The changing order; essays on government, monopoly, and education, written during a period of readjustment

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The Changing Order

Essays on Government, Monopoly, and

Education, Written during a Period

of Readjustment

By
George W. Wickersham

Sometime Attorney-General of the United States

G. P. Putnam's Sons

New York and London

$be fmicketbocfter press

1914

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Copyright, 1914

BY

GEORGE W. WICKERSHAM

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PREFACE

THESE essays are bi-products of the writer's
work as head of the United States Depart-
ment of Justice during the four years from March
5, 1909, to March 5, 19 13. That period was
instinct with great problems. New conceptions of
the relation of government to industrial organiza-
tion were asserting themselves; new theories of
government finding expression. The old order
was changing. The epochal litigation between the
government and great industrial combinations
culminated in a series of decisions rendered in cases
argued during that period in the Federal Supreme
Court. By these decisions, the supremacy of law
and government over monopoly was established.
During the same period, the laws regulating
common carriers in interstate commerce were radi-
cally amended, and these laws, and great questions
arising out of them, also were brought to the
Supreme Court for construction and exposition.
The admission of the territories of New Mexico
and Arizona into the Union gave rise to the
discussion at the National Capitol of profound
modifications in constitutional government as it
had been theretofore understood and practised.
These changes were being embodied in new con-
stitutions of some of the western States. Their

»<0

iv Preface

inclusion in the constitutions of the new States,
presented to the Congress for approval, compelled
a consideration of the meaning of the words
" republican form of government," as used in the
Constitution of the United States.

The following essays, which originally were pre-
pared for delivery as addresses on special occasions,
reflect the conflict of ideas involved in the discus-
sion of these questions — problems which go to the
very roots of civilized government. It is because
of the vital nature of the problems discussed, rather
than of any especial merit, literary or otherwise, in
the essays, that I venture to hope that what I have
written may be of more than ephemeral interest.
Constant requests for copies of some of these
papers have encouraged me to publish this collec-
tion. For while the old order indeed changeth,
yet I verily believe there are some fundamental
truths concerning government which have stood
the test of time, and which cannot be ignored
without unhappy consequence. What some of
those principles are, I have endeavored to show
in the following pages.

G. W. W.

New York,
April, 1 914.

CONTENTS

CHAPTER PAGE

I. — The Progress of Law i

II. — The State and the Nation . . 17

III. — College Men and Public Questions 30

IV. — Palimpsests 38

V. — Business and the Law . . .53

VI. — Engineering and Culture . . 71

VII. — The Study of Law and the Work

of Lawyers .... 82

VIII. — Recent Interpretation of the

Sherman Act . . . .103

IX. — Further Regulation of Interstate

Commerce 143

X. — Results of the Trust Dissolution

Suits 162

XL — Federal Control of Stock and Bond

Issues by Interstate Carriers . 179

XII. — New States and Constitutions . 217

XIII. — The Theory of Constitutional

Government in 1787 and 19 12 . 269

The Changing Order

i

THE PROGRESS OF LAW1

IT is related by Herodotus that after the deposi-
tion of the usurper who seized the throne of
Cambyses, King of Persia, the three leaders of the
successful movement debated as to the form of a
permanent government for that country. Otanes,
who contended for a democracy, finding himself
in the minority, proposed to yield his preferences
to the other two, on condition that neither Megaby-
zus nor Darius should reign over him or any of
his posterity; which being assented to, he made
no further opposition to the establishment of a
monarchy, and the historian adds :

At the present period this is the only family in
Persia which retains its liberty, for all that is required
of them is not to transgress the laws of the country. 2

1 Address before the George Washington University, Wash-
ington, D. C, February 22, 19 10.

3 Herodotus, Beloe's translation, Book 3, p. 165.

1

2 The Changing Order

This conception of liberty under law, usually
regarded as the product of northern independence
of character, and by many, as peculiarly an Anglo-
Saxon inheritance, thus appears to be of much
greater antiquity, and although often obscured,
sometimes for prolonged periods, it has ever re-
curred as the highest ideal of civilized human
society.

Herodotus does not explain to us in what respect
the liberty guaranteed to Otanes and his descen-
dants differed from that of the other inhabitants
of Persia, for, it will be observed, he considers that
the family of Otanes enjoyed liberty because all
that was required of them was that they should
not transgress the laws of the country; but as he
does state that the first act of Darius, after he was
proclaimed King, was to divide Persia into twenty
provinces, and to fix an amount of annual tribute
which each was to pay to him, it would seem that
the historian meant to indicate a distinction be-
tween government and law, and to imply that,
while subject to the law, the favored family was
relieved from the burdens of government.

Mr. James C. Carter, in his work on Law and
its Origin, maintains

that while Legislation is a command of the Sovereign,
the unwritten Law is not a command at all ; that it is
not a dictate of Force but an emanation from Order;
that it is that form of conduct which social action
necessarily exhibits, something which men can neither
enact nor repeal, and which advances and becomes

The Progress of Law 3

perfect pari passu with the advance and improvement
of society. *

Mr. Carter was a profound student of the Eng-
lish common law, and a strong believer in the value
of customary or common law, as opposed to statute
law, considering that those customary rules of
conduct which are the result of the moral con-
sciousness and progressive thought of a people, af-
ford a better working basis for the government
of a civilized state, than do rules of conduct pre-
scribed by legislative authority. It is the function
of the judges, he says,

to watchfully observe the developing moral thought,
and catch the indications of improvement in customary
conduct, and enlarge and refine correspondingly the
legal rules. In this way, step by step, the great
fabrics of common law and equity law have been
built up without the aid of legislation, and the process
is still going on.2

Yet he recognizes the necessity for the employ-
ment of legislative action, or what he calls "the
conscious agency of society," in the improvement
of the law in its application to the constantly
developing and increasingly complex forms of mod-
ern existence; insisting, however, that the sole
function both of law and of legislation is "to se-
cure to each individual the utmost liberty which
he can enjoy consistently with the preservation of

'Pp. 344-5. 'P. 329.

4 The Changing Order

the like liberty to all others," and adding, that
every abridgment of liberty demands an excuse,
and that its only good excuse is the necessity of
preserving it. *

It is the acknowledged duty of all good citizens
to obey the law, be that law written or unwritten.
The unwritten law, representing, as it does, a
generally prevailing public conception of right
action, must necessarily command the readiest
obedience; statutory laws too frequently embody
the ill-considered views of a moment, the expres-
sion of a temporary emotion, or the successful
determination of a portion of the community to
impose their will upon the remainder. The sound
growth and development of the written law must
follow and make more specific and more readily
enforcible the principles of unwritten law, or it
becomes an instrument of dissatisfaction and even
of oppression. Yet no progress in the improve-
ment of laws is realized through either evasion of
or organized opposition to the laws of a self-govern-
ing people. As Washington said in his farewell
address :

The very idea of the power and the right of the
people to establish government presupposes the duty
of every individual to obey the established govern-
ment.

All obstructions to the execution of the laws, all
combinations and associations under whatever plaus-
ible character, with the real design to direct, control,

TP.337.

The Progress of Law 5

counteract, or awe the regular deliberation and action
of the constituted authorities, are destructive of this
fundamental principle and of fatal tendency. . . .

However combinations or associations of the above
description may now and then answer popular ends,
they are likely in the course of time and things to
become potent engines by which cunning, ambitious,
and unprincipled men will be enabled to subvert the
power of the people, and to usurp for themselves the
reins of government, destroying afterwards the very
engines which have lifted them to unjust dominion.1

The history of every civilized state presents
many points of resemblance with that of every
other. Primitive communities are bound together
more or less loosely, dependent upon the need of
union for common defense against some external
enemy. As civilization progresses, a necessity
arises for rules to govern the action of the indi-
viduals in the community toward each other, more
than to protect the group against the aggressions
of other groups ; and as communities become more
populous, and civilization more complex, rules of
conduct must needs be increasingly minute and
specific ; but the fundamental principle guiding all
successful civilization must be to preserve, in as
large a measure as is consistent with the welfare
of the whole, freedom of action in the individual.
In monarchical countries this freedom is menaced
more from the head of the state than from other
individuals in it. Under democratic governments,

1 Messages and Papers, vol. i., p. 218.

6 The Changing Order

the individual requires more protection against
other individuals or groups of individuals ; yet the
abuse of monarchical power has often resulted in
the same injury to the welfare of individuals as
is occasioned by abuse of the power which, under
democratic institutions, individuals or groups of
individuals may acquire over other individuals or
groups.

Queen Elizabeth of England, between the six-
teenth and forty-third years of her reign, partly for
the purpose of raising revenue, and partly to re-
ward her favorites, granted a very large number of
patents, conferring upon their holders the exclusive
privilege or monopoly for designated periods of time,
to manufacture, sell, or deal in specified articles of
commerce. The injury to the community caused
by these special privileges became so great as
finally to produce a most remarkable and spon-
taneous outbreak both in and out of Parliament,
which led to a complete and absolute disavowal by
the Queen of any intention to afflict her subjects,
the cancellation of the greater part of these patents,
and the submission to the judgment of the courts
of law of the validity of the remainder. The
odious character of these monopolies in the view
of the English people of that day , is vividly depicted
in the debates of the time. The list of the objects
of the monopolies is truly appalling. They em-
braced the exclusive right to deal in such articles
as iron, powder, cards, leather, cloth, ashes, vin-
egar, sea coals, steel, brushes, saltpeter, and many

The Progress of Law 7

others. One Dr. Bennet, during a discussion in
Parliament, is recorded as saying :

In respect of a grievance out of the City for which
I come, I think my self bound to speak that now
which I had not intended to speak before; I mean a
Monopoly of Salt. It is an old Proverb Sal sapit
omnia; Fire and Water are not more necessary. But
for other Monopolies of cards, (at which word Sir
Walter Raleigh blusht), Dice, Starch and the like,
they are (because Monopolies) I must confess very
hurtful, though not all alike hurtful. I know there is
a great difference in them; And I think if the abuses
in this Monopoly of Salt were particularized, this
would walk in the fore rank.

He was followed by another member who se-
verely criticized the monopoly in tin. This brought
Sir Walter Raleigh to his feet. He could have
contented himself with blushes concerning cards,
but the attack on the Tin Monopoly compelled
him to speak. The arguments he resorted to in
its defense have become familiar to later genera-
tions.

When the Tinn is taken out of the Mine, and melted
and refined [he said], then is every piece containing
one hundred weight sealed with the Duke's Seal.
Now I will tell you, that before the granting of my
Patent, whether Tinn were but of seventeen shillings
and so upward to fifty shillings a hundred, yet the
Poor Workmen never had above two shillings the
week, finding themselves: But since my Patent,

8 The Changing Order

whosoever will work, may; and buy Tinn at what
price soever, they have four shillings a week truly
paid. There is no Poor that will work there, but may,
and have that wages. Notwithstanding, [he declared,
evidently perceiving that the argument fell upon deaf
ears] if all others may be repealed, I will give my
consent as freely to the cancelling of this, as any
Member of this House.1

Elizabeth was no less shrewd than Raleigh in
understanding the temper of the time, and with a
clear perception that the public conscience was
against her, she disclaimed all purpose of afflicting
her subjects, declared she had acted upon bad
advice, and authorized her minister, Cecil, to
inform the House that

There are no Patents now of force, which shall not
presently be revoked; for what Patent soever is
granted, there shall be left to the overthrow of that
Patent, a Liberty agreeable to the Law. There is no
Patent if it be Malum in se, but the Queen was ill ap-
prised in her Grant. But all to the generality be
unacceptable. I take it, there is no Patent whereof
the Execution hath not been injurious. Would that
they had never been granted. I hope there shall
never be more. (All the House said Amen,)2

Therefore, declared Cecil —

there shall be a Proclamation general throughout the
Realm to notify her Majesties resolution in this be-

1 D'Ewes, Journals of the Parliaments, pp. 645-6.
'Id., p. 652.

The Progress of Law 9

half. And because you may eat your meat more
savourly than you have done, every man shall have
Salt as good cheap as he can either buy it or make it,
freely without danger of that Patent, which shall be
presently revoked. . . . And they that have weak
stomachs, for their satisfaction, shall have Vinegar
and Alegar, and the like set at liberty. Train Oyl shall
go the same way; Oyl of Blubber shall march in equal
rank; Brushes and Bottles endure the like Judgment.
. . . Those that desire to go sprucely in their Ruffs
may at less charge than accustomed obtain their wish ;
for the Patent for Starch, which hath so much been
prosecuted, shall now be repealed.1

In the year following these debates, in the great
case of The Monopolies, it was held by the Court
of Queen's Bench that a patent granted by Queen
Elizabeth, to Ralph Bowes, Esq., conferring on
him the sole and exclusive right to make and sell
playing cards within the realm for a term of years,
was utterly void for two reasons: (1) that it was a
monopoly and against common law; (2) that it
was against divers acts of Parliament. It was
against common law because —

1. All trades, as well mechanical as others, which
prevent idleness (the bane of the commonwealth)
and exercise men and youth in labour, for the main-
tenance of themselves and their families, and for the
increase of their substance, to serve the Queen when
occasion shall require, are profitable for the common-
wealth, and therefore the grant to the plaintiff to

^.652.

io The Changing Order

have the sole making of them is against the common
law, and the benefit and liberty of the subject.

2. The sole trade of any mechanical artifice, or
any other monopoly, is not only a damage and preju-
dice to those who exercise the same trade, but also to
all other subjects, for the end of all these monopolies
is for the private gain of the patentees ; and although
provisions and cautions are added to moderate them,
yet ... it is mere folly to think that there is any
measure in mischief or wickedness: and, therefore,
there are three inseparable incidents to every mon-
opoly against the commonwealth, sc. i. That the
price of the same commodity will be raised, for he
who has the sole selling of any commodity, may and
will make the price as he pleases. . . . The 2d in-
cident to a monopoly is, that after the monopoly is
granted, the commodity is not so good and merchant-
able as it was before ; for the patentee having the sole
trade, regards only his private benefit, and not the
common wealth. 3. It tends to the impoverish-
ment of divers artificers, and others, who before, by
the labor of their hands in their art or trade, had
maintained themselves and their families, who now
will of necessity be constrained to live in idleness
and beggary. . . .

3. The Queen was deceived in her grant; for the
Queen, as by the preamble appears, intended it to
be for the weal public, and it will be employed for the
private gain of the patentee, and for the prejudice of
the weal public; . . .*

The principles of this great decision have been
recognized as immutable in all later discussions
1 11 Coke's Reports, 84 b.

The Progress of Law n

of the subject in the law of England or America.
All subsequent statutes against monopolies in
England and America depend for their reason on
the principles so clearly and so quaintly set forth
in this judgment. In the development of our
modern civilization, with our boundless natural
wealth and our unexampled facilities of transpor-
tation and communication, by individual effort
working through the machinery of compact
organization, the people of the United States
twenty years ago found themselves confronted
with conditions strongly resembling those which
aroused the people of England and their represen-
tatives in Parliament to the point of revolt against
even so beloved a sovereign as their Virgin Queen.
These conditions, however, unlike those of 1601,
were not wholly occasioned by sovereign grant,
although they were in large measure the result of
the abuses of grants by sovereign powers of cor-
porate existence and the facilities of corporate
organization. No such comprehensive control
over any one of the great industries which were
dominated by those large aggregations of capital
called " trusts' ' could have been attained but
through the exercise of powers granted by the
sovereign States ; and the condition, therefore, was
strongly analogous to that which arose in the reign
of Elizabeth. True, this form of control had not
yet resulted in that absolute power which the
patentees of Elizabeth possessed over the sale of
salt, vinegar, and the like. But mindful that

12 The Changing Order

"Eternal vigilance is the price of liberty," and to
employ Webster's immortal phrase, "While actual
suffering was yet afar off." We, like our ancestors
of revolutionary days, raised our arms, by the
peaceful method of legislation, against a power
which we perceived rising cloud-like on our eco-
nomic horizon. We saw the rapid concentration
of power over our great industries in a few hands ;
a power which no free state can long suffer to
endure; the power of fixing prices at will, deter-
mining the amount of production, dictating the
terms on which thousands of our fellow-country-
men might pursue their means of livelihood; the
power to exclude or permit competition ; all the ele-
ments of those monopolies which so stirred the
generation of Englishmen from whom the Pilgrim
Fathers came. The problem was complicated by
the dual nature of our government. Concerted
action by the States was impracticable, it may be
said, impossible. Efforts at control by one State
were evaded, first by removing to another; then
by the device of holding corporations. Therefore
the evil could not be met merely through the de-
velopment and application of the unwritten law,
although its principles clearly established the un-
lawfulness of all monopolies. Some means had to
be found through the exercise of national power to
check the continued concentration of control of
the great industrial life of the country.

In this instance, as in so many others in our
national history, there was found in the simple but

The Progress of Law 13

comprehensive charter of our national government
the basis for a solution of the problem, and the
prevention of the further growth of these great
abuses, by the exercise of what Mr. Carter called
1 ' the conscious agency of society ' ' speaking through
the national legislature.

In the power conferred upon the Congress to
regulate trade and commerce among the States
and with foreign nations, there was discovered a
weapon adequate to the need; and the simple,
comprehensive enactment that all contracts and
combinations in restraint of interstate or foreign
commerce should be unlawful, and that the Fed-
eral courts should be empowered to enjoin and
restrain violations of the act, placed in the hands
of the national judiciary the power to stem the
rising tide of monopoly.

The underlying principle in this legislation is
the preservation of the right of the individual
to carry on trade and commerce, free from undue
control and restraint on the part of great ag-
gregations of individuals or capital; in a word,
to protect the individual from the tyranny of a
group.

In the development of civilization, after four
hundred years, in a new world, the same menace
to free institutions had arisen which had recurred
from time to time in earlier civilizations; and by
the application of the principles of liberty, based
upon the fundamental conceptions expressed by
the ancient Persian and recorded by Herodotus,

14 The Changing Order

there was found an effective bulwark for the
protection of a people from industrial slavery.
Well might Washington say as he did in his
farewell message:

To the efficacy and permanency of your union
a government for the whole is indispensable. . . .
Sensible of this momentous truth, you have improved
upon your first essay by the adoption of a Constitu-
tion of Government better calculated than your
former for an intimate union and for the efficacious
management of your common concerns. This Gov-
ernment, the offspring of your own choice, uninfluenced
and unawed, adopted upon full investigation and
mature deliberation, completely free in its principles,
in the distribution of its powers, uniting security with
energy, and containing within itself a provision for
its own amendment, has a just claim to your confi-
dence and your support. Respect for its authority,
compliance with its laws, acquiescence in its measures,
are duties enjoined by the fundamental maxims of true
liberty.

The need and the purpose of our Federal Con-
stitution never have been more comprehensively
and accurately stated than in Washington's dec-
laration in the paragraph just read: "for an in-
timate union and for the efficacious management
of your common concerns."

It is because of the increase in the number and
character of our common concerns that we are
turning more and more to the source of national
power for the principles which permit of its appli-

The Progress of Law 15

cation to new evils as they arise, and to the ex-
tension of benefits and advantages which are of
common concern to all; not merely to a particular
State or locality.

The f ramers of the Constitution were thoroughly
imbued with the principles of the common law,
and they understood the language of the law. In
expressing the grant of power which they agreed
upon to the new Federal government, they were
possessed by no pedantic love of minute accuracy.
On the contrary, they employed the broadest
and most comprehensive language possible to
express the principles which they were formulat-
ing, thus leaving unfettered the application of those
principles to the manifold and changing phases
which future growth and development might make
essential to the preservation of the fundamental
object of the Union; to provide "for the efficacious
management* ' of "the common concerns" of the
whole country.

Very shrewdly were these great powers devolved
upon the national government. Hamilton an-
swered the objection that they would tend to
render the government of the Union too powerful
in the seventeenth paper in the Federalist.

Speaking of the principle embodied in the Con-
stitution of legislating for the individual citizens
rather than for the States, and adverting to the
objection that such principles would tend to make
the Union too powerful and enable it "to absorb
those residuary authorities which it might be

16 The Changing Order

judged proper to leave with the States for local
purposes," he said:

Allowing the utmost latitude to the love of power
which any reasonable man can require, I confess I am
at a loss to discover what temptation the persons
entrusted with the administration of the general
government could ever feel to divest the states of the
authorities of that description. The regulation of
the mere domestic police of a state appears to me to
hold out slender allurements to ambition.

Hamilton's mind was ever imperial!

Commerce [he continued], finance, negotiation and
war seem to comprehend all the objects which have
charms for minds governed by that passion; and all
the powers necessary to those objects ought in the
first instance to be lodged in the national depository.

And so there they were lodged by the charter
of our indissoluble union; and to them, as our
need bids, we turn for the effective vehicles of the
progressive development of a great and free coun-
try; whose laws must be adequate to cope with
every problem which the restless ambition of man
can invent, to the end that this land may ever
display a signal example of

Liberty and Union
Now and forever
One and inseparable.

II

THE STATE AND THE NATION x

THE administration of Federal justice is the
most vital agency of the national govern-
ment. The system of Federal government tinder
which a separate and distinct sovereignty erects its
agencies and expounds, administers, and enforces
its laws within the States, independently of those
of the States, also in theory sovereign, except
where and to the extent that they have voluntarily
parted with some attribute of sovereignty, is at
once the admiration and the despair of foreign
students of our institutions, and is often a source
of perplexity to ourselves.

The Constitution of the United States and laws
and treaties made pursuant to its authority are,
it is agreed, the supreme law of the land, anything
in the constitution or laws of any State to the
contrary notwithstanding. But ever since the
foundation of the Federal government a constant
pressure has developed, first one way, then an-
other; State against nation, nation against State,

1 The substance of an address delivered at the opening of a
new Federal building in Cleveland, Ohio, March 20, 191 1.
2 17

1 8 The Changing Order

to magnify or minimize the powers granted to the
Federal government by the Constitution.

During the last decade or two there has been a
growing tendency in the States to call on the na-
tional government for many things which are
properly within the functions and duties of the
States, but which, through the extension of certain
powers granted to Congress, may be also brought
within the scope of Federal regulation.

This tendency has been so marked, that at times
the States seem to have abdicated an important
part of their ordinary police powers, and to have
sought to escape their natural responsibilities by
devolving them upon the general government.

The principles regulating the respective powers
of State and Federal government are clearly stated
by Mr. Justice Harlan in delivering the judgment
of the Supreme Court in a very recent case.

There are, he says, certain fundamental prin-
ciples which prior decisions, to which he refers in
his opinion, recognize, and —

which are not open to dispute. . . . Briefly stated,
those principles are: That the Government created
by the Federal Constitution is one of enumerated
powers, and can not, by any of its agencies, exercise
an authority not granted by that instrument, either
in express words or by necessary implication; that
a power may be implied when necessary to give effect
to a power expressly granted; that while the Consti-
tution of the United States and the laws enacted
in pursuance thereof, together with any treaties made

The State and the Nation 19

under the authority of the United States, constitute
the supreme law of the land, a State of the Union may-
exercise all such governmental authority as is con-
sistent with its own constitution, and not in conflict
with the Federal Constitution; that such a power in
the State, generally referred to as its police power, is
not granted by or derived from the Federal Consti-
tution but exists independently of it, by reason of its
never having been surrendered by the State to the
General Government; that among the powers of the
State, not surrendered — which power therefore re-
mains with the State — is the power to so regulate the
relative rights and duties of all within its jurisdiction,
so as to guard the public morals, the public safety
and the public health, as well as to promote the pub-
lic convenience and the common good; and that it is
with the State to devise the means to be employed to
such ends, taking care always that the means devised
do not go beyond the necessities of the case, have
some real or substantial relation to the objects to be
accomplished, and are not inconsistent with its own
constitution or the Constitution of the United States.1

That these principles have not been always
clearly perceived is illustrated by the history of
the State of Ohio — not to mention that of other
States.

In the Ordinance of July 13, 1787, providing
for the government of the northwestern territory,
certain articles were formulated as "articles of
compact between the original States and the people
and States in the said territory " for the purpose of

1 House v. Mayes (219 U. S., 270, 281).

20 The Changing Order

"extending the fundamental principles of civil
and religious liberty, which form the basis wherein
these republics, their laws, and constitution are
erected; to fix and establish those principles as
the basis of all laws, constitutions, and govern-
ments which forever hereafter shall be formed in
the said territory." These articles, it was de-
clared, should " forever remain unalterable, unless
by common consent/'

These articles in effect embodied those funda-
mental principles of civil liberty which have been
the woof and fabric of Anglo-Saxon institutions
since they were first set forth in Magna Charta:
principles which were also embodied in the first
ten amendments to the Constitution of the United
States, adopted in November, 1791.

The Ordinance further provided that —

The navigable waters leading into the Mississippi
and St. Lawrence and the carrying places between
the same shall be common highways and forever free
as well to the inhabitants of the said territory as to
the citizens of the United States and those of any other
States that may be admitted into the confederacy,
without any tax, impost, or duty therefor.

Freedom of trade and commerce was a matter of
the utmost concern on the part of the great men
who framed this Ordinance and the Constitution
of the United States, and the Jay treaty of 1794
secured to the subjects of both Great Britain and
the United States the right —

The State and the Nation 21

freely to pass and repass by land or inland navigation
into the respective territories and countries of the
two parties on the continent of America (the country
within the bounds of the Hudson Bay Co. only
excepted), and to navigate all the lakes, rivers, and
waters thereof, and freely to carry on trade and com-
merce with each other.

The Ordinance of 1787 also made provision for
the erection of States out of the territory to which
it applied, whenever any of such States should have
60,000 free inhabitants, provided the permanent
constitution and State government which should
be formed "shall be republican and in conformity
to the principles contained in these articles."

That portion of the articles which dealt with
the government of the territory, provided for the
appointment of a court to consist of three judges,
with common-law jurisdiction, and whose commis-
sions should continue in force during good be-
havior. Among the provisions which were declared
to be unalterable save by common consent was
that —

The inhabitants of said Territory shall always be
entitled to the benefits of the writ of habeas corpus
and of the trial by jury, of a proportionate represen-
tation of the people in the legislature, and of judicial
proceedings according to the course of the common
law.

The principles of government embodied in the
Federal Constitution, adopted in 1789, were a

n The Changing Order

distribution of powers among three separate co-
ordinate branches — legislative, executive, and ju-
dicial. The legislative power was to be exercised
by representatives of the people, and senators re-
presenting the States, with the participation of the
President, to the extent of recommending legisla-
tion and exercising a qualified veto over measures
passed in Congress. The executive officers were
to be chosen for definite terms, and during such
terms were to be free from interference by either
of the other branches of government, save when
impeached for high crimes or misdemeanors; and
the judicial power was to be exercised by judges
holding office during good behavior and free from
interference or control by the other branches of
government. An independent judiciary was re-
garded by the framers of the Constitution as
absolutely essential to the success of the govern-
ment created by it.

Pursuant to the provisions of the Ordinance, a
constitution was adopted, and the State of Ohio
was admitted into the Union on March i,
1803. Those who prepared that constitution
had before them as models and guides the Ord-
inance for the government of the northwestern
territory, the Constitution of the United States,
and the Jay treaty. But they were unable
to grasp the wisdom embodied in those famous
documents.

Rufus King, in his sketch of the history of Ohio,
says of this constitution :

The State and the Nation 23

It was framed by men of little experience in matters
of state, and under circumstances unfavorable to
much forecast. With such a model of simplicity and
strength before them as the national Constitution,
which had just been formed, the wonder is that some
of its ideas were not borrowed. It seems to have been
studiously disregarded, and Ohio, as well as some
States farther westward, which her emigrant sons,
with filial regard, induced to follow her example, has
suffered ever since from a weak form of government,
made up in haste and apparently in mortal dread of
Gov. St. Clair. . . . Briefly stated, it was a govern-
ment which had no executive, a half-starved, short-
lived judiciary, and a lopsided legislature. ■

The student of American history must con-
stantly wonder at finding so often developed a
hostile attitude toward the judiciary. Disputes
which can only be settled by the arbitrament of
independent and incorruptible judges constantly
arise between citizens, between States, between a
State and the nation. The existence of a stand-
ing body of judges — men of learning and character,
withdrawn from the ordinary pursuits of business
life, and independent of all influences which might
warp their judgment and prevent them from
reaching decisions based only upon the fair and
unbiased consideration of the law as applied to the
evidence in the case — would seem to be of such obvi-
ous advantage to every member of the community
that no argument were needed to demonstrate it.

