SHALL WE HATE A POSTAL TELEGRAPH? OR, Will Congress Regulate Inter-State Telegraph Charges? AN ARGUMENT DEMONSTRATING THAT Congress has the Right to “Regulate” Telegraphing by Fixing Maximum Rates for Telegrams between Points in different States; gesting an Amendment to the Inter-State Commerce Act. ess of Thomas McGill & Co., Law Printers, Washington, 1). C. AND ci> 2 po tT i i i I / f V 0 , ,| , 1 1 ii (if er House of Representatives, Washington, D. C., December 15th, 1887. My dear Sir : The demand for a Postal Telegraph is acquiring in- creased force by the greater extortions of the Gould System following the collapse of organized opposition to that gigantic monopoly. It is apparent that something should be done to relieve the people ; but the objections to a Postal Tel- egraph System are cogent and various. One of the most important of these is that, although the Morse patents have expired, all the best and most valuable forms of batteries, instruments, etc., are pro- tected by more recent patents, which the Government could not use without the consent of the owners. It would be necessary to confiscate these patents or to purchase them at a frightful expense. A genuine apprehension is felt in a great many quarters at the idea of increasing, by a force so enor- mous, the patronage of the Federal Government as would be involved in the employment of the requisite force to conduct a telegraph. It is probable, and in- deed certain that the Government would be obliged to extend a Postal Telegraph until there were as many telegraph stations as there are now post-office stations. The representatives of the people might feel that the faith of the Government was pledged to purchase all the telegraph lines which accepted the Act of 1866, should the Government undertake to establish a Postal Telegraph. The Government could transact business at a loss, supplying the deficit by taxation ; not so the private companies, who would be driven out of business. Can the Government prohibit their business at a loss of 27 2.5 b 2 their entire properties, and at the same time refuse to buy under the Act of 1866? Are we prepared to buy ? The arguments in favor of a Government railroad line are quite as strong as those in favor of a Government telegraph line, and yet however few would view the adoption of the former by the Government without the greatest apprehension. Not the least objection to the proposed plan of a Postal Telegraph, is the great delay involved, whether the plan adopted be a purchase of existing lines under the provisions of the Act of 1866, or to build lines for the Government itself. It would seem, therefore, that every consideration of prudence and expediency would induce the representa- tives of the people to select another way of curbing the exactions of this monopoly should such exist. It is believed that an amendment of the Inter-State Commerce Act, extending, under proper restrictions, the control of the Commissioners to inter-State and for- eign telegraphing, would accomplish every purpose desired without involving the Government in a difficult and dangerous experiment, the indirect effects of which might be very detrimental to our institutions. In that connection, your attention is respectfully invited to the annexed argument, intended to show that Congress has jurisdiction to establish maximum rates of charges for the transmission of foreign and inter- state telegrams. Yours, very respectfully, John M. Glover, M . C . Commerce AN ARGUMENT THAT Congress has the Right to “ Regulate ” Telegraphing, by t Fixing Maximum Rates for Telegrams Between Points in Different States. A. Section 8 of article i of the Federal Constitution expressly confers on Congress the right to regulate com- merce among the several States. By a long series of decisions, extending through many years, it has been definitely and finally decided that the “commerce among the several States ’ ’ which may be regulated by Con- gress includes transportation from State to State) by railroads. This being evident, the question arises — Do telegraph companies stand on the same plane in respect to the right of Congress to ‘ ‘ regulate’ ’ inter- 5 State commerce ? That they do, will be abundantly demonstrated by reference to the following authorities : Western Union Tel. Co. v. Atlantic & Pacific l Tel. Co., 5 Nevada, 102. Pensacola Tel. Co. v. Western Union Tel. Co., 96 U. S., 1. Western Union Tel. Co. v. The State of Texas, 105 U. S., 460. Western Union Tel. Co. v. Pendleton, 122 U. S-, 347- Communication by the telegraph is a branch of com- mercial intercourse within the meaning of that clause 4 of the United States Constitution which gives Congress power to regulate commerce, &c., among the several States. (Western Union Tel. Co. v. Atlantic, &c., Tel. Co., 5 Nev., 102.) “These powers keep pace with the progress of the country, and adapt themselves to the new developments of times and circumstances. They extend from the horse with its rider to the stage coach, from the coach and the steamboat to the railroad, and from the railroad to the telegraph, as these new agencies are successively brought into use to meet the demands of increasing population and wealth. They were intended for the government of the business to which they relate, at all times and under all circumstances. As they were in- trusted to the general Government for the good of the