ishes because the citizen has learned, through contemplation of that trust in the private relation which is carefully guarded, to place property in the hands of others for custody; nothing can more emphasize the necessity for extending the same rules to the corporate relation. The very character of such frauds shows clearly that, because they become possible, the moral obligations of which they are the breach must have been more than proportionately developed. As Sir Henry Sumner Maine says: "It is the confidence reposed and deserved by the many which affords facilities for the bad faith of the few; so that if colossal examples of dishonesty occur, there is no surer conclusion than that scrupulous honesty is displayed in the average of the transactions which in the particular places have supplied the delinquent with his opportunity.

In conclusion, I will briefly recapitulate the positions which I have aimed to set forth :

First, that inasmuch as the great object and end of free government is to serve the rights and promote the happiness of the individual members, the powers which are delegated by those members to that gov ernment constitute a trust for the benefit of the individuals by equal right; and that this trust is paramount to all other trusts, public or private.

Second, that among the delegated powers is that attribute of sovereignty in the exercise of which private property may be taken for public use, and

1 "Ancient Law," by Sir Henry Sumner Maine, New York, 1875, p. 197.

the power to create artificial agencies to further accomplish the ends of government; and among things not delegated, either by the individual to the State government or by the State governments to the Federal Government, is a power to do anything not in the interest of all the political units constituting the people.

Third, that when government, in the just exercise of these functions, creates artificial agencies for commercial purposes, and delegates to them, either by necessary incident or directly, a portion of the power of the State, the government thereby creates a public trust which must be administered in the public interest; and that if such artificial agency attempts any thing beyond this, or in contravention of the common right, its act is so far ultra vires and void.

Fourth, that such trust is to be surrounded by the same specific guards as will secure the same regard for the rights and interests of the individual, and the sum of the individuals constituting the public cestuis que trustent, as I have pointed out in relation to private trusts.

Fifth, that the profits which the State may allow the trustee of the larger trust to make are essentially in the nature of compensation for the performance of the duties of this larger trust; and this right to compensation must always be subordinated to the chief object of that trust.

The recognition of these propositions I hold to be indispensable to the very existence of a real republican government.

CHAPTER IV

66

THE RELATION OF THE RAILWAY AND THE TRUST"

TO INDUSTRIAL LIBERTY

,,

I CANNOT better demonstrate the extent to which our employment of the corporate structure has caused us to depart from the spirit of our fundamental laws than by instituting a contrast between the theory upon which the government grants a franchise and the actual methods by which such franchise is used. According to democratic theory, individual and public political right are far more important than any convenience which a corporation can confer. The true office of the delegate who directly grants the franchise is, necessarily and always, that of a guardian of the right of his constituents, in preserving this as an equal right for each of those constituents.

In this guardianship the delegate can never act as the promoter or champion of any corporate franchise granted by him. According to this theory, such franchise is granted by these delegated guardians solely for the furtherance of equal public convenience. The delegated guardians, with an eye single to the public good, are assumed to environ the grant itself with strict limitations, in order that

the powers granted shall not and cannot be employed for any thing else than for this public good; the chief end being always the furtherance of public convenience, and the sole private interest granted being the right to reasonable compensation for equal service rendered; and this, to be reasonable, must always be in subordination to the public convenience. Accordingly, then, the grant is made to the individuals, not as favorites, but because they are ready to engage in furnishing a public service in an industry the direct management of which does not lie within the legitimate province of government. The persons receiving this franchise do not in any sense become the absolute owners of any public or quasi-public right. The proper ownership is confined to the capital which they invest and to the mechanical means which they employ. Their franchise is simply a privilege for the employment of these means. And inseparably coupled with that use there is a duty, not only subject to the strict construction, but also to the continued and careful control of the creator, who can lose none of his power and forego none of his duty as custodian of the permanent public right, in exacting performance from the holders of the franchise. This view, so far as it relates to the question of ownership of railways, has been often and clearly set forth; and never more clearly than by Mr. Justice Bradley in the case of Wabash, St. Louis, and Pacific Railway Company vs. Illinois, in which he says:

"The highways in a State are the highways of the State. Convenient ways and means of intercommunication are the first evidence of the civilization of a people. The highways of a country are not of private but of public institution and regulation. In modern times, it is true, government is in the habit, in some countries, of letting out the construction of important highways, requiring a large expenditure of capital, to agents, generally corporate bodies created for the purpose, and giving to them the right of taxing those who travel or transport goods thereon as a means of obtaining compensation for their outlay. But a superintending power over the highways, and the charges imposed upon the public for their use, always remains in the government. This is not only its indefeasible right, but is necessary for the protection of the people against extortion and abuse. These positions we deem to be incontrovertible. Indeed they are adjudged law in the decisions of this court. Railroads and railroad corporations are in this category.'

A corporation, therefore, lives by permission, and only by permission, to serve the public and to further enterprise for equal convenience; and any act which disturbs in any way the equality of this service is a usurpation of power. The delegates of the people granting the privilege, as the guardians of this political right, must not therefore be biassed in any way in behalf of the receivers of the franchise, and they cannot, without dereliction, acquire any active

1 U. S. Supreme Court Reports, 118, p. 586.

Although this citation is made from a dissenting opinion (in which Chief Justice Waite and Mr. Justice Gray concurred with Mr. Justice Bradley), the general principles set forth are, as Mr. Justice Bradley says, adjudged law in the decisions of the Supreme Court.