1 Ohio, by Rufus King. Houghton, Mifflin & Co., 1903.

24 The Changing Order

Yet in the early history of Ohio, as in the later
history of some of our present States and Territories,
from time to time waves of feeling hostile to the
judicial establishment arose, generally originating
in the resentment of some class of the community
to judicial decisions preventing that particular
class from carrying out schemes for its own ad-
vantage, to the detriment of the rest of the com-
munity.

The latest manifestation of this spirit in consti-
tutional provisions for the recall of judges by
popular vote, is, in effect, the same as that which
was resorted to in Ohio in 1809, as a means of
punishing the Common- Pleas judges who had
ruled that an act of the Legislature granting to
justices of the peace jurisdiction to try suits for
any amount not exceeding $50 without a jury, was
a violation of the right of trial by jury secured
by the Seventh Amendment to the Constitution of
the United States, in all suits at common law where
the value in controversy shall exceed twenty
dollars.

Although this decision was affirmed by the
Supreme Court of the State, an effort was made to
impeach the judges who rendered it, and when
this failed, resort was had, as Rufus King states in
his history of Ohio, "toa more efficacious course" :

The term of office was seven years, and the term
of seven years since the State constitution went into
operation was just expiring. Most of the judges had
been chosen much later, either as new appointments

The State and the Nation 25

or to fill vacancies. It was resolved by the majority
in both branches of the assembly that their terms of
office must all be limited by the original term of those
who had been first appointed. The three supreme
judges, three president judges of the common pleas,
all the associate judges of that court, more than a
hundred in number, and all the justices of the peace,
were discharged at a swoop. x

The history of Ohio furnishes no repetition of
such an attack on the independence of the judi-
ciary as this, but it was many years before the
courts recovered from the effects of this blow to
their independence. Not, indeed, until after the
decision by the Supreme Court of Ohio, in 1887,
that it was empowered and in duty bound to
declare a law invalid if not passed in due consti-
tutional form, did the judiciary of Ohio take the
place which that branch of the government must
occupy, in order that republican government as
it was understood by the framers of the Consti-
tution of the United States may be accomplished.

Ohio, in common with many of the other States,
had her experience in resisting the supremacy of
the Constitution of the United States and laws
and treaties made in pursuance of it. In 18 19
she undertook to impose a tax on each of the two
branches of the United States Bank, and Osborn,
the auditor of state, summarily took from one of
the branches a sum of money large enough to
cover the tax on both. He was advised by counsel

JOhiof Rufus King, p. 314.

26 The Changing Order

that as the State could not be sued by the nation
he was secure from Federal redress.

But the supremacy of the national government
was declared, and the insufficiency of Osborn's
defense demonstrated, in an opinion by Chief
Justice Marshall, which is one of the great land-
marks of constitutional law. The act of the
Legislature of Ohio under which Osborn proceeded,
was declared to be in conflict with the Federal
Constitution and therefore void; consequently
Osborn's act was not the act of the State; he was a
mere trespasser, and as such amenable to the pro-
cess of the Federal court.1

Representative republican government is founded
upon a practical recognition of the fact that in
a busy, prosperous community the average citizen
can give but little time to the details of his gov-
ernment. He therefore joins with his fellow-
electors in selecting representatives to frame the
laws by which he is to be governed, and in choosing
the principal officers who are to execute them. His
life, liberty, and property are protected from un-
due invasion by either branch of the government
by means of constitutional restrictions upon their
powers; and by limiting the terms for which they
are chosen, there is required of representatives
and agents alike a periodical account of their
stewardship. This system secures freedom from
undue interference during the term of office, thus
affording a reasonable time to work out any given

1 Osborn v. U. S. Bank, 9 Wheat., 938.

The State and the Nation 27

problem, and to submit it to the test of experience
before it is either approved or condemned. The
most beautiful work of the most skilled artisan
presents a crude and unlovely appearance, prom-
ising anything but perfection, at some stage of
its production, and if the capacity of its author
and the value of the work were determined at that
period, neither the artist nor the work could ever
win approval.

Abuses of power occur under all forms of govern-
ment. The representatives chosen to make laws
for State or nation have not always been faithful
to their trust. The greater importance of the
national legislature, upon which the eyes of the
nation are constantly turned, has, as a rule, pre-
served it from the corruption and the inefficiency
of many of the State legislatures. The history
of the latter has been too often a history of venality
and stupidity. But is the remedy to be found in
the overthrow of the whole system of representative
government? If the head of a large commercial
establishment should discover that his clerks and
officials had disobeyed his instructions, stolen his
money, and impaired his fortune, would he mend
the case by undertaking to do all their work him-
self, or by so hampering his new employees with
restrictions and penalties and threats of instant
dismissal for apparent offenses, that their only
certainty in not offending would lie in doing
nothing? Can public business be carried on by a
system based on distrust, any better than private

28 The Changing Order

business can be successfully so conducted? Is not
the remedy to be found rather in greater care in
the selection of agents and the more rigid enforce-
ment of their responsibilities? Political and social
reformers alike are prone to advocate the over-
throw of a system rather than the more difficult
task of selecting fit agents to carry on government.
How can any man who gives the subject a
moment's reflection view with indifference any
interference with the dignity and independence
of the judiciary? What are judges but impartial
arbitrators, to whom any one may be compelled
at any moment to turn for protection of life, limb,
or property? What will become of that protection
if our system of government should subject him
to the despoiling rage of the mob, when he asserts
the supremacy of law in the face of unjust clamor?
Who will be secure in life or property, if judges only
can retain their places by consulting the passing
fever of the crowd, instead of the laws of the land?
A glib, cheap answer is made by the advocates
of the destruction of representative government
when objection is made to their schemes: "You
do not trust the people," they say. On the con-
trary, it is they who do not trust the people.
Their whole program is based on the assumption
that the people are unfit or unable to choose honest
and faithful representatives, and therefore that
those whom they do select must be fettered with
minute instructions, deprived of any freedom of
action, subject to recall, and to be cast out a

The State and the Nation 29

once if they do not photograph into instant action
every passing wave of popular feeling which may
be worked up as a result of misinformation or
inflamed prejudice. Under such a system, the
people abandon all self-restraint and the necessity
of sober second thought, based on accurate infor-
mation and thorough discussion, before condemn-
ing their servants. It would seem an affront to
intelligent readers to suggest even the possibility
of such a change in the nature of our governments,
State or national, were it not that in some of
the Western States and Territories such theories
have already found expression in constitutions and
laws; and even in our Eastern States, there are
not lacking those who have seized upon those no-
tions as a gospel which is to bring salvation as
to a people sitting in darkness.

Indeed, these ideas seem to have gained such cur-
rencyin some partsof the country , that oneis tempted
to exclaim, in the language of James Russell Lowell :

Is this the country that we dreamed in youth,
When wisdom and not numbers should have weight,
Seed field of simpler manners, braver truth,
Where shams should cease to dominate
In household, church, and state?

But if we reflect on the history of our country,
we must realize that its people are "the heirs of
wise tradition's widening cautious rings," and that
in the long run they never yet, as a nation, have
proved unworthy of their birthright.

Ill

COLLEGE MEN AND PUBLIC QUESTIONS1

1 ASSUME that when you invited me to be your
guest this evening you expected me to talk to
you about the relations of college men to public
questions. As one busied in the tremendously im-
portant and equally absorbing business of govern-
ment, I am greatly interested in meeting you who
are coming out into the workaday world to assume
your share of the duty and the privilege of making
efficient the conduct of our public affairs, municipal,
State, and national.

To be truly efficient, a government must be
administered honestly and wisely. How these
results shall be accomplished, you and men like
you should in large measure determine. If you
do not play an important part in the solution of
this problem, then, whatever proficiency you may
have attained here in your studies, whatever
prowess you may have displayed in athletic sports,
you will have failed to realize the highest aim of
university education.

1 Address at the annual banquet of The Daily Princetonian,
Princeton, N. J.f May i, 191 1.

30

College Men and Public Questions 31

I congratulate you on coming out into the world
at this particular time in its history. Within
your grasp is life, and life abundantly. In the
words of the Psalmist, your feet are planted in a
large room. The world is all before you, where to
choose. When your fathers were graduated at the
university thirty-odd years ago, the thoughts of the
people were centered principally upon industrial
and business activity. The railroads were open-
ing up the great western country for development ;
mining and manufacture were being stimulated
by new inventions and increased facilities of
transportation, leading to cheapened production
and improved product; and the rapid progress in
facilities of intercommunication of thought were
bringing the ends of the earth into closer touch
with each other. The surplus population of Eu-
rope poured into our country, and brawny arms
from many lands developed our mines and carried
on the work of our factories. Plenty was scat-
tered over a smiling land. The way was open
for every one. If the older communities were too
crowded, there was room for all in the great West.
Industry and enterprise and intelligence found
ample scope; wealth was garnered in many fields.
The power of cooperation and organization in the
conduct of business has been applied during the
past thirty years to an extent never before dreamed
of. Men learned then how far-reaching a control
over industry and commerce could be effected
through organization. Commercial empires were

32 The Changing Order

formed. Great fortunes were amassed in the
hands of a few, but prosperity came also to many.
What wonder that materialism became rampant
and that the golden calf was erected for worship
in the market-places !

But the vision of truth and justice has never
wholly failed before the eyes of the American
people, and in the full flush of their highest pros-
perity they heard the voice of the national con-
science reminding them that righteousness alone
exalteth a nation. In the period of their greatest
material progress, they paused to consider whether
their institutions were securing justice between
man and man.

The laws of State and nation alike during this
period of great industrial progress were molded
to facilitate the conduct of business on a colossal
scale. There was nothing more natural. They
met the needs of the hour. True, they went be-
yond those needs, and, in so doing, they aroused
the people to a recognition of the fact that they
had gone too far. In the triumphal progress of
expanding industry and accumulating wealth, the
rights of individuals and of classes of individuals
who had but an humble share in it were not always
considered. Here and there occasional peaks of
garnered riches rose high above the plain, and like
the robber barons of the Rhineland, great masters
of capital sat enthroned upon them. But their
very height lifted them up where all men could see
and begin to question how they came there, and

College Men and Public Questions 33

whether it was for the common weal that such
inequalities of condition should exist.

So to-day, the great question confronting you
as you enter upon the drama of matured life is to
find the means of maintaining the true balance
between the freedom which the individual citizen
must enjoy in order that he may justly prosper,
and the protection of the mass of the people from
unjust discrimination in favor of the few.

In a country whose government is based on man-
hood suffrage, any abuse can continue only until
a majority of the people are convinced that it is
wrong. Then there is bound to be a change. But
whether or not the change proposed to remedy the
evil is a wise one and will not result merely in
jumping out of the frying-pan into the fire, depends
upon whether or not the remedy is sufficiently
discussed to be thoroughly understood. The
first popular impulse to right a wrong often results
in committing another wrong. It is in putting
clearly before the people the nature of civic ills,
and the character and effect of proposed reme-
dies, that men who have had the benefit of sys-
tematic university training may best justify their
advantages.

Public attention has been and now is focused
on these wrong tendencies. Recognizing the
existence of evils, two classes of remedies are pre-
sented. One class deals with forms of govern-
ment and new rules of conduct, another class
addresses itself to a consideration of the character

34 The Changing Order

of the men who make our laws and carry on our
public affairs. It is characteristic of our race
that we are more prone, in the face of civic ills,
to the making of new laws than to securing a better
class of public servants. We pass laws very much
as the Chinese buy a paper prayer and hang it up
to placate their gods. A common expression on
many lips is "there ought to be a law about that."
We are in truth a law-ridden people; and this
tendency is encouraged and stimulated by those
who seek popular favor by pointing to easy reme-
dies for obvious ills. Not satisfied with the ever-
swelling volume of statute laws, we are now urged
to tinker with our constitutions. There is nothing
new in this kind of demagoguery. Mommsen,
writing of the Rome of Cato's time, says:

In reality these demagogues were the worst enemies
of reform. While the reformers insisted above all
things and in every direction on moral amendment,
demagogism preferred to insist on the limitations of
the powers of the government and the extension of
those of the burgesses.

So in our own day, there is much clamorous
advocacy of measures to limit the powers of those
charged with the administration of our highly
complicated government, and to increase the
direct intervention of the public in the conduct of
its operations.

The idea that a busy, prosperous, commercial
people will, or can, make or administer laws better

College Men and Public Questions 35

than representatives chosen from among the people
for the purpose, is one that is almost as old as
recorded history, and all recorded history proves
its fallacy. But it is said that in the workings of
representative government, representatives do not
represent the people. I believe that to be a
superficial comment. Representatives have and,
being human, always will, from time to time fail
in their duty ; but in the long run, our representative
bodies must and do give expression to precisely
what the matured thought of the majority of the
people demands. They may not yield at once to
a spasmodic and artificially stimulated emotion
induced by one particular class of society for its
own ends as against all other classes. God forbid
that they should! But they are inevitably con-
trolled in the long run by the deliberate thought-
out will of the people. Impatient reformers,
desirous of securing the prestige of immediate
success in the advocacy of their nostrums, chafe
at delays. But you, who have had the advantage
of learning the lessons of the past, will, I am con-
fident, lend your influence to the maintenance of
a system of government which protects the legiti-
mate interests of a commercial people from de-
struction by the sudden gusts of popular passion.
You will carefully examine existing laws and
institutions before lending your aid to their
overthrow. No system of law can be devised
that automatically will work good. All laws must
be administered by human agencies. The best

36 The Changing Order

human agencies can only be secured by attaching
confidence and honor and dignity to the office. A
few laws easily understood are of more value
than a thousand laws impossible of comprehen-
sion. Remember the advice that Don Quixote
gave to Sancho Panza for his guidance in the
government of the island of Barataria:

Make not many proclamations; but those thou
makest take care that they be good ones, and above
all that they be observed and carried out ; for procla-
mations that are not observed are the same as if they
did not exist; nay, they encourage the idea that the
prince who had the wisdom and authority to make
them had not the power to enforce them; and laws
that threaten and are not enforced come to be like
the log, the king of the frogs, that frightened them at
first, but that in time they despised and mounted
upon.

A people as numerous as ours cannot as a body
lay aside their business occupations and meet in
the market-places, like the Athenians, to debate
on matters of public concern, and to enact into
law or executive order the result of their delibera-
tions. Industry and commerce will long continue
to engross the attention of the majority. As
education continues to be widespread, it is to be
expected that the people will take, increasingly,
an active, intelligent interest in public affairs.
But the business of governing a highly complex
modern civilization, so as to ensure the best results

College Men and Public Questions 37

to the greatest number, will always require the
absolute devotion and entire attention of a large
number of men. Temporary abuses may be cor-
rected, but continuously effective government
cannot be conducted through the spasmodic inter-
vention of popular uprisings. Nor can competent
men for the conduct of public affairs be secured
if they are to be commissioned as untrustworthy,
subjected to constant misrepresentation, and
liable to be turned out branded as unfaithful
servants at a moment's notice for temporarily
unpopular acts.

IV

PALIMPSESTS1

IN extending to me the invitation of your Club
to be its guest this evening, your President
neglected to furnish me with a definite statement
of the aims and objects of the Club, or the record
of its accomplishments, leaving me to infer from
the name you bear, the character of the interests
which unite you in this organization. I, therefore,
have been left to speculate as to whether or not
you devote your meetings to the study of paleo-
graphy, reading the photographic copies of famous
palimpsests which are now sent anywhere by the
great libraries of Europe for the convenience of
scholars in other lands, or if the name of your
Club is merely a figurative suggestion of broader
human interests, leading into fields of history and
philosophy, far beyond the mere deciphering of
ancient writings.

I have preferred to adopt the latter theory, and
to assume that your palimpsests are the leaves in
the great book of human history, which each genera-

1 Address before the Palimpsest Club, Omaha, Neb., Oct. 16,
1911.

38

Palimpsests 39

tion seeks in part to read for its own edification,
and in part to wipe clear of the records of previous
ages, in order that it may write its own story upon
them.

The scribes of the early Christian centuries
sought to erase from the parchment and vellum,
which then were limited in quantity and costly
to procure, the earlier writings which they bore,
without thought or care that these discarded
records might be of infinitely more worth to
humanity than those for which they had to make
room. They sought to expunge the thrilling
tales of Troy's siege — that wide expanse "That
deep-brow' d Homer ruled as his demesne"; the
treatise on the Republic, which preserves to us a
knowledge of the political acumen of Rome's
greatest orator; early Greek versions of the Chris-
tian gospels and epistles; that work which has
made the name of Euclid synonymous with Mathe-
matics, and many other works of lasting value;
and they covered the pages, once glowing with
the immortal language of Homer, Cicero, John,
Luke, or Paul, with the dry-as-dust scribblings
of an Ephraem Syrus and a Severus of Antioch.

But great ideas, once recorded, seldom perish!
Eternal truths survive; and the destructive work
of these pedants failed in its purpose, for what
they wrote was forgotten, while from under the
overlay of tedious monastic dialectics and incom-
prehensible verbiage, the eager, thirsty students
of "the new learning" uncovered the records of

40 The Changing Order

The glory that was Greece

And the grandeur that was Rome.

Their discoveries awakened the mind of Europe,
as the sunshine opens the flowers. In the words
of Symonds, the Renaissance wrought

the recovery of freedom for the human spirit after a
long period of bondage to oppressive ecclesiastical
and political orthodoxy — a return to the liberal and
practical conceptions of the world which the nations
of antiquity had enjoyed, but upon a new and enlarged
platform.

That rediscovery of the classic past restored the
confidence in their own faculties to men striving after
spiritual freedom, revealed the continuity of history
and the identity of human nature in spite of diverse
creeds and different customs; held up for emulation
master works of literature, philosophy and art; pro-
voked inquiry ; encouraged criticism ; shattered the nar-
row mental barriers imposed by mediaeval orthodoxy.

From these records of the splendid development
of the Greek and Roman intellect, and its keen
appreciation of what was most beautiful in nature
and most attainable in art, the modern European
mind was quickened into an activity whose impulse,
projected across four centuries, now stimulates
what is best and most vital in the thought of our
own time in our own country.

Emerson says:

The advancing man discovers how deep a property
he hath in all literature, in all fable, as well as in all

Palimpsests 41

history. He finds that the poet was no odd fellow
who described strange and impossible situations, but
that universal man wrote by his pen a confession true
for one and true for all. His own secret biography he
finds in lines wonderfully intelligible to him, yet dotted
down before he was born.

It is only when we come to realize that the men
who in long-gone-by days "fought and sailed and
ruled and loved and made our world" were men
like us; that their joys and sorrows, their triumphs
and defeats, were such as we suffer and enjoy, and
that the record of their thoughts and actions is
but a chapter in our own history, musing upon
which we may take note of our own dangers,
find solutions for our own problems in this our
day and generation, and say,

The future I may face, now I have proved the past.

How extraordinarily modern and human and
real, for example, the Romans of the second century
become as we read the letter of Pliny the younger
to the Emperor Trajan, written while the former
was proconsul in Bithynia, in which he tells of a
fire that had broken out at Nicomedia, and con-
sumed not only several private houses, but also
two public buildings, the town house and the
temple of Isis, though they stood on opposite
sides of the street. He says:

The occasion of its spreading so far was partly owing
to the violence of the wind and partly to the indolence

\2 The Changing Order

of the people. . . . The truth is, the city was not
provided either with engines, buckets, or any one
single instrument to extinguish fires.

He then unfolds to Trajan a plan to organize a
permanent fire company, consisting of one hundred
and fifty members. He says:

I will take care that the privileges granted them
shall not be extended to any other purpose. As this
incorporated body will consist of so small a number,
it will be easy enough to keep them under proper
regulation.

But Trajan put no faith in the abilities of even
so keen-minded and vigilant a governor as Pliny
to confine the activities of such a company within
its chartered powers. Public Service Commissions
had not yet been invented. He wrote in reply :

.... it is to be remembered that this sort of socie-
ties have greatly disturbed the peace of that province
in general, and of those cities in particular. Whatever
name we give them, and for whatever purposes they
may be founded, they will not fail to form themselves
into assemblies, however short their meetings may be.
It will therefore be safer to provide such machines as
are of service in extinguishing fires, enjoining the own-
ers of houses to assist upon such occasions, and if it
shall be necessary, to call in the help of the populace!1

It would seem as if Trajan must have had a
prophetic vision of the famous Moyamensing hose-

1 Melmoth's Pliny \ vol. ii., pp. 620-22.

Palimpsests 43

company of our American Philadelphia, and as if,
even in far-off Asia Minor, eighteen hundred years
ago, corporations were apt to exceed their char-
tered rights, and to reach out to exercise powers
not expressly granted to them — a tendency which
has been at times observed of incorporated bodies
in later days!

The fear of the tumult which Trajan seemed to
think incident to assemblies of members of the
corporation "however short their meetings may
be," was like the dread the rulers of France had of
the consequences of calling together the States-
General in 1789. Self-restraint in nations, as
well as in individuals, is the result of the exercise
of regulated freedom, of liberty under law. It is
not the product of centuries of tyranny. It can
only be acquired by practice.

But the study of our palimpsests suggests an-
other thought; and that is, that before we seek
to wipe out what has been written on the books of
human experience by those who have gone before
us, we should first carefully read, consider, and
make sure that what we propose to substitute is
really better than what we would destroy. There
is a certain presumption arising from age alone —
not an irrebuttable presumption, to be sure; but
institutions which have stood the test of an hun-
dred years or more are entitled to be considered
presumptively good for much longer, unless the
evidence is very clear that they have broken down
under the strain of new burdens which advancing

44 The Changing Order

time has imposed upon them. When automobiles
came into general use, it was not thought neces-
sary to depress the roads and carry them by
tunnel under all intersecting streams; we merely
strengthened the bridges so they would bear
the increased weight. Growth by modification
and adaptation, rather than by staccato-like
inventions, is the safest progress for human
institutions.

Man is said to be the only animal that profits
by the experience of others. Sometimes it would
appear as if he were not entitled to this distinction.

Emerson says:

All history becomes subjective; in other words
there is no history, only biography. Every soul must
know the whole lesson for itself — must go over the
whole ground. What it does not see, what it does
not believe, it will not know.

But a wise generation will endeavor to avoid
repeating experiments which previous history has
demonstrated to be doomed to failure. The
meeting of the States-General in France in 1789
brought together a great body representative of
the different classes of the French people. They
were almost all inexperienced in the science of
government. They were wholly inexperienced in
legislation. Nearly two centuries had elapsed
since the representatives of the three estates of
the realm had met to discuss measures affect-
ing the nation. The delegates to the National

Palimpsests 45

Assembly of 1789 were therefore at best mere
theorists. They were guided by philosophical
hypotheses, unaided by experience. They were all
too familiar with evils and abuses. They resorted
to philosophy and speculation — not history — for
remedies. They proposed to enact into law the
wildest Utopian dreams. They conceived of man
(that is, the abstract political man who was to be
the unit of control in the new state they dreamt
of) as possessed of the most exalted virtues, and
of a wisdom which sprang, like Minerva, full
armored from the head of Jove. Being endowed
by nature with virtue and wisdom, he needed but
the opportunity to decide, in order that he should
direct the state along the paths of justice to success
in protecting life and property at home, and in
sustaining the honor of the nation abroad. This
virtue was not found in the chosen representatives
of the people, but only in the individual when he
acted as an elector in exercising direct popular
sovereignty. Therefore, the nation must in its
aggregate capacity make its own laws, determine all
controversies, and initiate and control all actions
which the exigencies of national existence might
require. What the people willed at any moment
must become at once the rule of action for the
commonwealth. Representatives of the people
suffered a loss of virtue by being detached from
the mass to perform especial functions. At best,
they should serve only as a large committee to
suggest to the whole body of the people the prob-

46 The Changing Order

lems which the people would then solve. They
must be under the direct control of the popular
will, or they would cease to be truly repre-
sentative of the people. There was no God but
Reason, and Rousseau and Tom Paine were his
prophets !

And after they had hurried from one excess to
another, had killed their monarchs and every
leader who for a brief while stood forward as the
chief exponent of the prevailing theories — Robes-
pierre, Danton, Marat, Joubert — and an hundred
others of lesser note, and had demonstrated the
utter insecurity of life, liberty, and property under
such a system, a military absolutism was erected
on the ashes of unrestrained democracy.

Again, in 1848, after the revolution of July, the
poets and philosophers attempted to conduct the
government of France on the basis of unrestricted
and immediate control of the government by the
popular will. This time the experiment was of
shorter duration, and nearly twenty years of the
empire of Louis Napoleon followed.

But back in 1787, there gathered together in
America a body of men of different caliber. They
had won liberty, and they were resolved it should
not degenerate into license. They conceived of a
government which should be adequate to the
protection of life, liberty, and property at home,
and should command respect abroad. They took
the philosophical theories of the time and applied
to them the touchstone of history. They rejected

Palimpsests 47

Jean Jacques Rousseau and Tom Paine, and
adopted the principles of Magna Charta, and the
Bill of Rights. Dealing with theories of govern-
ment on the basis of examining all things, holding
fast that was best, they refrained from adopting
those institutions which experience in the past had
demonstrated to be fraught with peril to freedom,
however attractive they might seem as abstract
philosophical theories. Without the demonstra-
tion which the experience of the French nation
was shortly to furnish, they distrusted the practica-
bility of the doctrines of Rousseau and the Ency-
clopedists. They found more useful and robust
suggestion in Montesquieu's famous Esprit des
Lois, They turned to the history of popular
government in the past — in Greece and in Rome —
and in their plan of a government which was to
secure the blessings of liberty to themselves and
their posterity, they carefully guarded against
those opportunities for self-destruction which had
proved the ruin of the republics and democracies
of the older world.

As one reads the inadequate record of their delib-
erations, one is filled with wonder and admiration
at the evidence of their thorough familiarity with
the history of governments in the past, and at
their prescience in respect of the future. They
were at pains to save their country from the dis-
asters which past history demonstrated had ever
attended upon popular forms of government.
They never lost sight of the fact that a people is

48 The Changing Order

but an aggregation of individual men, and that if
a government by the people is to be successful
and lasting, it must contain within itself some
means of protecting the whole people from the
follies or weaknesses or ignorance of a minority
who, under the impulse of temporary emotion,
may draw to themselves enough support to ac-
complish what reflection and sober second thought
would demonstrate to be an injustice, but which
might be discovered too late to prevent irretriev-
able mischief.

So they devised a scheme of representative
republican government, with a distribution and
balance of powers, so adjusted that it can never
fail to respond to the real deliberate judgment of
the people, but which is strong enough to protect
the commonwealth from the effect of temporary
impulse, resulting from misinformation, passion,
or prejudice. They conceived of a government
which would be dignified and respected, in which
the whole people would be represented, and which
should be controlled and directed by the best
thought and highest ideals of the people. Their
experience in the colonial governments had taught
them the great advantage of establishing a govern-
ment on certain fundamental outlines contained
in a written constitution which should represent
the deliberate will of the whole people, and which
should limit and control the action of the repre-
sentatives of the people in making, interpreting,
and enforcing the laws. This constitution, they

Palimpsests 49

provided, should be altered only by the affirmative
act of a real majority of the whole people. They
did not leave it to be the sport of a minority,
taking advantage of the apathy of the majority.
It was to be the settled government of all, until
a secure majority of all should affirmatively and
deliberately determine to change it. By these
means they secured for the nation the benefits
of that self-restraint which in nations, as in indi-
viduals, coupled with self-knowledge and self-
reverence, lends life to sovereign power. Their
government was a growth — a continuity of the in-
stitutions which the hardy, upright, self-respecting
men of the American Colonies had worked out for
the preservation of that liberty and independence
which to them was dearer than property or life.