nation, it is not only the right but the duty of Con- gress to see to it that intercourse among the States and the transmission of intelligence are not obstructed or unnecessarily encumbered by State legislation. The electric telegraph marks an epoch in the progress of time. In a little more than a quarter of a century it has changed the habits of business, and become one of the necessities of commerce. It is indispensable as a means of intercommunication, but especially it is so in commercial transactions. The statistics of the business before the recent reduction in rates, show that more than eighty per cent, of all the messages sent by tele- graph related to commerce. Goods are sold and money paid upon telegraphic orders. Contracts are made by telegraphic correspondence, cargoes secured, and the movement of ships directed. The telegraphic announce- ment of the markets abroad regulates prices at home, and a prudent merchant rarely enters upon an impor- tant transaction without using the telegraph freely to secure information. “It is not only important to the people, but to the Government. By means of it the heads of the depart- ments in Washington are kept in close communication with all their various agencies at home and abroad, and can know at almost any hour, by inquiry, what is transpiring anywhere that affects the interest they have in charge. Under such circumstances, it cannot for a 5 moment be doubted that this powerful agency of com- merce and intercommunication comes within the con- trolling power of Congress, certainly as against hostile State legislation. In fact, from the beginning it seems to have been assumed that Congress might aid in devel- oping the system ; for the first telegraph line of any considerable extent ever erected was built between Washington and Baltimore, only a little more than thirty years ago,, with money appropriated by Congress for that purpose, 5 Stats, at Large, 618 ; and large dona- tions of land and money have since been made to aid in the construction of other lines. 12 Stats, at Large, 489, 772; 13 Stats, at Large, 365; 14 Stats, at Large, 292.” Pensacola Tel. Co. v. Western, &c., Tel. Co., 96 U. S., 1. In Western Union Tel. Co. v. State of Texas (105 U. S., 464), Chief-Justice Waite, in rendering the deci- sion of the Court, said : “In Pensacola Tel. Co. v. Western Union Tel. Co. (96 U. S., 1) this Court held that the telegraph was an instrument of commerce, and that telegraph companies were subject to the regulating power of Congress in respect to their foreign and inter-State business. A tel- egraph company occupies the same relation to com- merce as a carrier of messages that a railroad company does as a carrier of goods. Both companies are instru- ments of commerce, and their business is commerce itself. They do their transportation in different ways, and their liabilities are, in some respects, different; but they are both indispensable to those engaged to any considerable extent in commercial pursuits.” “In these cases (referring to Pensacola Tel. Co. v. Western Union Tel. Co., 96 U. S., 1 ; and Western Union Tel. Co. v. Texas, 105 U. S., 460) the supreme authority of Congress over the subject of commerce by the telegraph with foreign countries or among the States, is affirmed, whenever that body chooses to exert its power; and it is also held that the States can im- 6 pose no impediments to the freedom of that commerce. * * * The object of vesting the power to regulate commerce in Congress was to secure, with reference to its subjects, uniform regulations, where such uni- formity is practicable, against conflicting State legis- lation. Such conflicting legislation would inevitably follow with reference to telegraphic communication if each State was vested with power to control them be- yond its own limits.” Field, J., in Western Union Tel. Co. v. Pendle- ton, i22 U. S., 347, 358. B. It being established that telegraphs stand on the same plane with railroads, in respect to the power of Congress to regulate inter-State commerce, it remains to be con- sidered whether this power to regulate includes the power to fix maximum rates for the transmission of messages between points in different States. I. The common-law right of the legislative authority to fix maximum charges for services rendered in a public employment, or for the use of property in which the public has an interest, is clear. “ In countries where the common law prevails it has been customary for the legislature to declare what shall be a reasonable compensation under such circumstances, (i. e ., concerning a public interest,) or, perhaps, more properly speaking, to fix a maximum beyond which any charge made would be unreasonable. Undoubtedly, in mere private contracts, relating to matters in which the public has no interest, what is reasonable must be ascer- tained judicially. But this is because the legislature has no control over such a contract. So, too, in matters which do affect the public interest, and as to which legis- lative control may be exercised, if there are no statutory regulations upon the subject, the Courts must determine what is reasonable. The controlling fact is the power 7 to regulate at all. If that exists, the right to establish the maximum of charge, as one of the means of regu- lation, is implied. In fact, the common-law rule which requires the charge to be reasonable is