the business, interstate and local, in which the foreign corporation was engaged was that of a common carrier. But the immunity of interstate commerce is not confined to what is done by the carriers in such commerce. On the contrary, it is universal and covers every class of interstate commerce, including that conducted by merchants and trading companies."

It had previously been held that the vice of the measure of total capital stock could be cured by setting a reasonable maximum to the annual imposition. The highest maximum heretofore considered was $2,500. In General Railway Signal Co. v.

11 For general articles on the decisions grouped under this head see George E. Hinman, "Legal Phases of State Income Taxation of Miscellaneous Corporations," 3 Bulletin of the National Tax Association 41, 67; and T. R. Powell, “Indirect Encroachment on Federal Authority by the Taxing Powers of the States," 31 Harvard Law Review 572, 721, 932, "State Excises on Foreign Corporations," Proceedings of the National Tax Association, 1918, and "The Changing Law of Foreign Corporations," 33 Political Science Quarterly 549.

12

1 (1917) 245 U. S. 178. See 3 Bulletin of the National Tax Association 99, 18 Columbia Law Review 168, and 16 Michigan Law Review 264.

1 (1918) 246 U. S. 135. See 3 Bulletin of the National Tax Association 178, 16 Michigan Law Review 447, and 27 Yale Law Journal 1074.

14 (1918) 246 U. S. 146.