It was the product of the best thought and the
highest statesmanship of the American people.
The civilized world has done homage to their
learning, their wisdom, and their practical common
sense. While the institutions established by the
Constitution of the United States thus far have
resisted the recrudescence of the theories of the
philosopher of Geneva, and his modern disciples
of Oregon and Oklahoma, they have been found
sufficiently elastic to adapt themselves to the
changing needs of a people whose numbers have
increased from three millions to ninety, and for
the government of a nation of forty-six States, and
possessions beyond the seas. The cardinal prin-
ciples of the government are simple: a nice balance

50 The Changing Order

of powers, confidence in representatives who make,
judges who interpret, and administrators who
execute the law; freedom from interference for a
period adequate to enable them to demonstrate
the fidelity with which their tasks are discharged ;
and accountability to the people when this period
is passed.

But iconoclasts, such as arise in all ages, threaten
the overthrow of this system. Already their de-
structive work has been commenced in several
States. Opposition to them is sought to be dis-
credited by the cheap and ready cry that those
who oppose the proposed changes do not trust the
people. The sponge and the eraser of the eager
social reformer and the more eager demagogue
are set to work on the pages to which were ap-
pended the immortal names of Hamilton, Franklin,
Madison, and Washington. So vociferous are
these iconoclasts, and so apathetic the friends and
supporters of constitutional government, that one
is tempted to share the fears of Hamilton that it
may be

. . . forgotten that the vigor of government is
essential to the security of liberty; that in the con-
templation of a sound and well informed judgment,
their interest can never be separated; and that a
dangerous ambition more often lurks behind the
specious mask of zeal for the rights of the people than
under the forbidding appearance of zeal for the firm-
ness and efficiency of government. History will teach
us that the former has been found a much more cer-

Palimpsests 51

tain road to the introduction of despotism than the
latter, and that of those men who have overturned the
liberties of republics, the greatest number have begun
their career by paying an obsequious court to the
people; commencing demagogues and ending tyrants.

To an American of to-day, the suggestion of an
individual tyrant accomplishing the overthrow of
liberty in this country seems grotesquely absurd
and impossible. But the overthrow of representa-
tive republican government of the type estab-
lished by the Constitution of the United States,
and by those of practically all the States of the
Union until a very recent date, eliminates entirely
the element of protection of the commonwealth
from the immediate and disastrous action of an
organized and aggressive minority; weakens
government, by making executive officers depend-
ent entirely upon momentary popular favor, and
results in the destruction of all security of property
and liberty, by creating a spineless and servile
judiciary. Even the worst individual tyrant has
limitations to his rapacity and his cruelty. But
an unrestrained populace, stimulated by strong
emotion, knows no limits, and is capable of any
extreme.

"Know this also," says Carlyle, in closing his
French Revolution,

that out of a world of unwise nothing but an unwisdom
can be made. Arrange it, constitution-build it, sift
it through ballot-boxes as thou wilt, it is and remains

52 The Changing Order

an unwisdom — the new prey of new quacks and un-
clean things, the latter end of it slightly better than
the beginning. Who can bring a wise thing out of
men unwise? Not one!

It has been the boast of America that our system
was carefully framed so as to protect against
unwisdom, by a system of checks and balances so
devised as to secure equal rights to all, and to
prevent injustice to any.

Before we wipe away the institutions so care-
fully planned by our forefathers, to write over
their ruins the new social contract, and the revised
and latest edition of "The Rights of Man," shall we
not pause and consider whether we would not
throw away a priceless heritage, and like Esau,
barter away a precious birthright of freedom for
a mess of delusive pottage?

BUSINESS AND THE LAW1

FROM time immemorial, merchants and traders
have recognized the necessity of laws to
regulate the conduct of business. Human nature,
always more or less the same, makes it necessary,
to prevent perpetual strife,violence, and bloodshed,
that the rights of those engaged in business with
each other, and of the public in dealing with them,
should be denned and recognized, and some
method — the simpler the better — established for
compelling the observance of those rights, by
awarding redress to any one who is injured by an
invasion of them, and by protecting society at large
from the consequences of such invasion, by ade-
quate punishments to prevent repetitions of the
offense.

From an early day, customs grew up among
merchants which became settled and uniform, and
were recognized as binding upon them, and as
embodying the best methods of securing fair play
among them and protection to the public. As

1 Address before the Commercial Club, St. Louis, Mo., Feb.
16, 1912.

53

54 The Changing Order

early as the fourteenth century, in England, in the
towns where foreign commerce was carried on —
known as "staples" or "staple markets" — there
were established special tribunals for the ready
enforcement of these laws of trade. Those early
courts — known as "Courts Pie Poudrous" or
"Pi-Powders" — set an example which it would be
well for more modern tribunals to imitate — of
sitting during fair time from hour to hour, both
morning and afternoon, hearing and disposing
of cases in a summary and informal way, so that
disputes arising with regard to contracts, charter
parties, bills of lading, or other commercial matters,
might be disposed of, in the language of the old
books "between tide and tide." The very name
of these courts carries the suggestion of a sim-
plicity and expedition of legal procedure as far
remote from our modern ways as the time of
Edward III is from this age. We can imagine
strange -looking bearded men, speaking all manner
of foreign tongues, and clad in sea boots and fur-
lined robes, with the dust of the market place on
their feet, and the salt of the sea in their hair and
beards, making their complaints or their defenses
before the judges of the staple, producing their
witnesses, and receiving speedy judgment, accord-
ing to their own usages, at the hands of judges in
whose fairness and wisdom they had confidence,
and so going their ways recompensed, or cast in
damages, as the justice of the case might require,
ere the sun went down. These courts were

Business and the Law 55

established, as a statute of Edward III declared,
to give courage to merchant traders to come with
their wares and merchandise into the realm. And
the knowledge of the fact that foreign merchants
might come and trade according to the best usages
of the business, and be protected by the summary
administration of justice, gave an impetus to the
commerce of Great Britain which carried her into
the first rank among the nations of the world.
The staple system was established not only for
the purpose of facilitating the collection of the
royal customs, but to insure the quality of exported
goods.

Commercial morality [says a writer on the history
of this system] was none too high in those days, and
the average trader fully appreciated the maxim caveat
emptor. He had not the ingenuity of his nineteenth
century successor, but such tricks as he knew for the
undoing of the consumer he, too, practiced with
energy and perseverance. '

The rules and usages of the merchants ripened
into a code which later on was recognized as the
Law Merchant, and came to be administered in the
royal courts of law, and has come down to us
as part of our common law, much of it now being
embodied in statutes of the different States.

During the years while the foreign trade and
commerce of Great Britain was receiving its great
impetus through the Staples, the makers of various

1 Select Essays in Anglo-American Legal History, vol. iii., p. 22.

56 The Changing Order

articles of commerce in the towns began to organ-
ize themselves into associations or guilds, which
regulated the processes of manufacture, and the
prices, materials, tools, working hours, wages,
number of apprentices and the nature of their
duties. They punished dishonest workmanship,
the use of bad material, short weights and measures.
In a word, the traders of every town united in the
protection and pursuit of their common trade
interests. By and by, these guilds were recognized
by law, charters were granted to them by Parlia-
ment, and they controlled in each city the conduct
of every particular trade or business. In course
of time, as towns grew, some masters prospered
more than others, the wealthier members grew
into a guild aristocracy and endeavored to monopo-
lize the guild privileges, and sought to keep the
inferior class from sharing in them. As a result,
the excluded workmen formed new associations —
craft guilds of their own — and being more numerous
than the members of the merchant guilds, became
more powerful, and gradually superseded those
older organizations whose selfishness had brought
about their own extinction. In other words, the
successful associations of merchants of the four-
teenth century did precisely what similar organiza-
tions have done in the nineteenth and twentieth
centuries. Insiders became selfish, and excluded
from membership all but the favored few, so that
by keeping down their numbers they might keep
up their profits; they sought to absorb to them-

Business and the Law 57

selves the entire control of lines of business; they
excluded all competition. In the end, the number
of outsiders became so large that they formed new
guilds — or unions — imitated the selfish perform-
ances of their predecessors, and the outsider who
was not a member of either a merchant guild or a
craftsmen's guild was ground between both. So
the law of the realm had to be invoked — in a meas-
ure, the old common or customary law, and
sometimes direct legislative action — to protect the
individual against the tyrannous power of these
organizations. The problem arose then, as it has
in larger form in our own times, of how to adjust
the rights of all the people with the legitimate rights
of a small number of the people associated together
for the conduct of a particular business.

Centuries rolled by; America was discovered,
colonized, grew up mid stress and storm; fought
for independence, won it upon the basis of a creed
that all men were endowed with certain inalienable
rights, among which are life, liberty, and the pur-
suit of happiness, and that to secure these rights
governments are instituted among men, deriving
their just powers from the consent of the governed.
Such a government our fathers established by
means of a written constitution, adopted for the
declared purpose of establishing justice, insuring
domestic prosperity, and securing the blessings
of liberty to the people of the United States and
their posterity. Lecky, in his Democracy and
Civil Liberty y says that the ends which the great

58 The Changing Order

American statesmen set before them and which
they in large measure attained in framing the
Constitution, were:

to divide and restrict power; to secure property;
to check the appetite for organic change; to guard
individual liberty against the tyranny of the multitude
as well as the tyranny of an individual as a class; to
infuse into American political life a spirit of continued
and of sober and moderate freedom.

During the first fifty years of national existence
under the Constitution, it may be said that these
ends were almost absolutely attained. Lord Acton,
writing of this period, says that the causes of Old
World trouble — popular ignorance, pauperism,
the glaring contrast between rich and poor, reli-
gious strife, public debts, standing armies, and
war — were almost unknown. "No other age or
country, had solved so successfully the problems
that attend the growth of free societies," and, he
adds, "time was to bring no further progress."1
I pray that the day may be long distant when it
can truly be said of American institutions that
time can bring them no further progress. Pro-
gress is only attained by meeting and overcom-
ing problems. The more complex and apparently
insoluble the problems, the greater the progress to
be realized by solving them. Growth of nations,
as of individuals, is the result of struggle. The
same causes which operated to cause the Old

1 Acton, Essays on Liberty, p. 56.

Business and the Law 59

World trouble referred to by Lord Acton, exist
in a far less degree in our country than they did
there. We have no religious strife; our public
debts are not onerous; we have had but one great
war, and that half a century ago ; it was not a war
of aggression, but a war which rid us of the great
moral evil of slavery, and established a basis of
united and reinforced nationalism strong enough
to cope with the great problems the future holds
for us. We have no popular ignorance, but a
widespread popular intelligence. True, we have
had, and we still have, some glaring contrasts
between rich and poor. Progress and poverty
have gone hand in hand, but to nothing like the
same extent as in the greatest civilizations of
ancient times.

The century just passed has been one of un-
paralleled progress in the application of science
to industry and the affairs of daily life. The
almost boundless natural resources of this great
American continent have been developed and
applied in the light of a rapidly increasing knowl-
edge of the laws of nature, and an equally increasing
control over natural forces. A century which saw
the application first of steam and then of electricity
to transportation, the invention and development
of the electric telegraph, wireless communication,
the invention of the cotton-gin and the spinning
jenny, the automobile and the aeroplane, and a
thousand other devices, cannot be judged by the
standards which should be applied to any other

60 The Changing Order

age in recorded history. Population increased as
by magic; the most energetic and most adventur-
ous of the peoples of the Old World poured into our
country. Our natural resources were exploited,
developed, controlled, and marketed with bewil-
dering success. Wealth accumulated as by the
wave of a magician's wand; little heed was given
to the laws of business or of business association,
because the field was open to all, and energy and
enterprise were impatient of restriction or control.
A community into whose lap was poured increas-
ing and apparently inexhaustible wealth, took
little interest in suggestions to interfere with the
activities of men who were achieving such con-
spicuous success. But man is an insatiable crea-
ture; though he heap up untold riches, yet his
appetite grows by what it feeds upon, and he is
never content to cry "Enough!" The more he
has, the more he covets, and the less willing he
becomes to allow others any share in the common
wealth from which his power or his cunning can
exclude them. The garnered fortunes of American
merchants and of American specu ators assumed
such magnitude, the influence exerted by them in
public affairs became so obnoxious to the welfare
of the community and to the safety and continu-
ance of free institutions, that a gathering wave of
protest began to rise and to sweep with increasing
force across the land. It found expression in
legislation of a character which would have
seemed impossible to the statesmen of our older

Business and the Law 61

days. Students of Jefferson, who believed that
that people is best governed that is least governed,
were appalled at the growing volume of legislation
which they claimed interfered with the exercise
by men of the ordinary avocations of life. Indig-
nant protest cried out from the ranks of those
whose onward career towards increasing wealth
and power was sought to be thus checked. It was
the old problem that had arisen in Europe over
five hundred years previously — the problem of
protecting the rights and opportunities of all the
people against the selfish tyranny of the organiza-
tions or groups that had acquired wealth and power
so great as to lose sight of the rights of all those
outside of their own ranks. The evil was to be
met by the application, on behalf of all the people,
of those same rules of fair trade which had grown
up among the sturdy traders of the fourteenth and
fifteenth centuries.

The first subject to be wrested from the unfair
control of special groups or interests was the
greatest agency of modern commerce — transpor-
tation by railroad. During the years of develop-
ment of a new country, railroad charters had been
freely granted by State governments to any who
chose to take them, and the right of eminent
domain was freely conferred upon all who were bold
enough to undertake the construction of lines of
railroad. The shrewdest merchants were swift
to perceive the advantage of controlling trans-
portation, and the greatest impetus to monopo-

62 The Changing Order

listic control of industry was afforded by securing
special privileges in rates and methods of trans-
portation.

One looks back on the history of American rail-
road construction with mingled feelings of pride
and shame! Pride in the enterprise and courage
with which men undertook to build lines of railroad
in the face of every conceivable natural obstacle,
and invoked the highest engineering skill to
overcome difficulties which in any other age would
have daunted and defeated the most enterprising;
shame at the conscienceless way in which the
public was defrauded by the issue of securities
without value, by the methods with which trustees
of great properties juggled with them in their own
interests, and enriched themselves at the expense
of those they should have protected. One looks
back on the history of the growth of American
business during the last forty years with the same
mingled feelings — admiration and pride at the
splendid development of methods of production
and distribution which made American manu-
facturers and American merchants the foremost
in the world; which invented the department
store and the mail-order house ; which devised the
most perfect system of manufacturing and deliver-
ing goods to the purchaser ever known in history —
but shame at the birth and growth of a system of
underhand, concealed, and unfair dealing, whereby
competition was stifled, industries monopolized,
equality of opportunity denied, and charters of

Business and the Law 63

incorporation, granted for the benefit of all the
people, made instruments for the enrichment of
the few at the expense of all others.

The first attempt to cope by national legislation
with the evils which had resulted from the enor-
mous growth of wealth in our country, therefore,
naturally was directed at the management of the
railways; for that subject concerned almost every
inhabitant of the country. Probably no business
man to-day could be found who would not applaud
the legislation which, beginning with the Inter-
state Commerce Act of 1887, has been added to,
amended, expanded, and finally has found its last
expression in the act of 191 o. By these statutes,
the principle has been firmly established that rates
shall be reasonable; that there shall be no unjust
discrimination between those who use the railroads;
and that any violation of the laws declaring these
principles shall be punished with fine and im-
prisonment. The railroad companies consistently
and persistently have fought every effort to make
these laws adequate to the protection of the in-
individual merchant or shipper, and to secure him
that fairness and equality of treatment to which
every citizen is entitled; but step by step the
battle has been fought and the victory won for the
whole people.

Next, the attention of the national legislature
was directed to the great artificial aggregations of
manufacturers and dealers which had grown up
under the lax system of legislation existing in every

64 The Changing Order

State in the Union, whereby charters were handed
out, without inquiry, conferring power to engage
in any form of industry; and legal immortality,
and immunity from personal liability upon any
group of men who could raise enough money to
pay the nominal organization fees. Like the
medieval guilds, many of these associations had
grown rich and great, and in the plenitude of their
power, had ruthlessly invaded the rights and
trampled on the liberties of every one not within
their organization. Those who were in control
of their machinery had in many instances utilized
their position and the advantages of the knowledge
and power which they possessed, to enrich them-
selves even at the expense of their own constituents ;
and these combinations had become so strong that
nothing but the power of the nation was adequate
to check them and drive them back to their proper
bounds. A growing recognition of these evil condi-
tions led to the enactment of the Sherman Law of
1 890. I do not propose here to review the history of
that law — of how it was first treated with contempt-
uous indifference; how the Supreme Court of the
United States at first failed to grasp its proper appli-
cation ; how a better know! edge of its scope and mean-
ing grew; how decision after decision finally made
manifest to the people their power, by means of that
law, to check the growing evil of unfair methods of
controlling the trade and commerce of the nation,
and finally through it to break up the great monop-
olies of trade and prevent new ones from forming.

Business and the Law 65

The law at first was almost murdered in the
house of its friends, because there was given to it
by some courts and some judges a construction
which, if finally established by the Supreme Court,
would have reduced it to absurd consequences,
and made of an act established for the purpose of
preventing unlawful restraints upon the commerce
of the nation, a means of accomplishing the de-
struction of that commerce.

Surely, no thoughtful man, reading the history
of his country during the past sixty years, can fail
to feel thankful at the demonstration of the power
of his government peaceably to cope with the great
forces of monopoly and unfair trade, and to force
back within their bounds the scope of successful
enterprise; so that, however rich, however power-
ful in the progress of trade and commerce they
may become, men shall be compelled to recognize
the rights of others, and be prevented from,
by unfair competition, achieving the ruin of all
competitors.

This is a big country; large capital is required
to conduct business in a manner adequate to the
needs of an hundred millions of people. We cannot
go back to the days of small trading, and continue to
supply the wants of our people at prices which
would be adequate returns on small investment.
The wages reasonably demanded by American
standards of living can only be paid as incident to
the conduct of business on a large scale. But the
essential principle, upon the enforcement of which

66 The Changing Order

alone can the welfare of the people permit the
continued existence of artificial bodies with large
capital, is the recognition of the power of the
government as greater than that of any corporation
or group of men, and the constant exercise of that
power to preserve the rights of the humblest citizen
as well as the richest.

Probably negative, restrictive legislation has
gone as far as is necessary. The great principles
that the highways of commerce shall be open to all
on equal terms to those under like conditions and
similar circumstances, and that men may not
band themselves together by unfair methods to
destroy competitors, are now fully recognized by
law, and adequate means are provided to prevent
violations of that law. Most men are learning
the difference between a combination to get busi-
ness, and a combination to get a competitor.

What is left as yet untouched, is the provision
by national legislation of some adequate law of
association, under which there may be retained
the great advantages of cooperative effort in the
conduct of business — which in our day and genera-
tion must be great in volume successfully to meet
the needs of the people — while at the same time
protecting the people from the consequences of
unrestrained association, which in the past has
resulted in unfair competition and grossly unequal
fortunes. Nothing but continued confusion can
result from leaving the creation and regulation of
these associations to the varying caprices of forty-

Business and the Law 67

eight or fifty States. Until the national govern-
ment courageously faces the question and accepts
the responsibility which the assertion of power
involves, the proper equation between business
and the law cannot be adequately settled. In our
corporate laws we have shown little of the sagacity
which characterized our forefathers in framing our
constitutions.

In the development of a new continent there was,
of course, a tremendous advantage in laws which
enabled a number of coadventurers to contribute
toward a common fund to be devoted to a particular
enterprise without liability beyond the amount so
contributed. But when this contribution became
a mere sham and subterfuge; when the actual
capital of a corporation was only the money
borrowed on the faith of a fictitious capital, and
representations as to its business, in which imagi-
nation and hope played a much greater r61e than
facts, corporate organization became in a large
measure an instrument for fraud. When partner-
ships between corporations were legalized by
State authority, and one creature of legislation
extended its control over an indefinite number of
others through the acquisition of shares of their
stock, there was built up an irresponsible engine
for monopolizing business such as the world had
never witnessed. It is probably safe to say that
a very small percentage of even the successful
great combinations of business were created for
legitimate business purposes, or in the recognition

68 The Changing Order

of a legitimate demand for business extension.
They were often created to enable those who con-
trolled their machinery, and the financiers with
whom they dealt, to issue and sell to the public
vast amounts of stocks and bonds at prices far
beyond their actual value, and thus greatly to
enrich themselves at the expense of the country.
They piled up fortunes without precedent. Some-
times the stockholders profited, sometimes they
did not. Seldom, if ever, did they profit in the
same degree as the group who were in control.
In the rush and progress of industry, few thought
of, and still fewer acted in accordance with, the
principle that makes an agent or trustee liable to
account to his principal for all the profits realized
in carrying out the principal's business. These
things are so well known that it is but repeating
well-ascertained facts to refer to them. They con-
stitute one of the scandals of an age which has so
much in other ways to be proud of. Surely, the
generation that has seen these things, that has
been made keenly alive to their evil influence in
the State and to their false economic results,
should not pass away without enacting legislation
and securing methods of so enforcing it as to for-
ever prevent the recurrence in the future of any
such conditions.

How shall this be done? How can it be done,
save through Federal legislation which shall deal
with the conduct of business among the States
and with foreign nations by associations of men

Business and the Law 69

in corporate form; which shall so regulate the
methods of organization of such associations as to
prevent those who deal with them from deception
concerning their capital or business; which shall,
by appropriate provisions, make it certain that
every person who invests either by way of stock-
purchase or loan shall have at all times the means
of securing adequate information concerning the
property, business, and earnings and expenses of
the associations ; and that shall prevent them from
being used as engines of unfair competition and
destruction of others engaged in fair competition
with them? No limit can or should be set to the
capacity of such an association for legitimate,
normal growth; but it should be impossible for it
to inflate itself by mythical values based upon no-
thing but expectation, hope, or misrepresentation.
No individual carrying on business as such, and no
mere partnership, has ever yet succeeded in
absorbing so large a share of the trade or commerce
of the country as to accomplish, or threaten to
accomplish, monopoly. Individuals united by
secret agreements restraining their own action,
and plotting the destruction of competitors by
secret, unfair methods, have threatened the
stability of trade, abnormally increased the price
of products, and disturbed the normal currents of
business; but the great monopolies which have
arisen have always operated under corporate form,
and only by means of controlling corporate organi-
zation can the national government effectively

70 The Changing Order

prevent the recurrence of evil, and introduce that
certainty into the law of the conduct of business
by association which is so requisite to wholesome
national trade conditions.

No right-minded man begrudges to superior
intelligence the fruits of honest ingenuity and
industry; but no patriot would be willing to see
Americans become mere servants of great cor-
porate organizations. Only free men — not indus-
trial slaves — can maintain free institutions. The
problem before the business men of to-day is,
in Lecky's language, to infuse into and retain in
American political life a spirit of continued sober
and moderate freedom.

VI

ENGINEERING AND CULTURE1

THIRTY-FOUR years ago I was an undergrad-
uate of Lehigh, a student in the School of
Civil Engineering; destined, as I then thought, to
follow that profession as my life work. Fortu-
nately, I found a wise counselor in Dr. Henry
Coppee, at that time President of the University,
a student and teacher of literature, quick to
recognize in a young student a taste for letters,
and who, charitably excusing my lack of aptitude
for scientific pursuits by attributing to me capacity
in other directions, advised me to give up the study
of calculus for that of Blackstone. For this counsel
I have been always grateful. I refer to it, not as
in itself a matter of interest to others than myself,
but as evidence of the far more important fact
that, even in those early days, the student at Lehigh
was given by the faculty that suggestion and direc-
tion which was suited to his particular needs.
This was hardly to have been expected at that
time, for the absorbing interests of the institution

1 Address on receiving the honorary degree of LL.D., at Lehigh
University, Bethlehem, Pa., June 8, 1909.

71

72 The Changing Order

were then technical and practical, and as a rule the
students were endeavoring to acquire a sufficient
training in scientific and engineering lines to
enable them to make a living ; and the faculty was
addressing itself to the accomplishment of that
effort.

The country was slowly recovering from the
panic of 1873; ^e resumption of specie payments
and the era of prosperity was yet several years off.
But the great need of railway and industrial de-
velopment was even then appreciated, and it was
felt that soon there would be a great demand
for well trained engineers.

The thoughts of many eager young men were
therefore centered in preparation for the different
branches of engineering, in the belief that those
vocations offered the most promising pathways
to success and prosperity. Pennsylvania, particu-
larly the Lehigh Valley, was recognized as a great
field for a development in which engineering and
chemistry would necessarily play a large part.

Foreseeing this, and the advantage to the youth
of the Lehigh Valley of proper preparation for its
demands, Judge Packer had in 1865 endowed and
founded this institution, with the object, as set
forth in the Register of the University, "to afford
the young men of the Lehigh Valley a complete
education, technical, literary and scientific, for
those professions represented in the development
of the peculiar resources of the surrounding
region." Analytical chemists and mining and

Engineering and Culture 73

civil engineers were at first, therefore, as was
natural, almost the sole products of the institution,
and during the first ten years of its existence, out
of eighty-one degrees conferred by Lehigh, only
six were of Bachelor of Arts.

The early graduates of the University easily
obtained profitable employment, and their suc-
cesses inspired many others to come here for that
training, the commercial value of which met with
such ready recognition.

Your honored President, Henry S. Drinker, an
alumnus of only three or four years' standing when
I entered the University, had already won distinc-
tion by his work in the building of the Amboy
tunnel, and his accomplishments were taken as
an example of the opportunities which were open
to every graduate of the Engineering School, al-
though few felt they could acquit themselves with
as much distinction as he had done.

It was natural at that time for Americans, with
a sense of the great natural resources of their
country, to turn to the study and application of
practical science, in order that they might aid in
the development of those resources, and share in
the material results thereby to be realized.

It was natural, too, that on the threshold of a
great industrial and material development, young
men should address themselves to technical studies
with the view to fitting themselves in the shortest
possible time for practical work, and that they
should be impatient of what seemed to them a

74 The Changing Order

waste of time in such preliminary academic prepa-
ration as was required for the professions of law
and medicine. This spirit was not confined to
Lehigh. It was characteristic of other technical
schools ; perhaps of all of them. But the engineer-
ing profession, it seems to me, has suffered in
consequence, and while American engineers have
led the world in practical achievement, I think
I am correct in saying they never have taken
quite the rank in American social and political
life commensurate with their accomplishments in
their own profession. I ascribe this to the
fact that their training has been too purely tech-
nical ; they have specialized too early in life, and
without that broad and catholic foundation upon
which special training should be based.

The gentleman who delivered the alumni ad-
dress at your last commencement said:

Our older collegians are almost universally graduates
of the literary schools. When we go forth into the
world at large and come into contact with them, we
find that they are unwilling to concede the full value
of the technical education.

I do not agree with that statement. All edu-
cated men concede the full value of the technical
education: its results fully demonstrate it. But
the defects in a merely technical education are also
easily perceived. " It is true, " as was said in that
address, "that the requirements of civilization have
gone far beyond that which is purely culture;"

Engineering and Culture 75

that is to say, an age conspicuous for its ascertain-
ment and practical application of the forces of
nature has, of course, gone beyond the period of
merely conning the texts of sacred books, after
the manner of the Chinese. But the requirements
of a civilization that is not purely materialistic
have not dispensed with art and literature, nor
ignored the tremendous importance of the imagina-
tion— the value of poetry and song, in inspiring
that impulse which achieves the greatest practical
results, — nor can they minimize the importance of
the study of the past history of man, for contrast
and example, for warning and for emulation.

The art of measuring [says Mommsen] brings the
world into subjection unto man; the art of writing
prevents his knowledge from perishing along with him-
self; together, they make man — what nature has not
made him — all powerful and eternal. . . . Measure-
ment [he adds] necessarily presupposes the develop-
ment of the several ideas of units of time, of space and
of weight, and of a whole consisting of equal parts, or
in other words of number and of a numeral system.

This development — this adequate development of
the units of time, space, and weight — is suggestive
of that development of the capacity of the mind of
man which, availing of the knowledge of man's
experience in the past, preserved from perishing
by the art of writing, is, or should be, the aim and
object of the education of all men. The best
superstructure of special technical knowledge is

76 The Changing Order

built on the broad foundation of general intellec-
tual and moral culture.