itself a regu- lation as to price. Without it, the owner could make his rates at will, and compel the public to yield to his terms or forego the use. But a mere common-law regu- lation of trade or business may be changed by statute. * * * To limit the rate of charges for services ren- dered in a public employment, or for the use of prop- erty in which the public has an interest, is only chang- ing a regulation which existed before.” Munn v. People of Illinois, 94 U. S.,113. “Under these (the police) powers the Government regulates the conduct of its citizens one towards another, and the manner in which each shall use his own prop- erty, when such regulation becomes necessary for the public good. In their exercise it has been customary in England, from time immemorial, and in this country from its first colonization, to regulate ferries, common carriers, hackmen, bakers, millers, wharfingers, innkeep- ers, &c., and in so doing to fix a maximum of charge to be made for services rendered, accommodations fur- nished, and articles sold. To this day statutes are to be found in many of the States upon some or all of these subjects. With the Fifth Amendment in force, Congress, in 1820, conferred power upon the city of Washington ‘to regulate * * * the rates of wharf- age at private wharves, * * * the sweeping of chimneys, and to fix the rates of fees therefor, and the weight and quality of bread,’ (3 Stats, at Large, 587, sec. 7,) and, in 1848, ‘to make all necessary regula- tions respecting hackney carriages and the rates of fare of the same, and the rates of hauling by cartmen, wagoners, carmen, and draymen, and the rates of com- mission of auctioneers.’ (9 Stats, at Large, 224, sec. 2.)” Munn v. People of Illinois, (above.) (Where see English authorities cited in support of the common-law right of the public to limit charges for the use of property clothed with a public interest.) 8 “ Common carriers exercise a sort of public office, and have duties to perform in which the public is in- terested. (6 How., U. S. , 382.) Their business is therefore ‘affected with a public interest’ within the meaning of the doctrine which Lord Hale has so forci- bly stated in De Portibus Maris. (1 Harg. E. Tr., 7 8.)” Munn v. People of Illinois (above.) II. And this common-law right is possessed by the people of the United States and may be exercised by them through their appointed agency. “ When the people of the United Colonies separated from Great Britain, they changed the form but not the substance of their government. They retained for the purposes of government all the powers of the British Parliament, and through their State constitutions or other forms of social compact, undertook to give prac- tical effect to such as they deemed necessary for the common good and the security of life and property. All the powers which they retained they committed to their respective States, unless in express terms, or by implication, reserved to themselves. Subsequently, when it was found necessary to establish a National Government for National purposes, a part of the powers of the States, and of the people of the States, was granted to the United States. This grant operated as a further limitation upon the powers of the States, so that now the governments of the States possess all the powers of the Parliament of England, except such as have been delegated to the United States or reserved by the people. The reservations by the people are shown in the prohibitions of the constitutions.” Munn v . People of Illinois (above.) In Chicago, Burlington & Quincy R. R. Co. v. Cutts, 94 U. S., 155, a State statute dividing the railroads of the State into classes, according to business, and estab- lishing a maximum of rates for each of the classes, was held not repugnant to the constitutional provision as to regulation of inter-State commerce. The Court say : “In 1691, during the third year of the reign of 9 William and Mary, Parliament provided for the regu- lation of the rates of charge by common carriers. This statute remained in force, with some amendment, until 1827, when it was repealed, and it has never been re- enacted. No one supposes that the power to restore its provisions has been lost. A change of circumstances seemed to render such a regulation no longer necessary, and it was abandoned for the time. The power was not surrendered. That remains for future exercise when required. ‘ ‘ So here, the power of regulation existed from the beginning, but it was not exercised until, in the judg- ment of the body politic, the condition of things was such as to render it necessary for the common good. The objection that the statute complained of is void because it amounts to a regulation of commerce among the States, has been sufficiently considered in the case of Munn v. Illinois. This road, like the warehouse in that case, is situated within the limits of a single State. Its business is carried on there, and its regulation is a matter of domestic concern. It is employed in State as well as in inter-State commerce, and until Congress acts the State must be permitted to adopt such rules and regulations as may be necessary for the promotion of the general welfare of the people within its own jurisdic- tion, even though in so doing those without may be injuriously affected. ’ ’ III. Therefore, the common-law right of the legislative authority to fix maximum charges for services ren- dered in a public employment being shown to have vested in the people of the United States, and by the Constitution the power to regulate inter-State commerce being vested in Congress, to the exclu- sion of the States, it will be seen, by a review of the authorities hereafter cited, that no doubt has ever existed in the judicial mind that the word “regulate,” as used in the Constitution, meant to “wholly regulate,” and that it carries with it the right to fix reasonable maximum rates and charges for such service”to the public. 