In an age of great technical and industrial devel-
opment, the tendency, almost the irresistible
tendency, is towards pure materialism — the exalt-
ing of practical accomplishment in the production
of wealth over the less tangible results of the study
of history, literature, and art; and so there is on
the part of many men who have attained success
in business life, or in the practical sciences, a
disposition to extol such accomplishments beyond
all others, and to undervalue, or not at all to
realize the value of, mental culture in any other
than purely technical lines.

It is to be noted, however, that the greatest
discoveries in science followed that great intel-
lectual awakening which is known as the Renais-
sance. The revival of learning, the desire for
general culture, which found inspiration in the
study of the art, the literature, and the history of
the Greeks and Romans, produced as its first
fruits the marvelous architecture of Bramante,
Michelangelo, and Brunelleschi : the Basilica of
St. Peter's in Rome, and the Duomo of Florence;
the paintings of Leonardo, Raphael, and Titian;
the sculpture of Ghiberti, Luca della Robbia,
Donatello, and Michelangelo; the immortal Di-
vine Comedy of Dante, and the tender lyrics
of Petrarch. Then followed the philosophy of
Erasmus and Colet and More, the epic poem of
Ariosto, and the historical work of Guicciardini.

Engineering and Culture 77

Upon this splendid foundation of art and poetry
and letters was built the stately structure of
modern science.

Copernicus while studying mathematics devoted
his spare time to painting. Galileo was an earnest
student of literature, accomplished as a Greek
and Latin scholar, a musician, and a painter, when
the vibrations of the great swinging lamp at Pisa
first directed his attention to a problem in physics
which led to his great discoveries. Newton pur-
sued his studies at Trinity College, Cambridge,
and was graduated in 1665 with the degree of
Bachelor of Arts. Galvani and Volta, Priestley
and Lavoisier, were contemporaries of Rousseau
and the Encyclopedists. The steam engine was
invented by Watt, the locomotive by Stephenson,
and the spinning jenny by Arkwright, at a time
when the whole civilized world was in a ferment
of intellectual agitation concerning the rights of
man and the theories of social order, and when the
history and the literature of the ancient world were
eagerly studied for light on the fundamental prin-
ciples of civil government and individual liberty.

Almost without exception, the great men whose
names have been written large in the history of
science were men of broad culture, often almost
as proficient in literature and art as in science.

Leonardo da Vinci, that nearly universal genius,
the reviver of the science of hydraulics, the inven-
tor of the camera obscura, and of innumerable
designs for engines of war, tunnels, and canals for

78 The Changing Order

traffic, united, as is well known, these achievements
with the highest accomplishments in painting and
sculpture. His training was obtained under Ver-
rocchio, goldsmith, sculptor, painter, and teacher,
and the universality of his education is testified
to not only by his early sketches and paintings,
but by the tales of his daring architectural and
engineering projects. Bramante and Brunelleschi
are known almost as well for their proficiency in
art and letters as because of St. Peter's Church
and the Duomo of Florence. The versatile
Franklin, the all- wise Humboldt, the accomplished
Bunsen, and the cultured Priestley, are illustrations
of the fact that mere technical education alone
has never secured the first rank in the life of the
community. The written word is more imperish-
able than marble and steel.

"The aspiring youth that fired the Ephesian
dome outlives in fame the pious fool that raised
it."

The epic tales of Homer, the Divine Comedy
of Dante, the logic of Aristotle, the human drama
of Shakespeare, all teach the lesson of human life,
in the knowledge of which is to be found power to
comprehend and help and guide and lead men,
which is the supremest accomplishment of man.

The temple of Diana at Ephesus has crumbled
away, but the tragedies of ^Eschylus and the
comedies of Euripides remain. The Roman Forum
is an interesting collection of ruins. Only frag-
ments remain to indicate to us the skill of the

Engineering and Culture 79

forgotten engineers who built the great aque-
ducts and bridges and temples of imperial Rome.
But the Odes and Satires of Horace, the Letters of
Pliny, and the Lives of Plutarch make the great
men of Rome as real to us as those of yesterday
in France or England. From them, from their
experience, their ideas, their failures, and their
accomplishments, many an inventive mind has
caught inspiration and has had imagination
stimulated to the solution of great problems in
art, in architecture, and in science. The man
who goes out into the world without the knowl-
edge of these humanities is therefore lacking in a
mental equipment which leaves him subject to a
serious handicap. True, he may make it up after
leaving college, but it is difficult, and requires
exceptional character.

Robert Louis Stevenson, writing of his grand-
father Robert, one of the most distinguished
engineers of his time, describes him as "a man
of the most zealous industry, greedy of occupation,
greedy of knowledge, a stern husband of time, a
reader, a writer, unflagging in his task of self
improvement. "

Such a man will overcome all lack of early
advantages. But general cultivation to-day is so
widespread, that the man who enters upon his life
work with a mere technical training, when he
comes in competition with men of broad culture
is at a decided disadvantage.

That the faculty of this institution shares these

80 The Changing Order

views is demonstrated by this announcement in
the Register:

The desirability of a liberal training for an engineer
has led the University to offer courses in which, by
combining the studies of the several technical depart-
ments with the work of the course in arts and science,
a student may gain both a literary and professional
education, with the corresponding degrees, in six years.

That this is not an extravagant expenditure
of time will be appreciated when it is considered
that the work of a course in arts and law requires
seven years, and in arts and medicine eight.

To quote the Register again:

These courses possess decided advantages over the
usual engineering curriculum of four years, the studies
of which are necessarily almost wholly technical, and
the value of the wider training for which they provide
far outweighs the extra expenditure of time.

The combination of the ideals of purely technical
study with broad university culture, offers to
students the opportunity of becoming not merely
engineers, but educated gentlemen.

I have thus far dwelt only upon the practical
advantages of this broader than merely technical
education. But the refining influence and the in-
tellectual pleasures opened by such study should
not be lost sight of.

James Russell Lowell once exclaimed out of the
fullness of his scholarly mind:

Engineering and Culture 81

"Neither would I have you neglect the humani-
ties. I would wish that every one of you could
enjoy in the originals, Homer and Virgil and
Dante and Rabelais and Goethe." In an essay
written shortly before his death he revised this
list somewhat, and characterized Homer, Dante,
Shakespeare, Cervantes, and Goethe as "the five
indispensable authors. " Certainly if the work of
any one of them were eliminated from our litera-
ture and speech, there would be ragged spaces in
the fabric.

Is it not then well worth the time and effort
of an engineer or a chemist, as well as of a lawyer
or doctor, to study and know the works of these
great, these indispensable authors? From them
each of us may catch something of their knowledge,
their insight, their inspiration; and with quick-
ened imagination and sharpened perceptions may
more clearly see the solution of problems which
have baffled us. As the sage of Israel long ago
declared :

Wisdom is the principal thing; therefore get wis-
dom, and with all thy getting get understanding. . . .
Take fast hold of instruction, let her not go, keep her;
for she is thy life.

6

VII

THE STUDY OF LAW AND THE WORK
OF LAWYERS1

THERE can be no higher mission in life than
the work of educating men in a knowledge of
the laws of our country, unless we regard law merely
as described in Blackstone's definition, "a rule
of civil conduct prescribed by the supreme power
in a state, commanding what is right and pro-
hibiting what is wrong. " 2 But if we consider our
laws as the expression of the will of God working
through his people — the manifestation of their
sense of right and justice; sometimes, as is true
of all human institutions, clouded by misunder-
standing and misapplication, but always, in so far
as they are permanent and vital, reaching out to
establish justice and insure domestic tranquillity,
then we come to a realization that the study of the
law has a higher aim than the mere ascertainment
of police regulations.

No better description ever has been given of the

1 Substance of an address before the Law School of Georgetown
University.

2 i Bl. Com., p. 44.

82

The Study of Law 83

Anglo-Saxon conception of law than that embodied
in the quaint language of the statute 25 Henry VIII,
c. 21 j in which the Parliament addressed the King
in these words:

This your grace's realm, recognizing no superior
under God but only your grace, hath been and is free
from subjection to any man's laws, but only to such as
have been devised, made, and ordained within this
realm, for the wealth of the same; or to such other
as, by sufferance of your grace and your progenitors,
the people of this your realm have taken at their free
liberty, by their own consent, to be used among
them; and have bound themselves by long use and
custom to the observance of the same; not as to
the observance of the laws of any foreign prince,
potentate, or prelate; but as to the customed and
ancient laws of this realm, originally established as
laws of the same, by the said sufferance, consents, and
custom; and none otherwise. *

It is characteristic of the thought and character
of our British ancestors, that side by side with a
studied courtesy towards their sovereign, there
runs through this statute a strain of conscious
recognition of the subjection of even the sovereign
himself to the will of the people. They declare
themselves free from any man's laws except such
as have been devised, made, or ordained within
the realm for the commonwealth, and such as by
immemorial custom and usage, the people "have

1 1 Bl. Com., p. 80.

84 The Changing Order

taken at their free liberty, by their own consent
to be used among them."

This is the language of a people who three
hundred years before had extorted from King
John the solemn covenant:

No free-man shall be seized, or imprisoned, or
dispossessed, or outlawed, or in any way destroyed;
nor will we condemn him, nor will we commit him to
prison, excepting by the legal judgment of his peers,
or by the laws of the land.

To none will we sell, to none will we deny, to none
will we delay right or justice.

A covenant solemnly made, sworn, and sealed —

that the men in our kingdom have and hold the afore-
said liberties, rights, and concessions, well and in peace,
freely and quietly, fully and entirely, to them and
their heirs, of us and our heirs, in all things and places
forever, as is aforesaid. r

The conception that the people themselves are
the source of law as well as of government; that
kings are but one kind of symbol of popular
sovereignty, and that —

when a long train of abuses and usurpations, pursuing
invariably the same object, evinces a design to reduce
them [the people] under absolute despotism, it is their
right, it is their duty, to throw off such government,
and to provide new guards for their future security,

1 Magna Charta, Barrington, Phila., 1900, pp. 239, 250.

The Study of Law 85

found its most concrete formulation in that passage
in the Declaration of American Independence
which is inextricably interwoven into the woof and
fabric of American institutions :

We hold these truths to be self-evident, that all men
are created equal; that they are endowed by their
Creator with certain unalienable rights; that among
these, are life, liberty, and the pursuit of happiness.
That, to secure these rights, governments are insti-
tuted among men, deriving their just powers from
the consent of the governed.

Among a people, therefore, whose laws are self-
imposed — made by themselves for their common
weal, or by which they have bound themselves by
immemorial usage and custom ; and whose govern-
ment is created by themselves and for themselves —
a knowledge of domestic laws and institutions is
essential to a continuance of liberty and justice.

This was well understood by those who estab-
lished our form of government. Washington,
in his Farewell Address, advised posterity to resist
"the spirit of innovation upon its principles
however specious the pretexts," especially warn-
ing against alterations in the form of the Constitu-
tion "which will impair the energy of the system
and thus undermine what cannot be directly
overthrown." The best advice he could give as
to the means of preventing this impairment and
ultimate destruction, was to promote "as an
object of primary importance, institutions for the

86 The Changing Order

general diffusion of knowledge." For, he de-
clared, "in proportion as the structure of a govern-
ment gives force to public opinion, it is essential
that public opinion be enlightened."

I take it, therefore, that the object of all properly
conducted law schools throughout our country,
is not merely to train artisans in the law to exercise
their mechanical functions as attorneys, but to
teach the young men of this land the principles of
the laws by which we govern ourselves, and the
history and the nature of our institutions, to the
end that there may be disseminated among our
people such an understanding that enlightened
public opinion may control the enforcement of our
laws, the administration of our government, and
all projects for the amendment or alteration of
laws or institutions.

In that charming old-fashioned novel, Ten
Thousand a Year, Dr. Warren describes a conversa-
tion between his hero, Mr. Aubrey, who had been
robbed of his estates by the chicaneries of the
attorneys, Quirk, Gammon, & Snap, and the
Attorney-General of England whom he was con-
sulting as to the advisability of taking up the
practice of the law as a means of livelihood. The
Attorney-General was not very encouraging as
to immediate pecuniary results.

Certainly [he said] I have no cause to be dissatisfied ;
I've done pretty well; but I can tell you that eight
years passed over me before I earned enough a
year to pay my laundress!

The Study of Law 87

I wonder how many men would prepare them-
selves for the practice of the law to-day if they
believed that there was even a possibility of
having to wait eight years before earning enough
to pay the laundress !

But, the Attorney-General added — and it is
true to-day and here — "if you determine to get on
at the bar, you will."

Certainly [he said] law is difficult; but its difficulty is
often greatly overrated, especially by imperfectly edu-
cated, and ill-disciplined, quick, sharp men. . . . What
is wanted is a clear head ; a good memory ; strong com-
mon sense ; fixity of purpose ; an aptitude for analysis
and arrangement: before these combined, the difficul-
ties of law fly like the morning mist before the sun. x

The students of modern American law schools
are not left to haphazard and desultory methods
of study such as obtained in the time whereof Dr.
Warren wrote. At an earlier time, the law student
in England enjoyed facilities of study that in the lat-
ter part of the eighteenth and the early nineteenth
century fell into disuse. Thus Fortesque, writing
in the time of Henry VI, described the advantages
enjoyed by the students of law at that time in Eng-
land. The place of their study — the Temple —
he noted was

much more commodious and proper for the purpose
than any University. It is situated near the King's

1 Warren, Ten Thousand a Year, Tauchnitz Ed., 1845, vo*- "•»
p. 194.

88 The Changing Order

Palace at Westminster, where the Courts of Law are
held, and in which the Law- Proceedings are pleaded
and argued, and the resolutions of the Court, upon
cases which arise, are given by the Judges, men of
gravity and years, well read and practiced in the laws,
and honored with a degree peculiar to them. Here,
in Term-Time, the students of the law attend in great
numbers, as it were to public schools, and are there
instructed in all sorts of Law-Learning, and in the
practice of the Courts: . . . the place of the study
is not in the heart of the city itself, where the great
confluence and multitude of the inhabitants might
disturb them in their studies ; but in a private place,
separate and distinct by itself, in the suburbs, near
to the Courts of Justice aforesaid, that the students,
at their leisure, may daily and duly attend, with the
greatest ease and convenience.1

This is an apt description of an ideal place of
study. Whether or not the remainder of the
narrative would appeal to a modern American
student may be questioned.

Upon festival days and after the offices of the
church are over, they employ themselves in the study
of sacred and prophane history: here everything which
is good and virtuous is to be learned: all vice is dis-
couraged and banished. . . . The discipline is so
excellent that there is scarce ever known to be any
picques or differences, any bickerings or disturbances
amongst them.2

1 The Laws of England, Translation by A. Amos, Cambridge,
1825, pp. 178-79.
3 Id., p. 186.

The Study of Law 89

It is an old maxim that the law is a jealous
mistress. He who would acquire a thorough
knowledge of law must give himself to it heart and
soul. Especially during his novitiate must he
literally eat, drink, talk, and sleep law. He should
live in a community of those who are doing the
same. His effort should be always to get at
the underlying principle in whatever he is studying.
That principle should be to him like the thread
by which Theseus successfully escaped the laby-
rinth. And the Ariadne, from whose deft fingers
the line runs, must in his case be Clio, the Muse
of History. The laurel wreath she wears may be
won from her, and the fame of the student pro-
claimed through her trumpet, only if the papyrus
in her hand be searched diligently and its record
applied wisely.

But the students should not be left to wander
unaided through the wilderness of legal literature.
Wise guides must be furnished them for their
journey. Warning signs should be erected for their
benefit. Their footsteps should be directed along
well cut paths. In their progress they should
remember the legend of the sleeping beauty and
"be bold, be bold, and evermore be bold. Be not
too bold. " They should study thoroughly before
venturing to criticize or condemn. They must
beware of rash judgments. The statute laws of
the States and of the United States fill many
volumes. The unwritten or customary law is
found in those conceptions of right and justice

90 The Changing Order

which are the result of a thousand years of civiliza-
tion, and which have found authoritative expres-
sion in many thousands of judicial opinions,
recorded in thousands of volumes. The duty of
instructors is to help the students to winnow out
of this mass those decisions which are the great
beacon lights of the law, and which once thoroughly
mastered will enlighten their understanding to
comprehend the law in its entirety. It was said
of Sir George Jessel, one of the greatest judges
England ever produced :

His learning was profound, yet he was no mere
follower of precedent, no mere directory of cases.
He was able to take up the confused mass of the law
and mould it to the ends of justice.

In the case of Re Hallett 's Estate x he delivered one
of the greatest of his opinions. In the course of it he
expressed his views of the proper use of authorities :

The only use of authorities, or decided cases
is the establishment of some principle which the
Judge can follow out in deciding the case before
him. There is, perhaps, nothing more important in
our law than that great respect for the authority
of decided cases which is shewn by our tribunals.
Were it not for that our law would be in a most dis-
tressing state of uncertainty.

Lord Bowen likened the common law to an
"arsenal of common-sense principles," and he used
1 13 Ch. D., 676.

The Study of Law 91

that arsenal, whenever possible, to overcome mere
technical obstructions to justice, by the applica-
tion of fundamental principles of right and morals.

"There is no magic at all in formalities/ ' he
contended. ■

In most cases, when a supposed rule of the com-
mon law would work iniquity, it will be found on
careful investigation that the true principle has
been lost sight of, and has become encrusted over
by a later growth resulting from misunderstanding
and misapplication. In the long run the people's
sense of justice finds expression in principles of
immutable right.

Yet as Lord Bowen said in Dashwood v. Magniac :

It is not a valid objection to a legal doctrine that
it will not be always easy to know whether the doctrine
is to be applied in a particular case. The law has to
face such embarrassments.

The boldness with which a Jessel or a Bowen
applied the principles of the law, seemingly care-
less of their authority, was only the deft skill of
an expert swordsman, which would be fatal to one
of less adroitness.

Plutarch tells us that even the great Demos-
thenes never made any oration on the sudden,

and that oftentymes when he was sette in the assem-
ble, the people would call him by his name, to say
his opinion touching the matter of counsell then in

1 Dashwood v. Magniac (1891), 3 Ch., 306.

92 The Changing Order

hand: howbeit that he never rose upon their call,
unless he had first studied the matter well he would
speake of.1

I would that, like wise old Odysseus, I could com-
mand those winged words that move the hearts
of men to impress upon every young man the
importance of his thoroughly mastering the
principles of the law in the years of his preparation
for the bar. The law is not an exact science, and
yet it is not absolutely empirical. It is founded
upon immutable principles of morality and justice.
The application of those principles through a thou-
sand years of Anglo-Saxon civilization has gradually
evolved a code of rules which can be understood
only by a knowledge of their history. Yet in
large measure they are felt, recognized, acted upon,
believed in by thousands, hundreds of thousands
of people who know nothing of their origin, but
recognize in them a practicable standard of con-
duct. But a lawyer must know more about them.
He must know what principle is generally applica-
ble to a given state of facts, so that with this
governing principle in mind, he may turn to ad-
judged cases and statutes to determine the precise
application of the principle which the given cir-
cumstances require. Such ready command is
only possible if one have a thorough familiarity
with the history of the origin, growth, and develop-
ment of the law sought to be applied.

1 North's Plutarch, v., p. 288.

The Study of Law 93

It was said of Judge Cooley that his "remark-
able success as a law writer was largely due to his
ability to extract from a multitude of cases the
essential principles involved, to arrange them in
logical order, and to state them, with the reason-
ing on which they were based, accurately, clearly,
and briefly. "x

The same ability would lead to like success in a
counsel or an advocate.

A biographer of Judge Jeremiah S. Black re-
cords:

The keynote of his method is probably to be found
in his own remarks upon his despair when first set to
study the law. His heart sank within him when he
first saw the tools he must handle, the multiplicity
of those sources from which he must draw his knowl-
edge of the law. " I did not know the value of general
principles, or how legal problems could be solved by
the application of fundamental maxims." Through
the pain and perplexity of the following years he
had learned that lesson. ... It was not ignorance
of, but mastery over, precedent, which made him
apparently independent of the authority of decided
cases, and freed his recorded decisions from the useless
multiplication of citations upon points which he knew
to be no longer questionable.2

A like absence of the use of precedents is
noticeable in the opinions of Chief Justice Mar-

1 Dean Hutchins, in Great American Lawyers, vol. vii., p. 480.

2 Margaret S. Klinglesmith, in Great American Lawyers, vol.
vi., p. 13.

94 The Changing Order

shall. "Brother Story will furnish the authori-
ties," he is said to have observed, after having
delivered one of his matchless expositions of the
law.

The young men now engaged in the study of the
law in our leading American law schools are
fortunate in the opportunities for public service
which their studies will afford them, whether they
shall be applied as a means of livelihood in the
practice of the profession, or as a means of helping
to create that enlightened public sentiment upon
which so absolutely depends the permanence of
free institutions.

It has often been said of the United States that
it is a nation of lawyers; and when the part
played by lawyers in the molding and preserva-
tion of our institutions is considered, the charac-
terization may be accepted as just. Yet it is a
matter of common remark that lawyers to-day
do not enjoy the influence which they formerly
possessed. The explanation is not far to seek.
During the quarter of a century just past, the great-
est pecuniary rewards for lawyers were earned in
the application of legal knowledge and skill in
the organization and conduct of great commercial
enterprises in corporate form, and they too often
were led to become either the business associates,
or the salaried employees of their clients, thereby
losing their distinctive position as counsel, taking
on the nature of joint adventurers, contributing

The Study of Law 95

their knowledge and capacity to the capital of a
given enterprise, and sharing with their associates
not only in the pecuniary success or failure, but in
the resultant public criticism.

The period since the close of the Civil War has
been one of the most extraordinary industrial
and commercial development ever known in any
land during any other period of equal length in
recorded history. The natural development of
our great resources was aided by wonderful dis-
coveries in science, and the application of them to
mining, manufacture, transportation, and dis-
tribution of product. Bold and skillful men seized
upon the opportunities thus presented to realize,
and they did realize from the public, profits beyond
the wildest dreams of earlier imagination.

Able lawyers, with specialized training, devised
the legal machinery by which these great enter-
prises were organized, developed, and combined,
and through which vast industries were brought
under centralized control.

An absence of the personal responsibility which
inheres in partnership relation, continuity of
existence irrespective of changing individual inter-
ests, and the ability to split up interests in the
capital of an undertaking, and to dispose of any
part at will without affecting the legal entity, were
necessary to enable these great businesses to be
promoted, and vast projects realized. These
results were secured — they could only be secured —
through legislative action. States vied with each

96 The Changing Order

other in offering facilities for corporate organiza-
tion. Some of them virtually offered the boon of
perpetual corporate life with power to do, not
merely all that an individual could do, but things
which no individual could have dreamt of doing,
and with no accountability to any one for any
acts done. What amounted to partnerships be-
tween corporations, without the characteristic
liability of partners for the debts of the firm, were
authorized, fostered, and, encouraged. The most
efficient instruments for the creation of monopoly
were handed over the counter of every State
Legislature.

But when the people began to take alarm at the
growing power of such organizations, it was the
lawyers of the country who suggested remedies for
the evil, to be worked out by the application of
old established principles to the new conditions.
The people in many States had generously, even
recklessly, conferred the privilege and convenience
of corporate machinery. But by the exercise of the
power of amendment, wisely reserved in most char-
ters, it was found that the people might restrain
and correct abuses of privileges they had granted.
The power to regulate commerce among the States
and with foreign nations had been conferred upon
the national government by the Constitution of the
United States. Commerce was recognized by
the highest judicial authority as having a compre-
hensive meaning far more extensive than mere
trade. It embraced all forms of intercourse, and

The Study of Law 97

the power to regulate it involved the establishment
of rules by which such intercourse should be
governed. No State under the guise of creating
a corporation could charter a commercial libertine
against the paramount control of Congress over
interstate and foreign commerce. There was
another principle of the common law, too, the
application of which, it began to be realized, was
not limited to any particular field, but was co-
extensive with the principle itself. This was the
principle formulated by Lord Chief Justice Holt
upwards of two hundred years ago1 quoted by
Chief Justice Waite in support of a famous decision
of the Supreme Court of the United States that a
State may regulate the charges of a warehouseman
for the storage of wheat.2

That principle he stated in these words:

Property does become clothed with a public interest
when used in a manner to make it of public conse-
quence, and affect the community at large. When,
therefore, one devotes his property to a use in which
the public has an interest, he, in effect, grants to the
public an interest in that use, and must submit to be
controlled by the public for the common good, to the
extent of the interest he has thus created. He may
withdraw his grant by discontinuing the use ; but, so long
as he maintains the use, he must submit to the control.

The announcement of this decision in 1876
helped to pave the way for the enactment of the

1 In De Portibus Maris, i Harg. Law Tracts, 78.
3 Munn v. Illinois, 94 U. S., 113.
7

98 The Changing Order

first act for the regulation of interstate commerce
in 1887, and the succession of statutes affecting
the management of interstate railways enacted
by Congress in subsequent years. The Sherman
Anti-trust Law of 1890, sought to apply the power
to regulate commerce in such manner as to check
the tendency of the great industrial organizations
to effect monopolies, and to prohibit contracts,
combinations, and conspiracies in restraint of
interstate and international commerce.

The work of such eminent lawyers as Reagan and
Cullum, Edmunds, Thurman, Hoar, Sherman, and
Cooley, attest the influence of the educated lawyer
in dealing with these great fundamental problems
of national economics. Judicial decision has
affirmed the soundness of the principles thus
invoked in their application to the problems dealt
with by legislative action. Perhaps the full effect
of the principle of legislative control over property
affected with a public use has not yet been fully
grasped. But it may be suggested that in that
principle lies a means for the effectual protection
of the public from injury or destruction through
any form of industrial organization which is so
used — to employ the language of Chief Justice
Holt — as to make it a matter of public consequence,
and to affect the community at large.

The thought and the work of the great lawyers
I have named, and of many others in less con-
spicuous fields, who wrought out solutions of these
vast problems, should redeem the profession from

The Study of Law 99

the reproach of being merely the trained experts
of selfish forces. But the conspicuous pecuniary
rewards of those who were identified with the great
corporate interests have been used to fill the pop-
ular mind with distrust of an entire class, and for
a time even the disinterested and devoted labors
of such men as I have mentioned, could not redeem
the bar from the reproach of being antagonistic to
the interests of the people. Perhaps the envy
of the unsuccessful and the unskilled also has con-
tributed somewhat to discredit their more able or
more prosperous professional brethren. Be that
as it may, the great opportunity that is open to the
men entering upon the profession of law to-day is
to reinstate it in the place to which it is entitled,
by learning, by character, and by usefulness, in
any community in which popular government is
established and maintained.

There are many avenues open through which
this may be accomplished — open not only to them
who adopt the practice of law as a means of liveli-
hood, but to them who shall enter into public life
and become legislators or administrators in the
government of the State or the Nation, and to
them who in business or private life may use and
apply the lessons learned in this institution.

In a certain sense, the greatest opportunity
is that of the practitioner. His life will afford
him constant opportunity to test the practical
value of theory. His danger will be the tendency
to lose sight of the ethical aim of all law in the

ioo The Changing Order

intense technical interest of the game. Lawyers
are not only by nature and training conservative,
but they are apt to become so enamored of the
technical skill involved in legal procedure, as to lose
sight of the fact that rules of practice are devised
merely to the end that litigants may present the
merits of their controversy to a tribunal for de-
cision, in the simplest, most expeditious mode con-
sistent with apprising each of the contention of the
other, and giving him an opportunity to prepare
for the trial. The old English lawyers made a
fetish of pleading — the written statements of their
case made by the respective litigants in advance
of trial. The modern American lawyers have made
a fetish of procedure, and have created a mass of
artificial rules which in some States presents as
great an obstacle to reaching the judgment seat,
as did the common law rules of pleading before the
English judicature reform acts.

It will be the high privilege of the young men
now coming into the profession to contribute to the
work of clearing away this mass of worse than
useless machinery, and of substituting a few simple
regulations for the legislative minutiae that now
make up our codes of procedure. But to the
effective accomplishment of such reform, an ac-
curate knowledge of conditions and requirements
is indispensable. More harm is done by ill-con-
sidered reforms than by a continuance of existing
evils. It is always important, too, that changes
in law or procedure shall be developed along lines

The Study of Law 101

of established and well-recognized principles,
rather than across the grain, as it were, with no
continuity between the new regulation and the
old.