10 u In the matter of inter-State commerce, the United States are but one country, and are and must be subject to one system of regulations, and not to a multitude of systems.” Bradley, J., in Robbins v. Shelby Taxing Dis- trict, 120 U. S., 489, 494. “It has been contended by the counsel for the appel- lant that, as the word “to regulate” implies in its na- ture full power to be regulated, it excluded, necessarily, the action of all others that would perform the same operation on the same thing. That regulation is de- signed for the entire result, applying to those parts which remain as they were as well as to those which are altered. It produces a uniform whole, which is as much disturbed and deranged by changing what the regulating power designs to leave untouched as that on which it has operated. There is great force in this argument, and the Court is not satisfied that it has been refuted.” Marshall, C. J., in Gibbons v. Ogden, 9 Wheat., 1, 209, (where an injunction decree based on a State law conflicting with the power of Con- gress to regulate commerce was reversed.) “The ‘power to regulate commerce,’ here meant to be granted, was that power to regulate commerce which previously existed in the States. But what was that power ? The States were unquestionably supreme, and each possessed that power over commerce which is acknowledged to reside in every sovereign State. The power of a sovereign State over commerce, there- fore, amounts to nothing more than a power to limit and restrain it at pleasure. And since the power to prescribe the limits to its freedom necessarily implies the power to determine what shall remain unrestrained, it follows that the power must be exclusive. It can reside but in one potentate, and hence the grant of the power carries with it the whole subject, leaving noth- ing for the State to act upon.” Johnson, J., in Gibbons v. Ogden, 9 Wheat., 1, 227. ii “The power to regulate commerce covers a wide field and embraces a great variety of subjects. Some of these subjects call for uniform rules and National legis- lation ; others can be best regulated by rules and pro- visions suggested by the varying circumstances of different localities, and limited in their operation to such localities respectively. To this extent the power to regulate commerce may be exercised by the States. Whether the power in any given case is vested exclu- sively in the General Government, depends upon the nature of the subject to be regulated.” Gilman v. City of Philadelphia, 3 Wall., 713. ‘ ( It is not the railroads themselves that are regulated by this act of the Illinois Legislature so much as the charge for transportation; and if each one of the States through whose territories these goods are transported can fix its own rules for prices, for modes of transit, for times and modes of delivery, and all the other inci- dents of transportation to which the word ‘ regulation ’ can be applied, it is readily seen that the embarrass- ments upon inter-State transportation, as an element of inter-State commerce, might be too oppressive to be submitted to. It was to meet just such a case that the commerce clause of the Constitution was adopted.” Wabash, &c., R’y Co. v. Illinois, 118 U. S., 551, 572 . In this case a State statute enacted that if any railroad company should within that State charge or receive for transporting passengers or freight of the same class the same or a greater rate than it did for a longer distance, it should be liable to a penalty for unjust discrimination. Held, that such statute must be construed to include a transportation of goods under one contract, and by one voyage, from the interior of the State to another State, and hence was unconstitutional. The Court say : “It is not, and never has been, the deliberate opinion of a majority of this Court that a statute of a State which attempts to regulate the fares and charges by 12 railroad companies within its limits, for a transporta- tion which constitutes a part of commerce among the States, is a valid law.” This was stated with special reference to certain lan- guage used in Munn v. Illinois, 94 U. S., 113, 135, and Peik v. Chicago & Northwestern R’y, 94 U. S., 164, 177-8 ; as to which cases the Court say (p. 569) : ‘ 1 Though it is true that, as incidental or auxiliary to these, the question of the exclusive right of Congress to make such regulations of charges as any legislative power had the right to make, to the exclusion of the States, was presented, it received but little attention at the hands of the Court.” The Court also say : “ Of the justice or propriety of the principle which lies at the foundation of the Illinois statute, it is not the province of this Court to speak. As restricted to a transportation which begins and ends within the limits of the State it may be very just and