Finally, may I add, that all law to be effective
must be based on a broad sense of right. It is
that fact which gives to the customary or unwritten
law a greater sanctity in the minds of the people
than acts of the Legislature.

The greatest safeguard of popular liberty lies
in the inherent respect for their law felt by a self-
governing people. The enactment of statutes
which are not based upon eternal principles of
justice, but upon mere temporary or class expedi-
ents, tends to impair or destroy this attitude of the
people towards their law.

Respect for law is the Alpha and the Omega of
a free government. That respect can exist only
when the law is that which the people establish
"at their free liberty," which is just to all classes,
and which binds the hearts and the con-
sciences of men to respect even the law they may
violate.

With such laws in the hearts of the people and
on their statute books, we may say as did the
great lawgiver of Israel :

Keep therefore and do them ; for this is your wisdom
and your understanding in the sight of the nations,
which shall hear all these statutes, and say Surely this
great nation is a wise and understanding people.

For what nation is there so great, who hath God so

102 The Changing Order

nigh unto them, as the Lord our God is in all things
that we call upon him for?

And what nation is there so great, that hath statutes
and judgments so righteous as all this law, which I set
before you this day? x

1 Deut. iv., 6, 7, 8.

VIII

RECENT INTERPRETATION OF THE
SHERMAN ACT "

THE only legitimate end and object of all
government is the greatest good of the
greatest number of the people. The means by
which this end is attained, vary in accordance with
the experience and the temperament of the people.
Government is necessarily more or less of an
experiment at all times, but as men have been
making similar experiments since the dawn of
recorded history, the waste of repeating unsuccess-
ful experiments of the past may be avoided by
studying the records of the results of earlier
effort. Other things being equal, all thoughtful
persons will agree, the probabilities of success
will be greater if action be taken along lines
which in the past, under similar conditions, has
been attended with benefit to the common weal.
All history demonstrates the fact that the great-
est prosperity to the State has resulted from
allowing to individual effort in trade and com-

1 Address before the Michigan State Bar Association, Battle
Creek, Mich., July 6, 191 1.

103

104 The Changing Order

merce the utmost freedom consistent with the
protection of society at large.

Yet the experience of the remote, as well as of
the recent past, demonstrates the necessity of some
governmental regulation of private enterprise, in
order that the fruits of industry may not be entirely
garnered into a few hands, and that the freedom
of individual effort may not be unduly restrained.

We need look no further than to the history of
England, from which we derive most of our con-
ceptions of civil liberty, for evidence of the char-
acter of evils affecting trade and commerce which
commercial prosperity tends to develop, and of the
methods which have proved most effective in
restricting those evils.

The first statute enacted in England in 1436
against agreements in restraint of trade1 was
directed against regulations made "by persons in
confederacy" for their " singular profit and the
common damage of the people. " Note that even
at that early date, the action of the Legislature was
directed at curbing the selfish exercise of power by
a few for their own benefit, but to the common
damage of the people.

The considerations upon which contracts in
restraint of trade were held void at common law,
as our Supreme Court has often pointed out, were :
(1) the injury to the public by being deprived of the
restricted party's industry; and (2) the injury to
the party himself by being precluded from pur-

1 15 Henry VI, re-enacted 1503, 19 Henry VI, c. 7.

Recent Interpretation of Sherman Act 105

suing his occupation, thus tending to make him
more or less of a public charge. l In the case of a
corporation chartered by a State to carry on a
particular business, any agreement voluntarily en-
tered into by it which impaired or restricted in
any material degree its power to discharge the
functions conferred upon it by the State, was
necessarily contrary to public policy and void. 2

Monopolies in trade have been at all times, under
all forms of government, regarded as obnoxious
to the general welfare. They were early declared
to be contrary to the law of England, and the
outburst of popular resentment to the grant by
Queen Elizabeth to certain of her favorites of the
exclusive right of dealing in particular commodi-
ties, compelled even that powerful monarch to
disclaim any intention to offend against the popu-
lar sense of right and justice of her subjects, and
to blame her advisers for the acts which she
formally disavowed.3

The vice of monopoly was recognized in England
to be the power acquired by the monopolist to
control prices by excluding competition. With
the great development of the vast natural re-
sources of a new country, and the unprecedented
powers conferred by State legislation, throughout
the United States, upon associations of individuals
under corporate form, the opportunity and the

1 Gibbs v. Baltimore Gas Co., 130 U. S., 396, 409.

* People v. N. River Sugar Ref. Co., 54 Hun., 354.

* D'Ewes, Journal of the Parliaments of Elizabeth, p. 652.

106 The Changing Order

machinery for the centralization of control over
great industries proved so tempting to cupidity,
that twenty odd years ago, even so busy, self-
satisfied a people as the prosperous citizens of these
United States, was aroused to the necessity of
checking the rapid tendency to the concentration
of control of great industries in a few hands.
While the State Courts and Legislatures attempted
to deal with the subject, it was soon recognized
that only the National Government could ade-
quately grapple with an evil which had become
national in its extent. The simple but unlimited
power vested in Congress "to regulate commerce
with foreign nations and among the several States
and with the Indian tribes, " furnished the general
government with sufficient jurisdiction to protect
the commerce of the nation from undue restraints
and monopolization.

So the act of July 2, 1890, was passed, declaring
in terms so comprehensive, yet so simple that it
has required two decades of judicial exposition to
bring their meaning home to the people with living
force, that " every contract, combination in the
form of trust or otherwise, or conspiracy in re-
straint of commerce among the States, or with
foreign nations," is illegal, and that every person
who shall monopolize or attempt to monopolize
any part of such trade or commerce, is guilty of a
misdemeanor; and that the United States Circuit
Courts sitting in equity shall have jurisdiction, at
the suit of the United States, to prevent and re-

Recent Interpretation of Sherman Act 107

strain all violations of the act. Very slowly indeed
has a full consciousness of the meaning of this law
come over the intelligence of the American
people. The first effort to apply it, in the Knight
case,1 proved abortive, partly because of an
imperfect recognition of the remedies which
should have been sought; partly because of a too
narrow conception of the extent of Congressional
power over interstate commerce.

It was then successfully directed in the Trans-
Missouri2 and the Joint Traffic Association3 cases
against agreements between interstate railroads
made to control rates of interstate transportation ;
but an extreme statement of the meaning of
the phrase "restraint of trade" enunciated in the
opinions of the court in those cases, became the
basis of a school of literal interpretation which
seemed bent upon reducing the law to an absurdity,
and thus creating a public sentiment which would
make impossible its enforcement. Yet the author
of those opinions, in the second of them, rejected
with some sarcasm the interpretation sought to
be placed upon his language in the earlier one.
Observing at the outset that no contract of the
nature described by counsel as those which he sug-
gested, would be invalidated by the application of
the meaning given by the Court to the words of the
act, was before the Court in the case under con-
sideration, and that there was, therefore, some
embarrassment in assuming to decide just how far

• 156 U. S., 1. " 166 U. S., 290. s 171 U. S.f 506.

108 The Changing Order

the act might go in the direction claimed, Justice
Peckham said:

Nevertheless, we might say that the formation of
corporations for business or manufacturing purposes
has never, to our knowledge, been regarded in the
nature of a contract in restraint of trade or commerce.
The same may be said of a contract of partnership.
It might also be difficult to show that the appointment
by two or more producers of the same person to sell
their goods on commission was a matter in any degree
in restraint of trade. We are not aware that it has
ever been claimed that a lease or purchase by a farmer,
manufacturer, or merchant, of an additional farm,
manufactory, or shop, or the withdrawal from business
of any farmer, merchant, or manufacturer, restrained
commerce or trade within any legal definition of that
term ; and the sale of a goodwill of a business with an
accompanying agreement not to engage in a similar
business was instanced in the Trans-Missouri case as a
contract not within the meaning of the act ; and it was
said that such a contract was collateral to the main con-
tract of sale and was entered into for the purpose of en-
hancing the price at which the vendor sells his business.

In the Addyston Pipe case1 it was held that the
act operated to invalidate an agreement between
members of an association of corporate manufac-
turers of iron pipe, made for the purpose of con-
trolling prices by suppressing competition among
themselves. Montague v. Lowry 2 was to the same
effect.

* 175 U. S., 227. 9 193 U. S., 38.

Recent Interpretation of Sherman Act 109

In the Northern Securities case, it was held that
control of two competing lines of interstate railway
could not be acquired by vesting a majority of the
stock of each in a corporation organized under the
laws of New Jersey, without violating the act.
In the Swift case,1 a combination between com-
petitors in the business of buying and shipping live
stock and converting it into fresh meats for human
consumption, suppressing bidding against each
other, and arbitrarily, from time to time, raising,
lowering, and fixing prices, and combining to make
uniform charges to the public, was also held within
the prohibition of the statute.

In the Danbury hat case, 2 a combination of indi-
viduals to prevent defendants (manufacturers of
hats) from manufacturing and shipping hats in
interstate commerce was condemned; and in the
Continental Wall Paper case,3 a combination of
manufacturers of wall paper, fixing prices and
providing against sales except under agreements
between members of the combination, was held
to violate the law.

In the meantime, certain of the decisions had
drawn a line of differentiation, by holding that the
act was not intended to affect contracts which have
only a remote and indirect bearing upon commerce
between the States,4 and that a covenant by the
vendor of an interstate business to protect the pur-

« 196 U.S., 375.

3Loewe v. Lawler, 218 U. S., 274. 3 212 U. S., 227.
« Field v. Barber Asphalt Co., 194 U. S., 618; Hopkins v.
United States, 171 U. S., 578.

no The Changing Order

chaser from competition for a reasonable period,
made as a part of the sale of the business and not as
a device to control commerce, was neither within
the letter nor the spirit of the act. *

While the intent of parties entering into a par-
ticular agreement or combination, etc., was held to
be immaterial, where the necessary inference from
the facts was that the direct and necessary result
of the agreement was to restrain trade ; yet in the
Swift case, Justice Holmes pointed out that intent
was almost essential to a combination in restraint
of commerce among the States, and was essential
to an attempt to monopolize the same.

Where acts are not sufficient in themselves to
produce a result which the law seeks to give them —
for instance, the monopoly — but require further acts
in addition to the mere forces of nature to bring that
result to pass, an intent to bring it to pass is necessary
in order to produce a dangerous probability that it
will happen ... But when that intent and the
consequent dangerous probability exist, this statute,
like many others, and like the common law in some
cases, directs itself against that dangerous probability
as well as against the completed result.2

The proceeding against the American Tobacco
combination, brought before the Court for the first
time the question of the full interpretation of the
statute in its application to attempts to monopolize,

1 Cincinnati Packet Co. v. Bay, 200 U. S., 179.
a Swift & Co. v. United States, 196 U. S., 396.

Recent Interpretation of Sherman Act in

and in deciding the case in the Circuit Court,
Judge Lacombe expressed the extreme view of the
school of literal interpretation, by asserting that
the act prohibited every contract which to any
extent operated to restrain competition in inter-
state commerce.

Size [he said] is not made the test: Two individuals
who have been driving rival express wagons between
villages in contiguous States, who enter into a com-
bination to join forces and operate a single line, re-
strain an existing competition; and it would seem
to make little difference whether they make such
combination more effective by forming a partnership
or not.1

On the other hand, Circuit Judge Hook, in the
Standard Oil case, decided in the Eighth Circuit
after the decision in the Tobacco case, said:

The construction of the act should not be so narrow
or technical as to belittle the work of Congress, but on
the contrary it should accord with the great import-
ance of the subject of the legislation and the broad
lines upon which the act was framed. The language
employed in the act is as comprehensive as the power
of Congress in the premises, and the purpose was not
to hamper business fairly conducted, but adequately
to promote the common interest in freedom of com-
petition and to remove improper obstacles from the
channels of commerce that all may enter and enjoy
them. The wisdom of the law lies in its spirit as well

1 164 Fed., 702,

ii2 The Changing Order

as in its letter, and unless they go together in its
construction and application justice goes astray.

Speaking of the application of the second section
of the act, he added that the modern doctrine with
respect to monopoly "is but a recognition of the
obvious truth that what a government should not
grant, because injurious to public welfare, the
individual should not be allowed to secure and
hold by wrongful means."

This being the state of the law, the four decisions
involving a construction of the act rendered by the
Supreme Court during the term just closed are of
especial interest. ■ The first case decided came up
on writ of error, brought by the United States to
reverse a judgment of the Circuit Court in New
York sustaining pleas in bar to an indictment for
conspiracy to restrain interstate commerce in
violation of the first section of the act.2 The
facts stated in the plea showed that the conspiracy
had been originally entered into more than three
years before the finding of the indictment. The
Circuit Court had held that the crime was com-
pleted as soon as the conspiracy was formed. But
the indictment charged a continuing conspiracy
to eliminate competition. The Court said:

A conspiracy to restrain or monopolize trade by
improperly excluding a competitor from business
contemplates that the conspirators will remain in
business and will continue their combined efforts to

1 October Term, 1910. a U. S. v. Kissel, 218 U. S., 601.

Recent Interpretation of Sherman Act 1 13

drive the competitor out until they succeed. If they
do continue such efforts in pursuance of the plan, the
conspiracy continues up to the time of abandonment
or success.

The facts set forth in the indictment as the
means by which the alleged purpose was to be
accomplished, showed that the acts committed by
the defendants were for the purpose of preventing
a competing company from engaging in business;
that this prevention continued and could only be
terminated by the affirmative act of the defendants,
which act had not been performed. The plea
was therefore held bad.

A conspiracy in restraint of trade [said Mr. Justice
Holmes] is different from and more than a contract
in restraint of trade. A conspiracy is constituted by
an agreement, it is true, but it is the result of the
agreement, rather than the agreement itself; just as
a partnership, although constituted by a contract,
is not the contract, but is a result of it. The contract
is instantaneous; the partnership may endure as
one and the same partnership for years. A conspir-
acy is a partnership in criminal purposes. That as
such it may have continuation in time is shown by the
rule that an overt act of one partner may be the act
of all without any new agreement specifically directed
to that act. . . .

The next case decided was that of Dr. Miles
Medical Company v. John D. Park & Sons Com-
pany.1 That was a suit in equity brought by a

1 220 U. S., 373.

ii4 The Changing Order

manufacturer of proprietary medicines prepared
in accordance with secret formulae, to prevent
dealings in them by third parties in violation of a
system of contracts with its purchasers, denomi-
nated as agents (wholesale distributing agents and
retail distributing agents), to maintain certain
prices fixed by it for all sales of its products at
wholesale or retail. The Court held that the
evidence showed that complainant had created —

a system of interlocking restrictions by which the
complainant seeks to control not merely the prices
at which its agents may sell its products, but the
prices for all sales by all dealers at wholesale or retail,
whether purchasers or sub-purchasers, and thus to fix
the amount which the consumer shall pay, eliminat-
ing all competition.

The Court quoted the description of the essential
features of the system given by Mr. Justice Lurton
in his opinion in the Circuit Court of Appeals, as
follows:

The contracting wholesalers or jobbers covenant
that they will sell to no one who does not come with
complainant's license to buy, and that they will not
sell below a minimum price dictated by complainant.
Next, all competition between retailers is destroyed,
for each such retailer can obtain his supply only by
signing one of the uniform contracts prepared for
retailers, whereby he covenants not to sell to anyone
who proposes to sell again unless the buyer is
authorized in writing by the complainant, and not to

Recent Interpretation of Sherman Act 115

sell at less than a standard price named in the agree-
ment. Thus all room for competition between re-
tailers, who supply the public, is made impossible.
If these contracts leave any room at any point of the
line for the usual play of competition between the
dealers in the product marketed by complainant, it
is not discoverable. Thus a combination between
the manufacturer, the wholesalers, and the retailers
to maintain prices and stifle competition has been
brought about.

That these agreements restrained trade the
Court held to be obvious. That, having been
made, as the bill alleged, with most of the jobbers
and wholesale druggists, and a majority of the
retail druggists of the country, and having for their
purpose the control of the entire trade, they re-
lated directly to interstate as well as intrastate
trade, and operated to restrain commerce among
the several States, was also stated to be clear.
The Court analyzed and dismissed the contention
that the restraints were valid because they related
to proprietary medicines manufactured under a
secret process. It further held that a manu-
facturer cannot by rule and notice, in the absence
of contract or statutory right, even though the
restriction be known to purchasers, fix prices for
future sales. Reference was made in this regard
to the decision by the Supreme Court in the case
of Bobbs-Merrill Co. v. Strauss1 that no such privi-
lege exists under the copyright statutes, although

* 210 u. S., 339.

n6 The Changing Order

the owner of a copyright has the sole right to vend
copies of the copyrighted production, and it was
said that the manufacturer of an article of com-
merce not protected by any statutory grant was
not in any better case. The agreements in the
case at bar were obviously designed to maintain
prices after the complainant had parted with title
to the articles, and to prevent competition among
those who traded in them, and for that reason they
were held to be void. The Court cited a long line
of cases by which it had been adjudged that agree-
ments or combinations between dealers, having
for their sole purpose the destruction of compe-
tition and the fixing of prices, are injurious to the
public interests and void.

They are not saved by the advantages which the
participants expect to derive from the enhanced
price to the consumer. . . . And where commodi-
ties have passed into the channels of trade and are
owned by dealers, the validity of agreements to pre-
vent competition and to maintain prices is not to be
determined by the circumstance whether they were
produced by several manufacturers or by one, or
whether they were previously owned by one or by
many. The complainant having sold its product at
prices satisfactory to itself, the public is entitled
to whatever advantage may be derived from com-
petition in the subsequent traffic.1

Following these two cases, the Supreme Court
next addressed itself to the decision of the case
• 220 U. S., 373, 408.

Recent Interpretation of Sherman Act 1 1 7

of the two great monopolistic combinations — the
Standard Oil and the American Tobacco.

In the Standard Oil case, the Supreme Court
affirmed a decree of the Circuit Court which ad-
judged that the individual and corporate defend-
ants had entered into and were carrying out a
combination or conspiracy in restraint of inter-
state and foreign commerce in petroleum and its
products, such as was prohibited by the first
section of the act; and that by means of this
combination those defendants had combined and
conspired to monopolize, had monopolized, and
were continuing to monopolize a substantial part
of the commerce among the States, in the Terri-
tories, and with foreign nations, in violation of
Section 2 of the act.

This conclusion was based on the following con-
siderations, viz.:

1. Because the unification of power and control
over petroleum and its products, which was the inev-
itable result of the combining in the New Jersey cor-
poration by the increase of its stock and the transfer
to it of the stocks of so many other corporations,
aggregating so vast a capital, gave rise, in and of itself,
in the absence of countervailing circumstances, to say
the least, to the prima facie presumption of intent and
purpose to maintain the dominancy over the oil
industry, not as a result of normal methods of indus-
trial development, but by new means of combination
which were resorted to in order that greater power
might be added than would otherwise have arisen had

n8 The Changing Order

normal methods been followed; the whole with the
purpose of excluding others from the trade and thus
centralizing in the combination a perpetual control
of the movements of petroleum and its products in
the channels of interstate commerce.

2. Because this prima facie presumption was
made conclusive by considering the conduct of the
persons and corporations who were mainly instru-
mental in bringing about the acquisition by the New
Jersey corporation of the stocks of the large number
of corporations which it acquired, as well as the
modes in which the power vested in the New Jersey
corporation had been exerted and the results which
had arisen from it.

The acts of the defendants preceding the trans-
fers to the New Jersey company of the shares of
stock of a large number of other corporations were
held by the court to evidence

an intent and purpose to exclude others which was
frequently manifested by acts and dealings wholly
inconsistent with the theory that they were made with
the single conception of advancing the development of
business power by usual methods, but which on the
contrary necessarily involved the intent to drive
others from the field and to exclude them from their
right to trade and thus accomplish the mastery which
was the end in view.

Confirmation of the finding of a continuous
intent in the defendants to exclude others from the
field and themselves to dominate it, was found in

Recent Interpretation of Sherman Act 119

an examination of the exercise of its power by the
combination after it was formed.

. . . The acquisition here and there which en-
sued of every efficient means by which competition
could have been asserted, the slow but resistless
methods which followed by which means of transpor-
tation were absorbed and brought under control, the
system of marketing which was adopted by which the
country was divided into districts and trade in each
district in oil was turned over to a designated corpo-
ration within the combination and all others were
excluded, all lead the mind up to a conviction of a
purpose and intent which we think is so certain as
practically to cause the subject not to be within the
domain of reasonable contention.

Briefly, therefore, the decision of the Court was
put upon the ground that the defendant, by vest-
ing in a New Jersey corporation the stocks of a
large number of other corporations engaged in
various branches of the production, refining,
transportation, and marketing of petroleum and
its products, which but for such control would or
might have been engaged in competition with each
other in interstate and foreign commerce in those
commodities, had acquired the control of that
commerce; and that such control was acquired and
had been and was exercised with the intent and
purpose of maintaining it — not as a result of
normal methods of business, but by new means of
combination, resorted to in order to secure greater
power than would have been acquired by normal

120 The Changing Order

methods, and of driving out and excluding, so far
as possible, all competitors in the business, thus
centralizing in the combination a perpetual con-
trol of the movements of petroleum and its pro-
ducts in the channels of interstate commerce.

It was not alone the acquisition of a large share
of commerce among the States and with foreign
countries, upon which the Court predicated the
conclusion of unlawful combination and monopoli-
zation; but the attainment of dominion over a
substantial part of that commerce by means of
intercorporate stock holdings in actually or po-
tentially competing corporations, accompanied by
the exclusion of competitors, and attended with
continued acts evidencing an intent and purpose
to retain controlling power over the business, and
to exclude and suppress all competition with it.

In reaching the conclusions stated, the Chief
Justice reviewed the history of the English law on
the subject of monopolies and restraints of trade,
and held that the Sherman Act "was drawn in the
light of the existing practical conception of the
law of restraint of trade, " and that

in view of the many new forms of contracts and com-
binations which were being evolved from existing
economic conditions, it was deemed essential by an
all-embracing enumeration to make sure that no form
of contract or combination by which an undue re-
straint of interstate or foreign commerce was brought
about could save such restraint from condemnation.
The statute, under this view, evidenced the intent not

Recent Interpretation of Sherman Act 121

to restrain the right to make and enforce contracts,
whether resulting from combination or otherwise,
which did not unduly restrain interstate or foreign
commerce, but to protect that commerce from being
restrained by methods, whether old or new, which
would constitute an interference that is an undue
restraint.

The Chief Justice further said that as the act
had not defined contracts in restraint of trade, the
standard of reason which had been applied at the
common law and in this country in dealing with
subjects of the character embraced in the statute,
was intended to be the measure used for determin-
ing whether in a given case a particular act had or
had not brought about the wrong against which
the statute provided. He rejected the idea that
the use of the words "every contract, etc., in
restraint of trade" in the statute, leaves no room
for the exercise of judgment, but simply imposes
the plain duty of applying its "prohibitions to
every case within its literal language." This,
he said, would be to make the statute "destructive
of all right to contract or agree or combine in any
respect whatever, as to subjects embraced in
interstate trade or commerce." He cited the
language of Justice Peckham in writing the opinion
of the court in Hopkins v. United States. ■

To treat as condemned by the act all agreements
under which, as a result, the cost of conducting an

" 171 U. S., 578, 592.

122 The Changing Order

interstate commercial business may be increased would
enlarge the application of the act far beyond the fair
meaning of the language used. There must be some
direct and immediate effect upon interstate commerce
in order to come within the act.

And he observed:

If the criterion by which it is to be determined in
all cases whether every contract, combination, etc.,
is a restraint of trade within the intendment of the
law, is the direct or indirect effect of the acts involved,
then of course the rule of reason becomes the guide

A consideration of the text of the second section,
he said, serves to establish that it was intended to
supplement the first, and to make sure that by no
possible guise could the public policy embodied
in the first section be frustrated or evaded.

In other words, having by the first section forbidden
all means of monopolizing trade — that is, unduly re-
straining it by means of every contract, combination,
etc., the second section seeks, if possible, to make the
prohibition of the act all the more complete and per-
fect by embracing all attempts to reach the end pro-
hibited by the first section — that is, restraints of trade,
by any attempt to monopolize, or monopolization
thereof, even although the acts by which such results
are attempted to be brought about or are brought
about are not embraced within the enumeration of the
first section.1

1 Hopkins v. U. S., 171 U. S., 578, 592.

Recent Interpretation of Sherman Act 123

Mr. Justice Harlan, in a separate opinion, while
concurring in the main with the decision of the
Court, interpreted the majority opinion as amount-
ing to a reading into the statute of the word "un-
reasonable" before the words "restraint of trade, "
and vigorously protested that such interpretation
was in substance the reversing of the previous
deliberate judgments of the Court to the effect
"that the act interpreting its words in their or-
dinary acceptation, prohibits all restraints of
interstate commerce by combinations in whatever
form, and whether reasonable or unreasonable."

Two weeks after the decision in the Standard Oil
case, the Court rendered its decision in the case
against the Tobacco combination. In his opinion,
which was concurred in by all the associate justices
but Harlan, the Chief Justice interpreted the
opinion in the former case and answered the criti-
cisms of Mr. Justice Harlan and those who had
expressed views similar to his as to the meaning of
the Standard Oil decision.

In that case [said the Chief Justice], it was held,
without departing from any previous decision of the
Court, that as the statute had not defined the words
"restraint of trade" it became necessary to construe
those words, a duty which could be discharged only
by a resort to reason.

He quoted the language of Justice Peckham in
the Joint Traffic case. x

" 171 U. S., 568.

124 The Changing Order

The act of Congress must have a reasonable con-
struction, or else there would scarcely be an agreement
or contract among business men that could not be
said to have, indirectly or remotely, some bearing
upon interstate commerce, and possibly to restrain it.

"Applying/' said the Chief Justice,

the rule of reason to the construction of the statute, it
was held in the Standard Oil case that as the words
restraint of trade at common law and in the law of this
country at the time of the adoption of the Anti-trust
Act only embraced acts or contracts or agreements
or combinations which operated to the prejudice of
the public interests by unduly restricting competition
or unduly obstructing the due course of trade, or which,
either because of their inherent nature or effect, or
because of the evident purpose of the acts, etc.,
injuriously restrained trade, that the words as used in
the statute were designed to have and did have but a
like significance. It was therefore pointed out that
the statute did not forbid or restrain the power to
make normal and usual contracts to further trade by
resorting to all normal methods, whether by agree-
ment or otherwise, to accomplish such purpose. In
other words, it was held, not that acts which the statute
prohibited could be removed from the control of its
prohibitions by a finding that they were unreasonable,
but that the duty to interpret, which inevitably arose
from the general character of the term restraint of
trade, required that the words restraint of trade should
be given a meaning which would not destroy the
individual right to contract and render difficult if not
impossible any movement of trade in the channels of

Recent Interpretation of Sherman Act 125

interstate commerce — the free movement of which it
was the purpose of the statute to protect.1

The facts presented in the Tobacco case were
more intricate and involved than those in the
Standard Oil case. Not only was the American
Tobacco Company the holder of stocks in other
companies, but it was itself a consolidated com-
pany formed by the merger, under the laws of
New Jersey, of three pre-existing companies. The
combination of many previously competing com-
panies, was created, first by the transfer of shares
of stock from one to the other, afterwards cemented
by absolute conveyances of land, plants, and other
property and business. The nucleus of the com-
bination was the original American Tobacco
Company, organized in January, 1890, and to
which were at once conveyed by deed and transfer
the plants and business of five different concerns,
competitors in the purchase of the raw product
which they manufactured, and in the distribution
and sale of the manufactured products. The
result of this combination was to give to the new
company immediately on its organization a prac-
tical monopoly of the cigarette business of the
United States, and that accomplishment colored
all subsequent proceedings in the widening sweep
of the combination, the progress of which was
noted by the Supreme Court as being attended
with the constant acquisition of competing con-

1 U. S. v. American Tobacco Co., et al.

126 The Changing Order

cerns, buttressed by covenants on the part of all
their officers and principal stockholders not to
engage in business in competition with the pur-
chaser ; and in the acquisition of many competitors,
not for the purpose of continuing their operation,
but of closing them down and putting them
permanently out of business. A summary of the
salient facts dwelt on by the Court as the basis for
its decision was made in this language :

Thus, it is beyond dispute: First, that since the
organization of the new American Tobacco Company
that company has acquired four large tobacco concerns,
that restrictive covenants against engaging in the
tobacco business were taken from the sellers, and that
the plants were not continued in operation but were at
once abandoned. Second, that the new company
has besides acquired control of eight additional
concerns, the business of such concerns being now
carried on by four separate corporations, all absolutely
controlled by the American Tobacco Company,
although the connection as to two of these companies
with that corporation was long and persistently denied.