equitable, and it certainly is the province of the State Legislature to determine that question. But, when it is attempted to apply to transportation through an entire series of States a principle of this kind, and each one of the States shall attempt to establish its own rates of transportation, its own methods to prevent discriminations in rates, or to permit it, the deleterious influence upon the freedom of commerce among the States and upon the transit of goods through those States cannot be overestimated. That this species of regulation is one which must be , if established at all , of a general and National character , and cannot be safely and wisely remitted to local rules and regulations, we think it clear, from what has already been said. If it be a regulation of commerce , as we think we have demonstrated it w, it must be of that Na- tional character , and the regulation can only appropri- ately exist by general rules and principles, which demand that it should be done by the Congress of the United States under the commerce clause of the Constitution.” 13 So in Wabash, etc., R’y Co. v. Illinois (above), refer- ring to the case of the State Freight Tax, 15 Wall., 232, it is said : “It is impossible to see any distinction, in its effect upon commerce of either class, between a statute which regulates the charges for transportation and a statute which levies a tax for the benefit of the State upon the same transportation. ’ ’ IV. The principle that the power is in Congress to fix max- imum charges for inter-State railroad transportation has also been frequently upheld in Federal and State decisions. “The following propositions may now be laid down as settled : The transportation of merchandise from a place in one State to a place in another is commerce among the States. To fix or Limit the charges for such trans- portation is to regulate commerce. A statute fixing or limiting such charges for transportation from places in one State to places in other States is a regulation of commerce among the States. The power to regulate such commerce is vested by the Constitution in Con- gress. ’ ’ Kaeiser v. Illinois Cent. R. Co., U. S. Cir. Ct., S. D. Iowa, 18 Fed. Rep., 151; (holding a State statute providing a tariff of maximum charges for the transportation of freight and passengers by railroad to be unconstitutional in so far as it related to through shipments over inter-State lines.) To same effect Railroad Commissioners v. Railroad Co., 22 So. Car., 220, where it is said (adopting the principle laid down in Kaeiser v, R. Co., above) — “Any regulation of freight for the transportation from Columbia, in this State, to points in the State of North 14 Carolina, by the statutes of this State, is beyond the power of the State, because of its being an invasion of the power exclusively vested in Congress by the Con- stitution of the United States.” A State board of railroad commissioners has no power to regulate or interfere with the transportation of per- sons or merchandise by a steamship company between points within the States, if they be in transit to or from other States, or when in navigating the ocean the vessel goes beyond a marine league from the shore. The power has been conferred upon Congress, and is exclu- sive. Field, J., in Pacific Coast Steamship Co. v. Board of R. R. Commissioners, U. S. Cir. Ct., D. Cal., io Fed. Rep., io, (where an injunction was allowed to restrain the commissioners from es- tablishing rates of charges for passengers and ^ freight. ) A State statute attempting to control the rates of compensation upon the transportation of persons and commodities in transit from one State to another, held unconstitutional. Uouisville & N. R. Co. v. R. R. Commissioners of Tenn., U. S. Cir. Ct., M. D. Tenn., 19 Fed. Rep., 679. A Mississippi statute held unconstitutional, in so far as it assumed to regulate the charges of transportation on any railroad not strictly and entirely within Missis- sippi. Illinois Central R. R. Co. v . Stone, U. S. Cir. Ct. , S. D. Miss., 20 Fed. Rep., 468. The regulation by a State commission of transporta- tion from points within to points without the State held 15 a violation of the provisions of the Constitution giving Congress power to regulate commerce. Mobile & O. R. Co. v. Sessions, U. S. Cir. Ct., S. D. Miss., 28 Fed. Rep., 592, (where the Court say: u Does the State of Mississippi, by the act of the Legislature, or through its commission, have the power to regulate, by fixing charges for such transportation, such commerce as that specified in Rule 9 above set out? That this power is wholly vested in Congress is in my opinion settled.”) Any State statute fixing or limiting the charges for transportation of goods from a place in one State to a place in another, held an attempt to regulate commerce between the States, and hence unconstitutional. Hardy v. Atchison, Topeka & Santa Fe R. R. Co., 32 Kan., 698. The fixing of rates of freight shipped from one State into another is a regulation of commerce. Carton v. Illinois Central R. R. Co., 59 Iowa, 148, (holding unconstitutional the following provi- sion of an Iowa statute : “The tariff of rates established in the following schedule shall be considered the basis on which to compute the compensation for transporting freights, goods, merchandise, or property over any kind of rail- road within this State.”) \ John M. Glover.