Thus reaching the end of the second period and
coming to the time of the bringing of the suit, brevity
prevents us from stopping to portray the difference
between the condition in 1890 when the (old) Ameri-
can Tobacco Company was organized by the con-
solidation of five competing cigarette concerns and
that which existed at the commencement of the suit.
That situation and the vast power which the principal
and accessory corporate defendants and the small
number of individuals who own a majority of the

Recent Interpretation of Sherman Act 127

common stock of the new American Tobacco Company
exert over the marketing of tobacco as a raw product,
its manufacture, its marketing when manufactured,
and its consequent movement in the channels of
interstate commerce, indeed, relatively, over foreign
commerce, and the commerce of the whole world,
in the raw and manufactured products, stand out in
such bold relief from the undisputed facts which
have been stated. . . . z

These undisputed facts, the Court said, in-
volved questions as to the operation of the anti-
trust law not theretofore presented in any case.
They clearly demonstrated that the acts, con-
tracts, agreements, combinations, etc., which were
assailed were of such an unusual and wrongful
character as to bring them within the prohibitions
of the law.

Indeed [said the Chief Justice] the history of the
combination is so replete with the doing of acts which
it was the obvious purpose of the statute to forbid,
so demonstrative of the existence from the beginning
of a purpose to acquire dominion and control of the
tobacco trade, not by the mere exertion of the ordinary
right to contract and to trade, but by methods devised
in order to monopolize the trade by driving competi-
tors out of business, which were ruthlessly carried
out upon the assumption that to work upon the fears
or play upon the cupidity of competitors would make
success possible.2

* U. S. t>. American Tobacco Co., et al. * Ibid.

128 The Changing Order

These conclusions were stated to be inevitable,
not because of the vast amount of property aggre-
gated by the combination, not because alone of the
many corporations which the proof showed were
united by resort to one device or another, not alone
because of the dominion and control over the
tobacco trade which actually existed, but because
the Court was of opinion that the conclusion of
wrongful purpose and illegal combination was
overwhelmingly established by the following con-
siderations:

1. The fact that the first organization or com-
bination was impelled by a previously existing
fierce trade war, evidently inspired by one or more
of the minds which brought about and became
parties to the combination.

2. Because, immediately after that combina-
tion, the acts which ensued justified the inference
that the intention existed to use the power of
the combination as a vantage ground to further
monopolize the trade in tobacco by means of trade
conflicts designed to injure, either by driving com-
petitors out of the business or compelling them to
become parties to the combination.

3. By the ever-present manifestation of a
conscious wrong-doing by the form in which the
various transactions were embodied from the
beginning — now the organization of a new com-
pany, now the control exerted through taking up
stock in one or another or in several, so as to
obscure the result actually attained, evidencing

Recent Interpretation of Sherman Act 129

a constant purpose to restrain others and to
monopolize and retain power in the hands of the
few who, from the beginning, contemplated the
mastery of the trade which followed.

4. By the absorption of control of all the ele-
ments essential to the manufacture of tobacco and
its products, and placing such control in the hands
of seemingly independent corporations serving as
perpetual barriers against others in the trade.

5. By persistent expenditure of large sums in
buying out plants, not to utilize but to close
up, rendering them useless for the purposes of
trade.

6. By the constantly recurring stipulations
exacted from manufacturers, stockholders, or
employees, binding themselves generally for long
periods not to compete in the future.

From all of these acts, the Court deduced the
conclusion that the defendants had been engaged
in a largely successful effort, extending over a
period of years, to monopolize (that is, wrongfully
to acquire to themselves) the dominion over the
manufacture and marketing of tobacco and its
products and accessories, not by normal methods
of business, but by unfair and subtle methods of
combination, resorted to in order to secure greater
power than they could have acquired by normal
methods of business, and with the intention of
driving out and excluding so far as possible all
other competitors, and centralizing in the com-
bination a perpetual control of the movements of

130 The Changing Order

tobacco and its products and accessories in the
channels of interstate and foreign commerce.

The remedy to be applied in the Standard Oil
case was comparatively simple and obvious, and
the decree of the Circuit Court which, with slight
modifications, was affirmed by the Supreme Court,
to use the language of that court,

commanded the dissolution of the combination, and
therefore, in effect, directed the transfer by the New
Jersey corporation back to the stockholders of the
various subsidiary corporations entitled to the same,
of the stock which had been turned over to the New
Jersey corporation in exchange for its stock, and en-
joined the stockholders of the corporations after the
dissolution of the combination from, by any device
whatever, recreating directly or indirectly the illegal
combination which the decree dissolved.

A far more intricate problem was presented in
the Tobacco case, as was frankly recognized by the
Court. Conveyances, consolidations, and mergers,
and the dissolution of previously existing cor-
porations whose stocks and properties had been
acquired, had so blended the whole combination
into new form, as to make it impossible to effect a
dissolution by the simple method applicable to
the Standard Oil case, and therefore the Supreme
Court said that, in determining the relief proper
to be given, it might not model its action upon that
granted by the Court below, but in order to award
relief coterminous with the ultimate redress of the

Recent Interpretation of Sherman Act 131

wrongs which the Court found to exist, it must
approach the subject of relief from an original
point of view. In considering the subject from
that aspect, the Court said that three dominant
influences must guide its action:

(1) The duty of giving complete and efficacious
effect to the prohibitions of the statute; (2) the accom-
plishment of this result with as little injury as possible
to the interest of the general public; and (3) a proper
regard for the vast interests of private property which
may have become vested in many persons . . .
without any guilty knowledge or intent in any way
to become actors or participants in the wrongs which
we find to have inspired and dominated the combina-
tion from the beginning.

For the purpose of meeting that situation, the
Court declared that it might at once resort to one
or the other of two general remedies :

(a) The allowance of a permanent injunction re-
straining the combination as a universality and the in-
dividuals and corporations which form a part of or
co-operate in it in any manner or form from continuing
to engage in interstate commerce until the illegal
situation be cured . . . ; or (b) to direct the appoint-
ment of a receiver to take charge of the assets and
property in this country of the combination in all its
ramifications for the purpose of preventing a continued
violation of the law, and thus working out by a sale
of the property of the combination or otherwise, a
condition of things which would not be repugnant to
the prohibitions of the act,

132 The Changing Order

The Court, however, in consideration of the
public interests and that of innocent participants,
determined to send the case back to the Circuit
Court, with directions to endeavor to ascertain and
determine upon some plan or method of dissolving
the combination and working out a lawful con-
dition of things, if that could be done within a
period of six months, with a possible extension of
two months longer; but that in the event that
such condition of disintegration in conformity with
the law should not be brought about within that
time, it should be the duty of the Circuit Court,

either by way of an injunction restraining the move-
ment of the products of the combination in the chan-
nels of interstate or foreign commerce, or by the
appointment of a receiver, to give effect to the require-
ments of the statute.

Probably no more drastic decree has ever been
entered by the Supreme Court than this. The
Court remits to the Circuit Court the execution of
a decree of dissolution of a combination of sixty-
seven corporations and twenty-nine individuals,
with assets amounting to upwards of $400,000,000
book value, and net earnings exceeding $36,000,000
per annum; which had acquired 77 per cent, of the
entire business of the United States in manufac-
tured tobacco, plug and smoking tobacco; 96 per
cent, of snuff ; 77 per cent, of cigarettes; 91 per cent,
of little cigars ; and 14 per cent, of cigars and stogies ;
and which has acquired probably the most exten-

Recent Interpretation of Sherman Act 133

sive monopoly of interstate and foreign commerce
ever created in the world. This combination was
ordered to be resolved into, not necessarily its
original elements, but, in effect, to be divided up
into a number of separate and distinct integers, no
one of which should threaten monopoly, and which
should not either by reason of their organization
and business, or in their relation to each other,
constitute combinations in restraint of interstate
or foreign commerce. The Supreme Court not
only empowered, but directed the Circuit Court, in
case this lawful condition should not be brought
about within a period of six or eight months,
to either appoint a receiver of this vast property
for the purpose of, by sale or otherwise, working
out the ordered disintegration; or by injunction
to paralyze and end its conduct of interstate busi-
ness. Those who have thoughtlessly yielded to
the superficial conclusion resulting from the appli-
cation by the Chief Justice of the rule of reason to
the interpretation of the Sherman Law, can find but
little to justify the idea that the Sherman Law has
been rendered ineffective by those two decisions,
for precisely the contrary is clearly established by
these great judgments. The most cursory exami-
nation of the decree in the Tobacco case, — the
most casual consideration of the drastic and far-
reaching remedy imposed, makes it perfectly
apparent that the Sherman Law, perhaps for the
first time, has been demonstrated to be an actual,
effective weapon to the accomplishment of the

134 The Changing Order

purpose for which it was primarily enacted, namely,
the destruction of the great combinations famil-
iarly known as "trusts."

The main reliance of the defendants in both the
Standard Oil and the Tobacco cases was the de-
cision in United States v. Knight * to the effect that
the acquisition of a number of manufacturing
plants in one State by a corporation of another
State was not within the intent of the Sherman
law, even though the purchaser thereby acquired
upward of 90 per cent, of all the refineries of sugar
in the United States, because manufacture alone
and not commerce, was involved. The Knight
case had been distinguished in subsequent cases
as not involving any questions of interstate com-
merce. In the Standard Oil case the Court dis-
missed it with scant consideration, saying:

The view, however, which the argument takes of
that case and the arguments based upon that view
have been so repeatedly pressed upon this Court in
connection with the interpretation and enforcement
of the Anti-trust Act, and have been so necessarily
and expressly decided to be unsound as to cause the
contentions to be plainly foreclosed and to require no
express notice.2

1 156 U. S., 1.

2 The Court cited as illustrative of this point the cases of United
States v. Northern Securities Co., 3 Loewe v. La wler, * United States
v. Swift & Co., s Montague v. Lowry,6 Shawnee Compress Co.
v. Anderson. 7

3 193 U. S., 334- 42o8U. S., 274. s 196 U. S., 375

6 193 U. S., 38. 1 209 U. S., 423.

Recent Interpretation of Sherman Act 135

But the decision in the case of West, Attorney-
General, v. Kansas Natural Gas Company, ren-
dered May 15, 191 1, goes further in overthrowing
the doctrine of the Knight case than any of those
cited by the Chief Justice in the Standard Oil case,
or than the obvious disregard of its authority in the
latter case. In the Knight case, the facts presented
in the evidence were taken by the Court as involving
merely the acquisition by one corporation of manu-
factories wholly within the State, and it was held
that such acquisition was not within the power of
the Congress of the United States to regulate com-
merce among the States and with foreign countries.

Doubtless [said Chief Justice Fuller] the power to
control the manufacture of a given thing involves in a
certain sense the control of its disposition, but this is
a secondary and not a primary sense. . . . Com-
merce succeeds to manufacture and is not a part of
it. . . . The regulation of commerce applies
to the subject of commerce and not to matters of
internal police. Contracts to buy, sell, or exchange
goods to be transported among the several States, the
transportation and its instrumentalities and articles
bought, sold, or exchanged for the purpose of such
transit among the States, or put in the way of transit,
may be regulated, but this is because they form part of
interstate trade or commerce. The fact that an article
is manufactured for export to another State does not
of itself make it an article of interstate commerce,
and the intent of the manufacturer does not determine
the time when the article or product passes from the
control of the State and belongs to commerce.

136 The Changing Order

The cases of Coe v. Enrol1 and Kidd v. Pearson2
were cited in support of the proposition that func-
tions of manufacture and commerce were different,
that to hold otherwise would be to invest Congress,
"to the exclusion of States, with the power to
regulate, not only manufactures, but also agricul-
ture, horticulture, stock raising, domestic fisheries,
mining — in short, every branch of human industry.' '
That contracts, combinations, or conspiracies to
control domestic enterprises in manufactures, agri-
culture, mining, production in all its forms, or to
raise or lower prices or wages, might unquestion-
ably tend to restrain external as well as domestic
trade, the Court conceded; but it said that such
restraint would be an indirect result, however
inevitable and whatever its extent, and such result
would not necessarily determine the object of the
contract, combination, or conspiracy. So it was
held in Kidd v. Pearson that the refusal of a State
to allow articles to be manufactured within her
borders, even for export, did not directly affect
external commerce and did not trench upon the
Congressional control over interstate commerce.

In the West case, the Supreme Court reviewed
decisions of the U. S. Circuit Court in suits having
for their common purpose an attack upon the
constitutional validity of a statute of Oklahoma,
framed for the purpose of prohibiting the trans-
portation or transmission of natural gas from points
within that State to points in other States. This

1116U. S., 517. »I28U. S., 1.

Recent Interpretation of Sherman Act 137

prohibition was sought to be accomplished by var-
ious provisions in the statute under review. The
statute was held to be prohibitive of interstate
commerce in natural gas, and, consequently, a
violation of the commerce clause of the Constitu-
tion of the United States. Mr. Justice McKenna,
writing the opinion of the Court, said that the
act presented no embarrassing questions of inter-
pretation:

It was manifestly enacted in the confident belief that
the State has the power to confine commerce in natural
gas between points within the State .... And the
State having such power, it is contended, if its exercise
affects interstate commerce it affects such commerce
only incidentally — in other words, affects it only, as
it is contended, by the exertion of lawful rights
and only because it cannot acquire the means for its
exercise.

The results of the contention, the Court held,
repel its acceptance.

Gas, when reduced to possession, is a commodity;
it belongs to the owner of the land, and, when reduced
to possession, is his individual property subject to sale
by him, and may be a subject of intrastate commerce
and interstate commerce. The statute of Oklahoma
recognizes it to be a subject of intrastate commerce,
but seeks to prohibit it from being the subject of
interstate commerce, and this is the purpose of its
conservation. In other words, the purpose of its
conservation is in a sense commercial — the business

138 The Changing Order

welfare of the State, as coal might be, or timber. Both
of those products may be limited in amount, and the
same consideration of the public welfare which would
confine gas to the use of the inhabitants of a State
would confine them to the inhabitants of the State.
If the States have such power a singular situation might
result. Pennsylvania might keep its coal, the North-
west its timber, the mining States their minerals.
And why may not the products of the field be brought
within the principle? Thus enlarged, or without that
enlargement, its influence on interstate commerce need
not be pointed out. To what consequences does such
power tend? If one State has it, all States have it;
embargo may be retaliated by embargo, and commerce
will be halted at State lines. And yet we have said
that "in matters of foreign and interstate commerce
there are no State lines. " In such commerce, instead
of the States, a new power appears and a new welfare,
a welfare which transcends that of any State. But
rather let us say it is constituted of the welfare of all
of the States and that of each State is made the
greater by a division of its resources, natural and
created, with every other State, and those of every
other State with it. This was the purpose, as it is the
result, of the interstate commerce clause of the Con-
stitution of the United States. If there is to be a
turning backward it must be done by the authority
of another instrumentality than a court. ... At
this late day it is not necessary to cite cases to
show that the right to engage in interstate commerce
is not the gift of a State, and that it cannot be regu-
lated or restrained by a State, or that a State cannot
exclude from its limits a corporation engaged in such
commerce.

Recent Interpretation of Sherman Act 139

If, therefore, the State cannot control the trans-
mission of natural gas produced within its borders
to other States, because to concede that control
would be in effect to empower it to cut off at its
source all of the objects of interstate commerce,
how can it retain the right to prohibit the manu-
facture within its limits of commodities intended
to be shipped in interstate commerce? Com-
modities when so manufactured are precisely like
natural gas reduced to the possession of the owner —
that is, a commodity which belongs to him as his
individual property, is subject to sale by him, and
may be the subject of interstate and intrastate
commerce. It is true the statute did not deal
with the production of the gas, and to that extent,
possibly, it is not in conflict with Kidd v. Pearson
and Coe v. Errol. Yet if the constitutional right
of Congress to regulate interstate commerce
attaches to the commodity the moment it is in
existence in the hands of the owner, so that the
State may not prohibit its shipment in interstate
commerce, does it not apply as well from that
moment to prevent the owner from himself, by
combination or agreement, imposing an undue
restraint upon its shipment in such commerce.
What the State is prohibited from doing, the
citizen may not do, and the Sherman Act attaches
from the moment the commodity comes into
existence to prevent any impediment being laid
upon its possible passage into the ordinary and
usual currents of commerce among the States.

140 The Changing Order

Summing up the results of these late decisions,
therefore, it will be seen that the area of uncer-
tainty in the law has been greatly narrowed, and
that its scope and effect have been pretty clearly
defined; the school of literal interpretation has
been repudiated, and the application of a rule of
reasonable construction declared. There will be
always, of course, a field of uncertainty in so far
as an investigation of facts — particularly when
intent becomes a necessary consideration — is
required. But this much may surely be said to
be now beyond controversy :

That ordinary agreements of purchase and sale, of
partnership, or of corporate organization, do not vio-
late the first section of the Sherman Act , even though
incidentally and to a limited degree they may oper-
ate to restrain competition in interstate or foreign
commerce between the parties to such agreements.

But any contract, combination, or association,
the direct object and effect of which is to control
prices, restrict output, divide territory, refrain
from competition or exclude or prevent others from
competing in any particular field of enterprise,
imposes an undue restraint upon trade and com-
merce and is in violation of the first section of the
act. This principle applies to all associations of
competitors of the character usually known as
pools; to agreements with so-called wholesale or
retail agents, whereby the manufacturer of an
article, even though made according to some secret
process or formula, seeks to control the price at

Recent Interpretation of Sherman Act 141

which it may be sold by purchasers directly or
indirectly from the manufacturer. It applies also
to attempts to control competition between in-
dependent concerns by means of a stock-holding
trust, whether individual or corporation holder.

Size alone does not constitute monopoly. The
attainment of a dominant position in a business,
acquired as the result of honest enterprise and
normal methods of business development, is not a
violation of the law. But unfair methods of trade,
by destroying and excluding competitors by means
of intercorporate stockholdings, or by means
of agreements between actual or potential com-
petitors, whereby the control of commerce among
the States or with foreign countries in any par-
ticular line of industry is secured or threatened,
expose those who are concerned in such efforts to
the penalties prescribed in the second section of
the act, because they are engaged in monopolizing
or attempting to monopolize such commerce.

It is also now settled that no form of corporate
organization, merger, or consolidation — no species
of transfer of title, whether by sale, conveyance, or
mortgage; and no lapse of time from the date of
the original contract, conspiracy, or combination,
can bar a Federal Court of equity from terminat-
ing an unlawful restraint, or compelling the dis-
integration of a monopolistic combination. The
maxim nullum tempus occur rit regi is applicable to
any continuing combination or conspiracy which
the Anti-Trust Act of 1890 condemns.

142 The Changing Order

Speaking of the conscious development of insti-
tutions in America, Woodrow Wilson in his work
on "The State," writes:

It is one of the distinguishing characteristics of the
English race, whose political habit has been trans-
mitted to us through the sagacious generation by whom
this government was erected, that they have never
felt themselves bound by the logic of laws, but only by
a practical understanding of them based upon slow
precedent. For this race, the law under which they
live is at any particular time what it is then understood
to be, and this understanding of it is compounded
of the circumstances of the time. Absolute theories
of legal consequence they have never cared to follow
out to their conclusions. Their laws have always
been used as parts of the practical running machinery
of their politics — parts to be fitted from time to
time, by interpretation, to existing opinion and social
condition.

If this law, designed to protect the people of this
country from the evils of monopoly, and to pre-
serve the liberty of the individual to trade freely,
shall now be clearly understood ; if its true purpose
shall be recognized and its beneficent consequences
realized; the twenty years of slowly developed
interpretation and widening precedent will not
have been without great value. For the law will
henceforth be used, to employ Dr. Wilson's
language, as a part of the running machinery of
our political system, adapted to the needs of our
social condition.

IX

FURTHER REGULATION OF INTER-
STATE COMMERCE1

ONE of the most important questions — perhaps
the most important — before the country to-day-
is that of the proper relation of the national govern-
ment to corporations engaged in carrying on com-
merce among the States and with foreign countries.
The Sherman Anti-Trust Law was held applicable
to railroad companies in 1897, but the Interstate
Commerce Law of 1887, and the various amend-
ments to it, particularly the Elkins Law of 1903, the
Hepburn Act of 1906, and the Mann-Elkins Law
of 1 9 10, have dealt so comprehensively and effec-
tively with common carriers by railroad, express,
pipe line, telegraph, telephone, and to a certain
extent by water, that but few civil suits have been
brought against such carriers under the Sherman
Act, and — so far as I am aware — no criminal
indictments have been found for violation of its
provisions by railroad companies or other carriers.
The gradual interpretation of the Act of July 2,

1 Address before Minnesota State Bar Association, Duluth,
Minn., July 19, 191 1.

143

144 The Changing Order

1890, resulting in the decisions and decrees ren-
dered by the Supreme Court at its last term, has at
last clearly demonstrated the effectiveness of that
law to destroy existing combinations in restraint
of interstate or international commerce, and
attempts to monopolize any part of it, and to
prevent renewed combination or monopolistic
effort.

The first practical application of the "rule of
reason," to combinations in violation of the anti-
trust law, made since the Supreme Court decisions
in the Standard Oil and Tobacco cases, was that
of the United States Circuit Court for the Third
Judicial Circuit, in the Government's suit against
the so-called Powder Trust.1 Certainly, no per-
son interested in the maintenance of any monopoly
or other restraints of interstate commerce can
derive comfort from the stern demonstration of
unlawful combination contained in the Court's
opinion in that case, or the impending doom
foreshadowed in its decree.

The recent decisions of the Supreme Court in
Standard Oil Co. v. United States, and American
Tobacco Co. v. United States [says Judge Lanning
in rendering the opinion of the Court] make it quite
clear that the language of the anti-trust act is not to
receive that literal construction which will impair
rather than enhance freedom of interstate commerce.
As we read those decisions, restraint of interstate trade

1 United States v. E. I. du Pont de Nemours & Co., et a/.,
decided June 21, 191 1, U. S. Cir. Ct., Dist. of Delaware.

Regulation of Interstate Commerce 145

and restraint of competition in interstate trade are not
interchangeable expressions. There may be, under the
anti-trust act, restraint of competition that does not
amount to restraint of interstate trade, just as before
the passage of the act there might have been restraint
of competition that did not amount to a common law
restraint of trade. . . .

While all this is true, the recent decisions of the
Supreme Court make it equally clear that a combina-
tion cannot escape the condemnation of the anti-trust
act merely by the form it assumes or by the dress it
wears. It matters not whether the combination be
"in the form of a trust or otherwise," whether it be in
the form of a trade association or a corporation, if it
arbitrarily uses its power to force weaker competitors
out of business or to coerce them into a sale to or
union with the combination, it puts a restraint upon
interstate commerce and monopolizes or attempts to
monopolize a part of that commerce in a sense that
violates the anti-trust act.

In determining the form of decree to be entered,
the Circuit Court said that the relief which it
proposed to give was preventive and injunctive.

If our decree, limited to that purpose, shall neces-
sitate a discontinuance of present business methods,
it is only because those methods are illegal. The
incidental results of a sweeping injunction may be
serious to the parties immediately concerned, but, in
carrying out the command of the statute, which is as
obligatory upon this Court as it is upon the parties to
this suit, such results should not stay our hand ; they
should only challenge our care that our decree be no

146 The Changing Order

more drastic than the facts of the case and the law
demand. . . . The present decree will therefore
be interlocutory. It will adjudge that the 28 de-
fendants are maintaining a combination in restraint
of interstate commerce in powder and other explosives
in violation of Section 1 of the anti-trust act, that they
have attempted to monopolize and have monopolized
a part of such commerce in violation of section 2 of
that act, that they shall be enjoined from continuing
said combination, and that the combination shall be
dissolved. . . .

The decree further provided that in order that
the Court might obtain such further information
as should enable it to frame a final decree which
should give effective force to its adjudication, a
hearing should be given the parties at the next term
4 'as to the nature of the injunction which shall be
granted herein and as to any plan for dissolving
said combination," the defendants being enjoined
in the meantime from doing any acts to further
extend or enlarge the field of operation or the
power of the unlawful combination.

Therefore, within such time as the ascertainment
of facts and the preparation of evidence necessary
to the initiation and conduct of appropriate pro-
ceedings by the Government may require, such of
the known monopolistic combinations in restraint
of interstate trade and commerce as shall not
voluntarily dissolve, will be brought before the
Courts for judgment, and the precedents fur-
nished by the Standard Oil, Tobacco, and Powder

Regulation of Interstate Commerce 147

cases afford some assurance of the results which
may be anticipated.

But the question remains, can the great end and
object of the Sherman Law — namely, that the
normal course of trade and commerce among the
States shall not be impeded by undue restraints and
monopolies — be realized through the operation of
that law alone?

In dealing with transportation, Congress was
not content to rely simply on the process of injunc-
tion to restrain, and indictment to punish violations
of the anti-trust law. It also established an
administrative commission clothed with powers —
greatly enlarged from time to time — over those
engaged in the transportation business, which
Congress enacted should be carried on for a rea-
sonable compensation and without unjust discrim-
ination as between parties or localities similarly
situated. While Congress has not specifically
incorporated corporations to carry on such busi-
ness— save in a very few instances — nor directly
licensed them to engage in interstate transporta-
tion, nor expressly exempted them from State
interference, the Federal Courts have substantially
held that Congress, by regulating the rates and
practices of common carriers in interstate com-
merce, has prohibited State regulation which would
conflict with that of the nation. The decisions of
the Federal Courts on this subject have not been
always consistent, and in some instances State
legislation has been allowed effect, despite ap-

148 The Changing Order

parent conflict with Federal regulation of the
same subject. But in the absence of direct
Congressional exclusion of state law, or an avowed
direct and exclusive license system, or system
of national incorporation, the Courts have very
properly considered the susceptibilities of the
States, and have upheld State legislation when-
ever it seemed to be not destructive of national
control over the essentials of interstate commerce.

A more frankly logical system would be, of course,
more satisfactory ; but Congress — in common with
other legislative bodies — is apt to shrink from taking
a clearly logical position in legislation which may
involve conflict with other sovereignties or quasi-
sovereignties, and to leave judicial interpretation
to add to statutory authority a power the legisla-
ture was desirous to confer, but feared to express.

There are many reasons why a similar attitude
may be expected when Congress comes to deal with
the difficult problem of regulating the conduct of
large commercial businesses among the States by
corporations.

The existing system, whereby every State
charters corporations without the slightest regard
to other States, or to the nation, empowered to
roam at will — so far as the creator is concerned —
but subject to any restriction or condition which
any other State into which they may desire to go
in carrying on their business, chooses to impose,
naturally led to a demand for authority in one
corporation to take and hold stock in another, in

Regulation of Interstate Commerce 149

order that the business of a corporation organized
in one State might be carried on in another State,
without subjecting the parent company and its
entire capital and corporate organization to the
laws of the latter. Probably no one thing has done
more to facilitate restraint of trade and the growth
of monopoly than the departure from the early
rule of law that one corporation cannot own stock
in another. That departure was the most baneful
result of the laissez-faire policy in dealing with
corporations to which the country abandoned itself
during the last thirty years of the nineteenth
century. The conditions which have resulted
from the exercise of the expressly conferred power
in one corporation to take and hold stock in
another, present the most serious obstacles to
effectively dealing with the "trust" problem.
For few corporations, if any, solely by means of
the direct acquisition of property and the widen-
ing scope of their own business, have acquired such
control of the particular commerce among the
States with which they are concerned as to con-
stitute monopoly, or to threaten it. Whenever
competitors have been excluded by unfair means,
and a very large part of the commerce absorbed
by a particular interest, the machinery by which
such result has been accomplished will be found
on examination to be the control of various
corporations by means of intercorporate stock
holdings.

The cases of the Standard Oil, American To-

150 The Changing Order

bacco, the Powder Company, the American Sugar
Refining Company, and others, furnish abundant
judicial demonstration of this fact.

In a large number of cases, it has been sought to
perpetuate the control secured by one corporation
through the acquisition of stocks of other corpora-
tions, by pledging such stocks as security for
issues of notes or bonds ; and enormous amounts of
securities have been sold to the public in faith of
such pledges.

If Congress should enact that no corporation
engaged, in interstate commerce shall hereafter
acquire any stock of any other corporation so
engaged, and that unless all such corporations
should dispose of all stocks held by them in other
corporations engaged in interstate commerce
within some specified period, they should be pro-
hibited from carrying on interstate commerce until
they did so dispose of such stocks, the axe would
indeed be laid at the root of the trust evil; but
justice to the innocent holders of securities issued
to the public based on pledged stocks, acquired and
held pursuant to express legal authority, would
require consideration to be given to their case, and
such exceptions to be made from the prohibitions
as might be necessary to their protection. These
necessary acts of justice might seriously interfere
with the enactment of legislation effective to the
accomplishment of the main purpose in view.

But such drastic legislation, while logical and
effective, is hardly to be expected, and the ques-

Regulation of Interstate Commerce 151

tion will therefore remain: Within what limits
is legislation to regulate corporations engaged in
interstate commerce other than transportation
expedient and practicable? Should the analogy
of the Interstate Commerce Law and Commission
be followed? Is any regulatory legislation neces-
sary besides the Sherman Act and the statutes
prohibiting railroad rebates?

Conservative minds naturally shrink from ac-
cepting a conclusion which would devolve upon the
national government the comprehensive powers
and duties involved in extending the principles of
the Interstate Commerce laws over commercial and
industrial corporations; for the increased centrali-
zation of control in Washington over the trade of
the country, the multiplication of Federal office-
holders, and bureaucratic intermeddling with
business, may be necessary, but are undesirable
incidents to the conduct of daily business life.

That some further regulation over corporations
carrying on commerce among the States may be
necessary, is a matter of current comment. It
has been openly advocated by representatives of
some of the largest combinations of capital, per-
haps as a means of salvation, and to preserve,
under government supervision, great organizations
whose continued existence is menaced by the
recent interpretation of the Sherman Act, and the
disintegration of which would be necessarily
attended with much loss. To such, it is a case
of "any port in a storm." Better continued co-

152 The Changing Order

operative life, even under a powerful master, than
disseminated properties and segregated activities,
without constant governmental supervision.

But there are other reasons for such regulation.
The Federal Department of Justice is not organ-
ized or equipped to maintain constant supervision
and control over business organizations. It deals
only with cases of violation of the law. The ac-
tivities of an administrative board or commission
would be directed to preventing such violations,
and in aiding business men to maintain a continued
status of harmony with the requirements of law.

Moreover, unless Congress shall provide for the
establishment of corporations drawing their life
and powers only from the national government,
and subject only to its control, or shall confer
specific powers on State corporations which will
enable them to carry on commerce away from the
State of their creation, without the interference
of States into which they go, the present unsatis-
factory condition of conducting business in the
different States by means of many different cor-
porations, owned or controlled through stock
ownership by a parent company created by some
one State, will continue, and in the natural, normal,
healthy, and legitimate growth of such business,
questions of the application of the Sherman Law
must arise, which cannot property be settled with
the District Attorney or the Department of Justice,
but should be dealt with by an administrative body
having appropriate jurisdiction.

Regulation of Interstate Commerce 153

There are still further considerations involved
in the question. The tendency of this age is
toward cooperation in every field of activity.
The early form of cooperative business effort by
means of partnerships was found insufficient for
large enterprises, because of the unlimited liability
imposed on the partners, and the inelastic char-
acter of the investment. The great commercial
development of the country would scarcely have
been possible but for the introduction of coopera-
tion in the form of corporations for business
purposes, in the early part of the nineteenth cen-
tury. The growth of the incorporated companies,
the development of close relations between them
by agreement, and through reciprocal stock
ownership, so unified their power and extended
their control, that their employees were driven to
cooperative association for protection against the
suppression of their rights, and for the purpose of
compelling better recognition of their claims to
larger recognition in the division of profits. The
problems of modern commercial life are vast.
They affect not only employer and employed, but
the public. Facilities of transportation and for
the transmission of intelligence have brought all
parts of the world into close touch. Any eco-
nomic disturbance in one part of the country
affects to a greater or less extent every other part
of the country. Common needs have developed,
and commodities of many kinds are standardized.
Prices, should be reasonable. Destructive com-

154 The Changing Order

petition, while it is attended with abnormally low
prices, never produces reasonable prices. Indeed,
abnormal price is one of the indicia of monopoly.
Fair competition is essential to healthy national
life, but it is more than doubtful whether or not
there can be fair competition without concert of
action or cooperative effort to some extent.
Business men of integrity are naturally desirous
of avoiding violations of law. The construction
of the Sherman Law originally contended for would
have condemned them for any concerted action
which imposed any restraint on trade. The more
enlightened view which has been expressed by the
Supreme Court limits the prohibition to undue
restraints — those which are not the result of nor-
mal business methods, but which are intended to
accomplish, or have for their direct and primary
purpose, interference with the natural course of
trade and commerce among the States or with
foreign countries. Yet even within these rules,
it is contended, there is an area of activity where
cooperation and association should only have play
under government supervision and control.

With such supervision, a natural economic force
may be utilized to the public benefit and to the
general satisfaction of the commercial world. By
it, while monopolies and restraints of trade will
still be held at bay by the terrors of the anti-
trust act, thousands of small traders may by
regulated cooperation protect themselves from
the ruin of destructive competition on the one

Regulation of Interstate Commerce 155

hand, and from the constant apprehension of
indictment on the other.

Whether or not such a Federal Industrial Com-
mission should have power to regulate prices would
almost certainly arise for serious consideration.
The Interstate Commerce Law prescribes as a legis-
lative rule that prices for transportation by rail,
or wire, or pipe line, shall be reasonable, and that
no unjust discrimination shall be made between
individuals or localities similarly situated. It
leaves it to the Commission to determine when this
legislative standard is departed from and to take
proceedings appropriate to compel compliance
with it. A similar rule might be declared by
Congress with respect to the prices of commodities
the subject of interstate commerce.

We have become accustomed to the regulation
of rates of transportation, but the suggestion that
prices of commodities be regulated by Congress
seems novel and radical. Yet the principle on
which the regulation of transportation rates is
based, is simply that when property is used in a
manner to make it of public consequence and affect
the community at large it becomes clothed with a
public use, and may be controlled by the public
for the common good. In the early days in some
parts of this country statutes were enacted to
regulate the business of millers and the rates they
might charge for grinding. At that time it was
a matter of public concern that every farmer should
have the right to have his corn ground at a

156 The Changing Order

reasonable rate. So to-day the conduct of the
great commerce in staple articles among the States
is become a matter of public consequence, and the
courts have upheld legislation regulating it by-
prescribing some of the conditions under which it
may be carried on. To require as one of these con-
ditions that prices for commodities dealt in inter-
state commerce must be reasonable, only involves
a new application of the same principle.

Indeed, unless prices be dealt with under such a
law it would fail to reach the essential evil; for
" unified tactics with regard to prices" has been
authoritatively declared to be the essence of
modern monopoly, and as was said in the case of
National Cotton Oil Co. v. Texas (197 U. S., 115-
129), "It is the power to control prices which
makes the inducement of combinations and their
profit. It is such power that makes it the con-
cern of the law to prohibit or limit them." But
legislative control of prices smacks of medieval
sumptuary legislation and is foreign to the genius
of our institutions. Students of Adam Smith are
taught to believe that the natural price of an arti-
cle is that which is fixed by the operations of the
natural unrestrained law of supply and demand,
working without any artificial restraint. The
anti-trust legislation of the United States and of
most of the States is based upon this theory. It
is said in The Wealth of Nations:

The price of monopoly is upon every occasion the
highest which can be got. The natural price, or the

Regulation of Interstate Commerce 157

price of free competition, on the contrary, is the lowest
which can be taken, not upon every occasion, indeed,
but for any considerable time together.1

But the fact is, that the law of supply and de-
mand does not and has not for many years worked
in this country in a natural, unrestrained, and
unfettered manner. The Government, in the first
instance, interposes an artificial restraint in the
protective tariff on imports. True, the theory of
this tariff is to equalize conditions of competition;
to place, as it were, a handicap on the foreign
competitor who has produced his commodities
under conditions less burdensome than those
under which the American manufacturer pro-
duces his. In fact, the inequalities resulting
from the methods of tariff legislation are very
often impossible to justify on the theory of
sufficient protection only, and the resulting price is
that fixed by a limited competition between dealers
in the market from which foreign competitors are
to a certain extent excluded. Nor is this all : It is
probably safe to say that in almost every one of
the great staple industries, prices have been for
years fixed by agreement between the principal
producers, and not by the normal play of free com-
petition even among the domestic producers, nor
by the unfettered operation of the law of supply
and demand.

1 Ed. Geo. Bell & Co., London and New York, 1896, vol. i.,
p. 62.

158 The Changing Order

Take, for instance, the facts concerning the
powder and explosive business, as found by the
United States Circuit Court in the recently decided
case to which I have already referred.

The record of the case now before us [said Judge
Lanning] shows that from 1872 to 1902, a period of
thirty years, the purpose of the trade associations
had been to dominate the powder and explosives
trade in the United States by fixing prices, not
according to any law of supply and demand, for
they arbitrarily limited the output of each member,
but according to the will of their managers. It ap-
pears, further, that although these associations were
not always strong enough to control absolutely the
prices of explosives, their purpose to do so was never
abandoned. Under the last of the trade association
agreements — the one dated July 1 , 1896, and which was
in force until June 30, 1904 — the control of the com-
bination was firmer than it had before been. Succeed-
ing the death of Eugene du Pont in January, 1902,
and the advent of Thomas Coleman du Pont and
Pierre S. du Pont, the attempt was made to continue
the restraint upon interstate commerce and the
monopoly then existing, by vesting, in a few corpora-
tions, the title to the assets of all the corporations affili-
ated with the trade association, then dissolving the
corporations whose assets had been so acquired,
and binding the few corporations owning the operating
plants in one holding company, which should be able
to prescribe policies and control the business of all the
subsidiaries without the uncertainties attendant upon
a combination in the nature of a trade association.
That attempt resulted in complete success.

Regulation of Interstate Commerce 159

For years, the Court said, trade agreements
between all manufacturers of powder and explosives
in the United States have been in existence. There
were times when the parties to these agreements
broke away from and disregarded them, but usually
the fines and penalties imposed on the violators
were effective to protect and effectuate them.

A large number of indictments recently found
in the Southern District of New York, were based
upon evidence of the continued existence during
a number of years, and until a recent date, of
pools, or associations of manufacturers of various
kinds of wire, under which official and noncom-
petitive prices were fixed, determined, agreed
upon, and maintained.

The fact seems to be, that the prices of many
standard articles of consumption sold in the United
States for a number of years past have not been
fixed at all by the operation of the laws of supply
and demand, or by unrestrained competition, but
by associations of the producers, without the
participation of the consumer or the general public
— that is, without those who have had to pay the
bill having any voice in fixing the price. In this
view, it is certainly not unreasonable that the
purchasing public should desire to have some part
in determining the price it is to pay — in like man-
ner as has been recognized to be just with respect
to the cost of transportation.

If there could be any assurance that the free
play of competition would be assured, and the

160 The Changing Order

natural price resulting from the unrestrained
operation of supply and demand maintained, then
no governmental supervision of business — beyond
occasional prosecutions for violations of the Sher-
man Law — would be necessary. But the habits
formed through years of following a system are not
easily shaken off, and the artificial forms of or-
ganizations made necessary by the conflicting
laws of many States with those of the nation will
always present a border land of doubt, which will
furnish, on the one hand, opportunities for those
who wish to violate the law to do so with some
show of justification ; and on the other, to perplex
those who are sincerely desirous of keeping the
law, but by reason of the complexity and conflict
of different State laws find it difficult to do so
without seeming to run counter to the anti-trust
law. The supervision of a Federal commission
might supply a satisfactory method of reaching
this difficulty.

In theory, it would seem that such a commission
should have some power over prices; but the prac-
tical difficulties in the way of exercising such power
so as not to inflict a greater evil than that it is
intended to cure, are so great as perhaps to be
insurmountable. It would be well-nigh impossible
to fix a maximum price which would not be, on the
one hand unjust to the small producer, and on the
other hand unduly to increase the profit of the large
producer. For the large producer, with an ad-
equate supply of raw material, and the economies

Regulation of Interstate Commerce 161

and efficiencies only possible with a large capital
and extensive organization, can always afford to
sell at prices which would be ruinous to the small
producer.

These problems go to the very root of the con-
tinued prosperity of our people. They can only
be solved by a careful consideration free from any
partisan bias. I have not attempted to express a
conclusion, but merely to state the elements of a
problem which, if wisely determined, will "scatter
plenty o'er a smiling land," and if unwisely dealt
with, may paralyze the hand of industry that mak-
eth rich — not with the unequal wealth of monopoly,
but with the distributed wealth which brings
national prosperity and continued peace.

X

RESULTS OF THE TRUST DISSOLUTION
SUITS1

THE trust question ; that is the question of the
proper relation of the Government to large
business organizations, is a great economic ques-
tion which should not be made the football of
politics. The men who united in framing the
Sherman Anti-trust Law were Democrats as
well as Republicans. In the final debate in the
Senate, one of the clearest statements of the
need and purpose of that legislation, was made
by Senator George, a Democratic Senator from
Mississippi.

Since President Taft came into office, eleven
(n) final decrees have been entered in equity suits
brought by the Government under the Sherman
Law to prevent and restrain violations of the act ;
two (2) large combinations of competitive con-
cerns have been voluntarily dissolved, following
criminal prosecutions of individuals concerned in
them; and in one other instance, a temporary

1 From an Address before the Finance Forum, West Side
Young Men's Christian Association, New York, Nov. 13, 19 12.

162

Results of Trust Dissolution Suits 163

injunction resulted in the abandonment of a
comprehensive movement to increase railroad
rates, prior to the enactment of the law which gave
to the Interstate Commerce commission power to
prevent increases until it should have investigated
the justice of making them. Of these decrees,
three (namely, those against the Standard Oil
Combination, the Tobacco combination, and the
Powder combination) were directed against what
are technically known as trusts; that is, the kind
of things spoken of by Senator Sherman when he
introduced his original bill into the Senate in
March, 1890:

Associated enterprise and capital are not satisfied
with partnerships and corporations competing with
each other, and they have invented a new form
of combination commonly called trusts, that seek
to avoid competition, by combining the controlling
corporations, partnerships and individuals engaged
in the same business, and placing the power and
property of the combination under the government
of a few individuals. . . .

Perhaps the simplest definition of a modern trust
is "a partnership of competitive corporations."
Now, the decrees in the cases above mentioned
struck down three of the greatest existing partner-
ships of competitive corporations controlling
great industries which ever have grown up in the
United States. They also established the prin-
ciple that monopoly and unfair restraint of com-

164 The Changing Order

petition could not successfully entrench themselves
behind stock ownership; but that in whatever
form the control of great industries is absorbed
into a few hands, the law can search into the
organization, and if it be found that an undue
restraint is put upon interstate commerce, or a
monopoly threatened, the Court can end that
restraint or break up that monopoly.

In another case, namely, the suit against the
Terminal Association of St. Louis, the unification
of substantially every terminal facility by which
the traffic of that city was served, was scrutinized
by the Supreme Court, and, recognizing the
peculiar topographical conditions of the city, the
combination was permitted to continue; but only
upon condition that its organization be so modified
that the Association should act as the impartial
agent of every line which was under compulsion
to use its instrumentalities.

Eight (8) of the other decrees mentioned ran
against combinations of (i) manufacturers of
incandescent electric lamps; (2, 3) manufacturers
of plumbing supplies and of sanitary enamel ware;
(4) wholesale grocers; (5) manufacturers and
dealers in kindling wood; (6) manufacturers of
window glass; (7) manufacturers of what is known
as plate matter and ready print matter for use in
newspapers; and (8) manufacturers and importers
of aluminum and the raw material from which it is
produced. All of these were cases where indepen-
dent manufacturers or dealers — competitors in

Results of Trust Dissolution Suits 165

business — had united in various agreements, hav-
ing for their purpose and necessary effect the
fixing of prices, control of territory, and partition-
ing of business among themselves, and the exclu-
sion of competition.

Following the prosecution of the Beef Packers
in Chicago, who were charged with combining
for the purpose of controlling the price in meat
and meat products, the National Packing Com-
pany (a corporation which had been organized to
take over a very large number of competing plants
which had been acquired by representatives of the
three great packing interests) was dissolved, and its
properties scattered all over the United States, ag-
gregating upwards of sixty million dollars in value,
were distributed pro rata to and among the owners
of the stock of the Packing Company. This
distribution was so made as not only to remove
the restraint on competition which was wrought
by keeping all of these properties under one cor-
porate control, but in many instances to induce
competition in places where there was previously
none. Moreover, many of these plants had been
conducted under the names of their original own-
ers, their actual ownership being unknown. This
practice was terminated, and the business at these
plants is now being conducted in the names of their
actual owners. Besides these cases, in which final
decrees have been actually entered, suits are pend-
ing and now being actively prosecuted against such
large combinations as:

166 The Changing Order

The United States Steel Corporation ; the Ameri-
can Sugar Refining Company; the National Cash
Register Company; the United Shoe Machinery
Company; the Keystone Watch Case Company;
the American Naval Stores Company (known as
the turpentine trust) the International Harvester
Company; the New Departure Company (the
combination manufacturing and controlling coaster
brakes).

These various concerns are charged with exist-
ing in violation of the anti-trust law.

A suit to terminate the control by the Union
Pacific Railroad system of the Southern Pacific
Railroad system has been argued in the Supreme
Court of the United States and now awaits deci-
sion. x A suit to dissolve the combination between
the carriers and producers of anthracite coal in
Pennsylvania, New Jersey, and New York has also
been argued in the Supreme Court and awaits
decision.2 A suit to terminate a combination of
bituminous coal-carrying roads in Ohio and West
Virginia has been argued and submitted to the
Circuit Court of Appeals in the Ohio circuit, and
awaits decision.3 Four (4) different suits are
pending against combinations of steamship lines
which control certain forms of traffic between the

1 Decided in favor of the Government, Dec. 12, 1912 (226 U. S.,
61, 470).

3 Decided partly in favor of Government, partly in favor of
defendants, Dec. 16, 1912 (226 U. S., 324).

3 Decided in favor of the Government, Dec. 28, 191 2. Final
decree entered March 14, 1914.

Results of Trust Dissolution Suits 167

United States and foreign countries; five (5) suits
are pending against combinations of lumber dealers
formed for the purpose of regulating and control-
ling competition in that business, and especially of
preventing retail dealers from purchasing directly
from the wholesalers, instead of buying directly
from jobbers; one (1) suit is pending against a
combination of magazine publishers formed to
control prices and fix the terms on which retailers
may deal in their publications; and one (1) suit
against a combination of bill-posters, organized
to monopolize the business of bill-posting through-
out the United States, was recently brought and
is now pending. A prosecution of a number of
persons engaged in a pool formed for the purpose of
controlling the entire supply of free cotton of a
given season has been twice argued in the Supreme
Court and awaits decision.1

Now, before considering the effect of all these
suits, we must first stop to consider what the law
upon which they are based was intended to accom-
plish, because that must be the criteria by which
to judge the results achieved. There seems to be a
good deal of popular misconception on this point,
and much current discussion has proceeded, ap-
parently on the theory that the object of the law
was to secure the confiscation or destruction of the
property employed by the combinations declared
to be illegal by the act. Indeed much of the

1 Decided in favor of the Government, Jan. 6, 1913 (226 U. S.t

525).

1 68 The Changing Order

criticism of the results of the dissolution of the
Tobacco and the Standard Oil combinations has
been based simply upon the fact that the selling
value of the stocks of the constituent companies
had increased.

Yet the Supreme Court declared in the Standard
Oil case, and reiterated in the St. Louis Terminal
case, that while injury to the public by the pre-
vention of an undue restraint on, or the monopoliza-
tion of, trade or commerce, is the foundation upon
which the prohibitions of the statute rest, one of
the fundamental purposes of the statute is to
protect, and not to destroy rights of property. And
in the Tobacco case, the Supreme Court laid great
stress upon its duty, while giving complete and
efficacious effect to the prohibitions of the statute,
to do so with as little injury as possible to the
interests of the general public, and with a proper
regard to the vast interests of private property
involved.

This principle was observed in the Standard
Oil decree, by directing the distribution of the
stocks of the corporations held by the New Jersey
Company pro rata among its stockholders, and
enjoining the several corporations from in the
future doing any acts of the character of those by
which the combination had been created and
maintained. In the Tobacco case, where upwards
of an hundred millions of bonds, and nearly eighty
millions of preferred stock in the hands of the
investing public were involved, the Court ordered

Results of Trust Dissolution Suits 169

such a distribution of the properties of the com-
bination among fourteen separate corporations
as should give to no one of them an actual or
potential monopoly of any part of the business,
and then enjoined those companies from methods
of organization or business which would make
possible new combination or monopoly.

The first great combination that was broken
up under the Sherman Law was one of manufac-
turers of sewer pipe, to divide territory, suppress
competition in bidding, and control the prices of
their product. This was consummated by the
judgment of a Circuit Court of Appeals presided
over by President Taft, when he was Circuit Judge,
which was unanimously affirmed by the Supreme
Court in 1899.

The next great result obtained was the dissolu-
tion of the Northern Securities Company in 1904.
The decree there practically compelled the Securi-
ties Company to distribute the stocks of the two
great trans-continental railroad companies which
it held (that is, the Northern Pacific and Great
Northern) pro rata among its stockholders. The
immediate result of that distribution was to make
the same people owners, in the same proportion,
of the stocks of those two competing systems.
That was, however, but a temporary condition,
and for a long time past no one has suggested that
these two systems are under a common control.
It was also followed by an enormous rise in the
market price of these railroad stocks; yet no

170 The Changing Order

one has ever questioned the great benefit resulting
to the public from the termination of the unified
control over those two particular systems; and,
far more important, it resulted in arresting the
process of concentrating the ownership of railroads
into a few hands, which was then going rapidly-
forward.

The third great step in the enforcement of this
law was its application to the great industrial trusts
in the Standard Oil and Tobacco cases. The
beneficial results of those decisions ought not to
be obscured by the temporary high prices of the
stocks of the constituent companies quoted on the
curb market. There is a perfectly obvious reason
for these high prices. Before the Government
suits were brought, no outsiders knew anything
about the value of the properties of the Standard
Oil combination ; nor with accuracy of the Tobacco
trust. The evidence adduced in those suits
afforded the public some idea of the vast amount of
property which had been acquired by them, and
led to the speculative prices which followed the
distribution. The great accomplishment of the
decisions is in wiping away all artificial barriers
to the enforcement of the law, establishing its
supremacy over the largest combinations, and
demonstrating its sufficiency to reach the actual
evil of monopoly, no matter in what form it is
clothed.

The properties and business of the Standard Oil
combination were distributed among more than

Results of Trust Dissolution Suits 171

thirty corporations, which were compelled there-
after to conduct their businesses separately and
independently of each other. The properties and
businesses of the Tobacco combination were dis-
tributed among fourteen, and those of the Powder
trust, among three separate corporations. The
decrees prohibited the different companies from
having common directors, common officers, com-
mon agents; from occupying the same offices;
from making contracts with each other tending to
prevent the freest competition and the most inde-
pendent action; from carrying on business in
any name but their own, and from lending finan-
cial assistance to each other. In the decrees
against the various combinations of independ-
ent manufacturers formed by agreement among
themselves, a large variety of practices which in
the past had resulted in crushing out fair and
useful competition, and in centralizing control
over the business in the combination, have been
expressly prohibited. Thus, in the suit against
the Pacific Coast Plumbing Supply Association
twenty-four corporations and sixty individuals
were enjoined:

From combining, etc., to prevent manufacturers
of plumbing supplies from selling to persons not
members of the association or not listed in a blue
book published by the association;

From publishing any such book;

From publishing any list of manufacturers
who had not agreed to sell only to members of

172 The Changing Order

the association or to persons listed in the blue
book;

From advertising lists of persons in the business
who are not members of the association;

From combining to boycott a manufacturer for
having sold to persons not members of the associ-
ation and not listed in the blue book;

From conspiring to prevent persons located in a
given territory from purchasing plumbing supplies
from manufacturers or other dealers;

From communicating with a manufacturer or
dealer to induce him not to sell to persons not
members of the association or not conforming to
the definition of a jobber, given in the blue book.

In the decree against the manufacturers of
electrical incandescent lamps, a large number of
corporations, all of whose stock was owned by the
General Electric Company, had carried on business
ostensibly as independent companies, but really
under the control of the General Electric Company ;
they were ordered to be dissolved and their busi-
ness in the future to be conducted in the name of
the General Electric Company. The making and
performance of certain contracts whereby the
manufacturers agreed to sell goods only to the
General Electric, or as permitted by them, or on
terms or prices fixed by them, were enjoined.
Independent competitive companies were enjoined

From fixing prices by agreement;

From maintaining by agreement, differentials
between lamps which did not in fact differ in

Results of Trust Dissolution Suits 173

quality or efficiency and from allowing discounts
based on the aggregate of purchases from different
manufacturers.

From making agreements with jobbers, etc.,
under which they could only secure goods manu-
factured by the General Electric Company on
condition of agreeing to take all other goods
manufactured by them;

From making more favorable terms of sale to
customers of any rival manufacturer than it at
the same time offered to its established trade, with
the purpose of driving such rival out of business.

An interesting decree was rendered in the case
against the Central West Publishing Company
and the Western Newspaper Union. These two
concerns are substantially the only ones in the
country engaged in the business of manufacturing
and selling ready-print papers, and stereotype
plates, both of which are used by a vast number
of newspapers, largely the country press. They
were enjoined against combining with each other
and thus preventing any competition whatever in
the business, and they were both enjoined:

1. From underselling any competing service
with the intent or purpose of injuring or destroying
a competitor.

2. From sending out traveling men for the
purpose or with instructions to influence the cus-
tomers of the competitors or either of them so as
to secure the trade of the customers, without regard
to the price.

174 The Changing Order

3. From selling their goods at less than a fair
and reasonable price with the purpose or intent
of injuring or destroying the business of a com-
petitor.

4. From threatening any customer of a com-
petitor with starting a competing plant unless he
patronized the defendant.

5. From threatening the competitors of either
one that they must either cease competing with
the defendants or sell out to one of the defendants,
under threat that unless they did so their business
would be destroyed by the establishment of nearby
plants to compete with them.

6. From in any manner, directly or indirectly,
causing any person to purchase stock or become
interested in the other for the purpose or effect
of harassing it with unreasonable demands or
inquiries.

7. From circulating reports injurious to the
business of the other.

8. From persuading customers of competitors
to violate contracts made with them by under-
taking to indemnify them against loss and damage
by reason of so doing.

Every one of these decrees dealt with forms of
unfair competition, which investigation had shown
to have been resorted to for the purpose of con-
trolling prices and suppressing competition. An
examination of the different decrees will demon-
strate that the decision in the Tobacco case has
been put into practical effect and that the Federal

Results of Trust Dissolution Suits 175

courts are exercising in equity suits under the
Sherman Law, a power to restrain which is co-
extensive with the evils against which it was
enacted. That statute strikes at undue restraints
of the trade and commerce of the United States
and attempts to monopolize it, and empowers the
courts of equity of the United States to make such
decrees as will be effective to prevent and restrain
every form in which such restraints or attempts
to monopolize may be found to exist.

The first tangible result of these dissolution suits
is found in the fact that no new combinations or
trusts, such as the Standard Oil, Tobacco, Sugar,
Steel, Harvester, or the like, have been formed
during the last four years. So long as the statute
remains in its present form, none will be formed,
unless the law department of the national govern-
ment shall cease to be vigilant in the enforcement
of the law. The next result is, that it has become
apparent that the field of enterprise is open to
competition if any choose to embark in it. Only
a few days since, the formation of a new corpora-
tion with a substantial capital was announced to
engage in the tobacco business in competition with
the companies resulting from the disintegration of
the trust. Since the disintegration of the Tobacco
trust, all of the stock of the United Cigar Stores
has been sold to persons having no connection
with the old trust, and that big retail corporation
is carrying on its business independently of the
companies with which it was formerly affiliated.

176 The Changing Order

A fight for the control of the company between
the holders of a majority of the stock of the
Waters-Pierce Oil Company, to whom it was dis-
tributed by the Standard Oil Company, after the
Supreme Court's decision, and the minority holders,
has resulted in the sale of that majority stock, or a
large part of it, to that minority, and thereby the
elimination of Standard Oil interests from that
corporation.

The regulation of rates of transportation of oil
through the pipe lines owned by the companies,
which were controlled by the Standard Combina-
tion by means of the enforcement of the Hepburn
Act by the Interstate Commerce Commission, also
promises to remove all unfair advantage of the
large refining and marketing companies over the
terms and conditions of transportation, which
constituted so potent a factor in building up the
trust.

But the criticism is made that these suits have
not resulted in reducing the price of commodities
dealt in; and it is argued that as one of the evils
of monopoly is the control of prices, the fact that
prices have not been reduced is evidence that the
monopoly has not been destroyed. The criticism
is a superficial one. Scarcely a year has passed
since the principal dissolutions took place, and it
can hardly be expected that the results of twenty
years of successful monopolization can be undone
in less than one year. In the next place, the
various companies among which the business of

Results of Trust Dissolution Suits 177

former combinations has been distributed are not
likely to embark on a sharp price-cutting com-
petition unless compelled to. The prices of raw
materials have been distinctly affected by the
dissolution, and both tobacco leaf and crude oil
sell at much higher prices since the unification of
substantially all the buyers has been removed,
than those which previously prevailed. There
has been some advance in the price of a few pro-
ducts of petroleum, such as gasoline, due to the
enormous increase in demand for the refined article,
and the increase in the price of crude oil. There
has been no increase in the price of tobacco pro-
ducts, but there is an enormously increased
competition in pushing the sale of different brands
of tobacco by means of extensive advertising.

More important than all of these, the unfair
methods of competition resorted to in the past
have been checked and in large measure destroyed,
so that the field is open to fair competition and
enterprise to a larger degree, I believe, than for
many years past. Of course, this has its dis-
advantages as well as its advantages. It is im-
possible in many lines of industry to maintain what
the producers consider to be satisfactory prices,
and some complaint is made in different trades,
because the producers are advised that they cannot
lawfully get together and agree upon and main-
tain prices which will afford them a satisfactory
profit. The law is coming to be understood by the
community, and substantially the only complaint

178 The Changing Order

heard against it is from those who wish through
some form of combination or agreement, to raise
prices or restrict competition. When the pending
suits against the great combinations are terminated,
I believe no abnormally large combinations will be
left intact, and the businesses and property now
held by them will be distributed among a sufficient
number of separate and distinct companies to
remove all possible fear of undue influence by
them over the business of the country. If their
future activities are restricted by injunctive
provisions in adequately drawn decrees, and the
government law department is vigilant in seeing
that they are complied with, it is my hope that
no further legislation will be necessary to protect
against undue restraints of interstate commerce.

XI

FEDERAL CONTROL OF STOCK AND
BOND ISSUES BY INTER-
STATE CARRIERS1

IN a special message to Congress in January, 19 10,
the President recommended the enactment of a
law regulating the issue of stocks and bonds by rail-
road companies subject to the Interstate Commerce
Act, for any purpose connected with or relating to
any part of its business governed by that act.
The Republican platform of 1908 had declared in
favor of such legislation. The President expressed
his opinion that it would be plainly within the
jurisdiction of Congress. The bills for the amend-
ment of the Interstate Commerce Act, in ac-
cordance with the President's recommendations,
introduced into each House of Congress, contained
provisions prescribing the conditions under which
stocks and bonds should be issued. The necessity
of expressing such regulations in negative and
restrictive form, because applied to corporations
deriving their corporate life and powers from State

1 An address delivered before the Illinois State Bar Associa-
tion, at Chicago, June 24, 1910.

179

180 The Changing Order

laws, resulted in complicated provisions not easily
understood by those unfamiliar with the subjects
involved. Partly on this account, partly on ac-
count of doubts as to the constitutionality of
such legislation entertained by most Democrats
and by some Republicans, the provisions dealing
with that subject were dropped from the bill, but
a clause was inserted authorizing the President to
appoint a Commission to investigate "questions
pertaining to the issuance of stocks and bonds
by railroad corporations subject to the provisions
of the Act to Regulate Commerce, and the power
of Congress to regulate the same. "

The first question arising in the consideration
of this matter will be, necessarily, the power of
Congress to legislate in the premises, and it has
therefore seemed to me that a discussion of that
subject would be of timely interest.

The authority of Congress over the issue of stocks
and bonds by State railroad corporations engaged
in interstate commerce must rest upon the pro-
visions of Section 8 of Article I. of the Constitution,
granting to the Congress power —

To regulate commerce with foreign nations, and
among the several States, and with the Indian tribes,
[and] . . .

To make all laws which shall be necessary and proper
for carrying into execution the foregoing powers. . . .

This grant vested in the Congress a power in its
nature sovereign and exclusive over such commerce,

Federal Control of Stocks and Bonds 181

to be exercised in such manner as Congress in its
wisdom should deem fit, provided the means
adopted should be in some respect appropriate or
adapted to carrying into execution the powers so
conferred. But the relationship between the
means and the end need not be direct and im-
mediate. *

No better definition of this power, and no clearer
statement of the principles governing its construc-
tion and exercise, ever has been formulated than
the opinion of Alexander Hamilton on the con-
stitutionality of a national bank law, rendered
February 23, 1791. Thomas Jefferson, then Sec-
retary of State, and Edmund Randolph, the At-
torney-General, had united in advising President
Washington that Congress was without power to
establish a national bank, their objections being
founded on a general denial of the authority of the
United States to erect corporations. But Ham-
ilton asserted that the national government was
empowered to create corporations whenever the
Congress deemed such action necessary or proper
to carry out more effectually any power conferred
by the Constitution; that such power was "in-
herent in the very definition of government, and
essential to every step of the progress to be made
by that of the United States."

Every power vested in a government [he main-
tained] is in its nature sovereign and includes by force

'Legal Tender Cases, 12 Wall., 457, 543.

1 82 The Changing Order

of the term a right to employ all the means requisite
and fairly applicable to the attainment of the ends of
such power and which are not precluded by restrictions
and exceptions specified in the Constitution, or not
immoral, or not contrary to the essential ends of
political society. . . .

The circumstance that the powers of sovereignty
are in this country divided between the National and
State governments does not afford the distinction
which makes this principle inapplicable to the United
States.

It does not follow from this, that each of the portion
of powers delegated to the one or to the other, is not
sovereign with regard to its proper objects. It will only
follow from it, that each has sovereign power as to
certain things, and not as to other things.

He held the power to erect corporations to be
unquestionably incident to sovereign power, and
consequently to that of the United States "in
relation to the objects entrusted to the manage-
ment of the Government."

The difference is this* where the authority of the
Government is general, it can create corporations in
all cases; where it is confined to certain branches of
legislation it can create corporations only in those
cases.

The only question to be considered was whether
the means to be employed, or the corporation to be
erected, has any natural relation to any acknowl-
edged objects or lawful ends of the government.

Federal Control of Stocks and Bonds 183

If the end be clearly comprehended within any of
the specified powers, and if the measure have an ob-
vious relation to that end, and is not forbidden by any
particular provision of the Constitution, it may safely
be deemed to come within the compass of the national
authority.

In the powers to collect taxes, to borrow money,
to regulate trade between the States, and to raise
and maintain fleets and armies, he found ample
basis for the exercise by Congress of its sovereign
power in the creation of a banking corporation
for the purpose of aiding in the exercise of those
enumerated powers.

Based upon this executive interpretation, Wash-
ington approved the charter of the first United
States Bank. Twenty-eight years later, the sound-
ness of the proposition asserted by the great
finance minister was judicially established by the
Supreme Court, and Chief Justice Marshall, in
expressing the unanimous opinion of the Court,1
could find no better language in which to formu-
late the principles of the decision, than a paraphrase
of that used by Hamilton.

We admit [he said], as all must admit, that the
powers of the Government are limited, and that its
limits are not to be transcended. But we think the
sound construction of the Constitution must allow
to the national legislature that discretion, with respect
to the means by which the powers it confers are to be
carried into execution, which will enable that body to

1 McCulloch v. State of Maryland, 4 Wheat., 316.

184 The Changing Order

perform the high duties assigned to it, in the manner
most beneficial to the people. Let the end be legiti-
mate, let it be within the scope of the Constitution,
and all means which are appropriate, which are plainly
adapted to that end, which are not prohibited, but
consist with the letter and spirit of the Constitution,
are constitutional.1

The Government of the United States though
limited in its powers, is supreme, and its laws, when
made in pursuance of the Constitution, form the su-
preme law of the land, " anything in the constitution or
laws of any State to the contrary notwithstanding."3

He admitted that among the enumerated powers
was not to be found that of establishing a bank or
creating a corporation, but he pointed out that
among the enumerated powers of government were

the great powers to lay and collect taxes; to borrow
money ; to regulate commerce ; to declare and conduct
a war; and to raise and support armies and navies.
The sword and the purse, all the external relations,
and no inconsiderable portion of the industry of the
nation, are intrusted to its government. It can never
be pretended that these vast powers draw after them
others of inferior importance, merely because they are
inferior. Such an idea can never be advanced. But
it may with great reason be contended that a govern-
ment intrusted with such ample powers, on the due
execution of which* the happiness and prosperity of the
nation so vitally depends, must also be intrusted with
ample means for their execution.3

1 McCulloch v. State of Maryland, 4 Wheat., 241.

»P. 406. 3 Pp. 407-8.

Federal Control of Stocks and Bonds 185

In Gibbons v. Ogden * there was sharply presented
to the Court a consideration of the nature and
extent of the power conferred by the Constitution
upon the Federal Congress "to regulate commerce
with foreign nations, and among the several States,
and with the Indian tribes. "

The subject to be regulated is commerce [said the
Chief Justice, in oft-quoted language], and our con-
stitution being, as was aptly said at the bar, one of
enumeration, and not of definition, to ascertain the
extent of the power, it becomes necessary to settle the
meaning of the word. . . . Commerce, undoubt-
edly, is traffic, but it is something more — it is inter-
course. It describes the commercial intercourse
between nations and parts of nations in all its branches,
and is regulated by prescribing rules for carrying on
that intercourse.

Mr. Justice Johnson somewhat elaborated this
definition: —

Commerce, in its simplest signification means an
exchange of goods; but in the advancement of so-
ciety, labor, transportation, intelligence, care, and
various mediums of exchange, become commodities,
and enter into commerce; the subject, the vehicle,
the agent and their various operations, become the
objects of commercial regulation. Ship-building, the
carrying trade, and propagation of seamen, are such
vital agents of commercial prosperity that the nation
which could not legislate over these subjects, would
not possess power to regulate commerce.

1 9 Wheat., 1.

186 The Changing Order

This power to regulate, the Chief Justice pointed
out, was the power —

to prescribe the rule by which commerce is to be
governed. This power, like all others vested in
Congress, is complete in itself, may be exercised to its
utmost extent, and acknowledges no limitations, other
than are prescribed in the constitution. ... If,
as has always been understood, the sovereignty of
Congress, though limited to specified objects, is
plenary as to those objects, the power over commerce
with foreign nations, and among the several states, is
vested in Congress as absolutely as it would be in a
single government, having in its constitution the
same restrictions on the exercise of the power as are
found in the Constitution of the United States.

In passing upon the constitutionality of the
Employer's Liability Act of June II, 1906 (32
Stat., 232), Mr. Justice White cited this definition
of Chief Justice Marshall's as one which is and
always has been accepted by the Supreme Court;
and applied it to sustain the proposition that
Congress, under the grant of power to regulate
commerce, may lawfully regulate the relation of
master and servant in conducting that commerce. r

"It cannot at the present day be doubted,"
said Justice Bradley, in delivering the unanimous
opinion of the Court in California v. Pacific Rail-
road Co.,2 "that Congress, under the power to
regulate commerce among the several States, as

1 The Employer's Liability Cases, 207 U. S., 463.
3 127 U. S., 1-127.

Federal Control of Stocks and Bonds 187

well as to provide for postal accommodations and
military exigencies, had authority to pass these
laws" — referring to the Pacific Railroad Acts:

The power to construct, or to authorize individuals
or corporations to construct, national highways and
bridges from State to State, is essential to the complete
control and regulation of interstate commerce. With-
out authority in Congress to establish and maintain
such highways and bridges, it would be without
authority to regulate one of the most important
adjuncts of commerce. This power in former times
was exerted to a very limited extent, the Cumberland
or National road being the most notable instance.
Its exertion was but little called for, as commerce was
then mostly conducted by water, and many of our
statesmen entertained doubts as to the existence
of the power to establish ways of communication by
land. But since, in consequence of the expansion
of the country, the multiplication of its products,
and the invention of railroads and locomotion by
steam, land transportation has so vastly increased,
a sounder consideration of the subject has prevailed
and led to the conclusion that Congress has plenary
power over the whole subject.

In 1887, Congress enacted the Interstate Com-
merce Act by which it required rates for the trans-
portation of freight and passengers in interstate
commerce to be just and reasonable, forbade un-
just discrimination, and created a commission to
determine when any rate was in violation of this
statutory rule, and otherwise to exercise a certain

1 88 The Changing Order

control over interstate carriers. While the con-
struction of various provisions of the act has been
submitted to the courts in a number of cases, the
constitutionality of the act has never been seriously
questioned.

In Mo. Pacific Ry. Co. v. Kansas,1 the Court
quoted from the opinion in Atlantic Coast Line v.
North Carolina Corporation Commission,2 that —

The elementary proposition that railroads from the
public nature of the business by them carried on and
the interest which the public have in their operation
are subject, as to their State business, to State regula-
tion, which may be exerted either directly by the
legislative authority, or by administrative bodies en-
dowed with the power to that end, is not and could
not be successfully questioned in view of the long
line of authorities sustaining that doctrine,

and said,

The Coast line case was concerned with the exertion
of State power over a matter of State concern. But
the same doctrines had been often previously ex-
pounded in reference to the power of the United States
in dealing with a matter subject to the control of that
Government.

In Louisville & Nashville R. R. v. Kentucky3
it was said :

While there is no general reservation clause in the
charter of the L. & N. Co., we think for the reasons

1 216 U. S., 262. a 206 U. S., 1. * 161 U. S., 677.

Federal Control of Stocks and Bonds 189

stated in the Pear sail case (161 U. S., 646), that under
its police power the people, in their sovereign capacity,
or the legislature, as their representatives, may deal
with the charter of a railroad corporation, so far as
is necessary for the protection of the lives, health or
safety of its passengers or the public, or for the security
of property or the conservation of the public interests,
provided, of course, that no vested rights are thereby
impaired.

When the subject involved affects commerce
among the States, this power of control for the
public good is vested in and can be exercised by
Congress. The power extends, not only to restric-
tive, but if in the wisdom of Congress it seem
necessary, to prohibitive measures, in order to en-
force the rules laid down by Congress respecting
the conduct of interstate commerce.

That the power to regulate commerce between
the States involves the power to prohibit such
commerce when in the opinion of Congress such
prohibition is essential to the public welfare, was
recognized and established by the Supreme Court
in the Lottery Case.1 Having asserted that the
carrying of lottery tickets from State to State
constitutes interstate commerce, and that the
regulation of such commerce is within the power
of Congress under the Constitution, the Court,
speaking by Mr. Justice Harlan, asked:

Are we prepared to say that a provision which is,
in effect, a prohibition of the carriage of such articles
1 188 U. S., 321.

190 The Changing Order

from State to State is not a fit or appropriate mode for
the regulation of that particular kind of commerce?

If a State, when considering legislation for the
suppression of lotteries within its own limits, may
properly take into view the evils that inhere in the
raising of money in that mode, why may not Congress,
invested with the power to regulate commerce among
the several States, provide that, such commerce shall
not be polluted by the carrying of lottery tickets from
one State to another? In this connection it must not
be forgotten that the power of Congress to regulate
commerce among the States is plenary, is complete in
itself, and is subject to no limitations except such as
may be found in the Constitution. What provision
in that instrument can be regarded as limiting the
exercise of the power granted? What clause can be
cited which, in any degree, countenances the sugges-
tion that one may, of right, carry or cause to be carried
from one State to another that which will harm the
public morals? We cannot think of any clause of that
instrument that could possibly be invoked by those
who assert their right to send lottery tickets from State
to State, except the one providing that no person shall
be deprived of his liberty without due process of law.
. . . [But] it will not be said to be a part of any
one's liberty, as recognized by the supreme law of the
land, that he shall be allowed to introduce into com-
merce among the States an element that will be con-
fessedly injurious to the public morals.

That regulation may sometimes appropriately
take the form of prohibition, the Court illustrated
by reference to the acts of Congress with respect

Federal Control of Stocks and Bonds 191

to the transportation of diseased cattle (Act of
May 29, 1884, chapter 60) ; the provisions of the
Sherman Anti-Trust Act of July 2, 1890; and the
legislation regarding the shipment of intoxicating
liquors among the States (Act of August 9, 1890,
26 Stat., chapters 313, 328). The Pure Food Law
of June 30, 1906, is a later example of the same
character of legislation.

The decision in the Lottery Case was followed
in Buttfield v. Stranahan1 which affirmed the
constitutionality of the Act of March 2, 1897 (29
Stat., 604), for the prevention of the importation
of impure and unwholesome tea.

In the Commodities Clause Cases2 the Supreme
Court construed the provision contained in the
Hepburn Act of June 29, 1906 (34 Stat., 584) —
commonly called the commodities clause — to
mean that a railway company was thereby pro-
hibited from moving in interstate commerce
commodities owned by it, or in which it had a
direct interest, and from transporting commodities
in such commerce under the following circum-
stances and conditions: (a) When the commodity
has been manufactured, mined, or produced by a
railway company or under its authority, and at the
time of transportation the railway company has
not in good faith, before the act of transportation,
parted with its interest in such commodity; (b)
when the railway company owns the commodity
to be transported in whole or in part; (c) when

1 192 U. S., 470. 1 213 u. S., 366.

192 The Changing Order

the railway company at the time of transportation
has an interest direct or indirect, in a legal sense,
in the commodity — which last prohibition does
not apply to commodities manufactured, mined,
produced, owned, etc., by a corporation in which
the railway company is merely a stockholder —
and, as thus construed, declared that the clause
was a regulation of commerce inherently within
the power of Congress to enact. Reference was
made by Mr. Justice White, in writing the
unanimous opinion of the Court, to the case of
New Haven Railroad v. Interstate Commerce
Commission, * in which, to use his own language :

After much consideration, it was held that the
prohibitions of the Interstate Commerce Act as
to uniformity of rates and against rebates, operated
to prevent a carrier engaged in interstate commerce
from buying and selling a commodity which it carried
in such a way as to frustrate the provisions of the act,
even if the effect of applying the, act would be sub-
stantially to render practically impossible the buying
and selling by an interstate carrier of a commodity
transported by it.

This case he cited as an authority to demonstrate
that the statute, as construed by the Court, was
inherently within the power of Congress to enact as
a regulation of commerce.

We do not say this [said the learned Justice] upon
the assumption that by the grant of power to regulate

1 200 U. S., 361.

Federal Control of Stocks and Bonds 193

commerce the authority of the Government of the
United States has been unduly limited on the one hand
and inordinately extended on the other, nor do we
rest it upon the hypothesis that the power conferred
embraces the right to absolutely prohibit the move-
ment between the States of lawful commodities, or
to destroy the governmental power of the States as to
subjects within their jurisdiction, however remotely
and indirectly the exercise of such power may touch
interstate commerce. On the contrary, putting these
considerations entirely out of mind, the conclusion
just previously stated rests upon what we deem to be
the obvious result of the statute as we have interpreted
it; that it merely and unequivocally is confined to a
regulation which Congress had the power to adopt and
to which all preexisting rights of the railroad com-
panies were subordinated.1

The case of McCulloch v. Maryland2 settled the
power of Congress to create a corporation, when-
ever that was an appropriate means to carrying
out a power given to the Congress in the Consti-
tution. In the exercise of the power to regulate
commerce among the States, Congress passed
acts incorporating the Union Pacific Railway
Company, in 1862 (12 Stat., 489); the Northern
Pacific Railroad Company, in 1864 (13 Stat., 365) ;
the Atlantic and Pacific Railway Company, in
1866 (14 Stat., 292); and the Texas Pacific Rail-
way Company, in 1871 (16 Stat., 473), and the
Supreme Court held all of these acts to be valid

Siting Armour Packing Co. v. United States, 209 U. S., 56.
• 4 Wheat., 316.
13

194 The Changing Order

and constitutional exercises of power. x In Luxton
v. North River Bridge Co.,2 the constitutionality
of an act of Congress incorporating a company to
build a bridge across a navigable river between
two States was affirmed.

Prior to the sixties, Congress had enacted much
more legislation concerning commerce by water
and the instruments of that commerce than
respecting commerce by land. The power of
Congress over water commerce is no greater than
that over land commerce. Both depend upon
the same clause in the Constitution:

Up to a recent date [said Mr. Justice Brewer in
In re Debs3] commerce, both interstate and inter-
national, was mainly by water, and it is not strange
that both the legislation of Congress and the cases in
the Courts have been principally concerned therewith.
The fact that in recent years interstate commerce has
come mainly to be carried on by railroads and over
artificial highways has in no manner narrowed
the scope of the constitutional provision, or abridged
the power of Congress over such commerce. On the
contrary, the same fulness of control exists in the one
case as in the other, and the same power to remove
obstructions from the one as from the other.

1 See Pacific R.R. removal cases, 115 U. S., 2; Ames v. Kan-
sas, in U. S., 449; California v. Pacific Railroad Co., 127 U. S.,
1; Reagan v. Mercantile Trust Co., 154 U. S., 413; Central
Pacific Railroad Co. v. California, 162 U. S., 91; United States
v. Union Pacific R.R. Co., 160 U. S., 1; United States v. Union
Pacific R.R. Co., 98 U. S., 569.
_ » 153 U. S., 525. 3 158 U. S., 564, 591.

Federal Control of Stocks and Bonds 195

In some respects, congressional legislation has
dealt far more minutely with the subject of water
commerce than with that by railroad.

The navigation laws of the United States provide
that only vessels registered pursuant to act of
Congress shall be deemed vessels of the United
States and entitled to the benefits and privileges
appertaining to such vessels, and that they shall
enjoy such benefits and privileges only so long
as they shall continue to be owned by a citizen
of the United States or a corporation of a State,
and shall be commanded by a citizen of the United
States (U. S. R. S., Sec. 413) : That, with certain
exceptions, only vessels built within the United
States and belonging wholly to citizens thereof may
be lawfully registered (R. S., Sec. 4132) : That no
bill of sale, mortgage, hypothecation, or conveyance
of any vessel or part of a vessel of the United States
shall be valid as against any person other than the
grantor or mortgagor, his heirs and devisees and
persons having actual notice thereof, unless re-
corded in the office of the Collector of Customs
where such vessel is enrolled (R. S., Sec. 492).

By Section 4283, Revised Statutes, the liability
of an owner of any vessel for loss, injury, or de-
struction of property shipped in it is limited to the
amount of the value of the interest of such owner
in the vessel and her freight. The constitution-
ality of this enactment was upheld by the Supreme
Court, ■ even as applied to a vessel engaged in ply-?

1 Lord v. Steamship Co., 102 U. S., 541.

196 The Changing Order

ing on the Pacific Ocean between two ports of the
State of California.

It seems strange, that although such comprehen-
sive control over interstate and foreign commerce
by water, including the regulation of the agencies
of such commerce, the citizenship of the owners
of such agencies, the method of transferring and
incumbering such ownership, and the limit of the
liability of the owners, had been exercised by
Congress from an early date, yet when a bill was
introduced in Congress in 1864 to declare the Rari-
tan Delaware Bay Railroad of New Jersey a law-
ful structure and a military and post road, so as
to enable it to compete for through traffic between
Philadelphia and New York with the Camden &
Amboy Railway monopoly, it was defeated. New
Jersey had in 1832 granted to the last-named com-
pany a monopoly in railroad construction and main-
tenance through that State, between New York
and Philadelphia, as complete as that which the
State of New York had granted to Robert Fulton
and Robert Livingston in steamboat traffic in the
waters of New York, which had been declared
contrary to the Federal Constitution in Gibbons
v. Ogden. Yet the bill in favor of breaking the
monopoly was successfully opposed upon the
ground that —

there is no warrant in the Constitution of the United
States that will allow Congress through her representa-
tives from other states of this Union to interfere with

Federal Control of Stocks and Bonds 197

the local railway system of any individual State which
it has incorporated merely for the purpose of doing
business within its limits.

Nor were there wanting members of Congress to
contend that railroad transportation did not fall
under the term "commerce." The same opposi-
tion was successfully made to an effort to break
the Pennsylvania Railroad monopoly during the
following session, and not until June 15, 1866, was
the bill passed which gave to a railroad corporation
of one State the right to carry on interstate com-
merce in other States.1 This act (14 Stats., 66)
is brief but comprehensive:

Whereas the Constitution of the United States con-
fers upon Congress, in express terms, the power to
regulate commerce among the several States, to estab-
lish post roads, and to raise and support armies:
Therefore :

Be it enacted by the Senate and House of Representa-
tives of the United States, etc., That every railroad
company in the United States, whose road is operated
by steam, its successors and assigns, be, and is hereby
authorized to carry upon and over its road, boats,
bridges, and ferries, all passengers, troops, govern-
ment supplies, mails, freight, and property on their
way from any State to another State, and to receive
compensation therefor, and to connect with roads of
other States so as to form continuous lines for the
transportation of the same to the place of destination.

1 See A Congressional History of Railways in the United States,
by Lewis H. Haney, vol. ii., pp. 214-230.

198 The Changing Order

This law (subsequently carried into the Revised
Statutes as Section 5258) has been followed by a
large number of acts of Congress regulating inter-
state commerce in various particulars. Many of
those statutes are enumerated in Mr. Justice
Brewer's opinion in the Debs case, * and all opera-
tion by State railroad companies as agencies of
interstate commerce since 1866, has been carried
on under the authority granted by that act, and
the subsequent acts regulating interstate com-
merce. Obviously, as Mr. Justice Brewer said in
the Debs case:

these powers given to the national government over
interstate commerce and in respect to the transporta-
tion of the mails were not dormant and unused. Con-
gress had taken hold of these two matters, and by
various and specific acts had assumed and exercised
the powers given to it, and was in the full discharge
of its duty to regulate interstate commerce and carry
the mails. The validity of such exercise and the
exclusiveness of its control had been again and again
presented to this Court for consideration. It is
curious to note the fact that in a large proportion of
the cases in respect to interstate commerce brought
to this Court the question presented was of the validity
of State legislation in its bearings upon interstate
commerce, and the uniform course of decision has been
to declare that it is not within the competency of a
State to legislate in such a manner as to obstruct
interstate commerce.

1 In re Debs, 158 U. S., 564, 580.

Federal Control of Stocks and Bonds 199

In the light of these authorities, it would seem
clear that the right of a corporation — certainly
of a railroad corporation — of one State to carry on
business in interstate commerce, depends upon the
will of Congress.

It is contended however that the right to carry
on commerce between the States is not one created
by the Federal Constitution, but a right which the
Constitution found in existence and which it gave
Congress power to regulate. This is perfectly true
as to individuals, but not as to corporations.
Until Congress legislated on the subject, the States,
under the rulings of the Supreme Court, enjoyed
in unrestrained right to legislate regarding the
instrumentalities of commerce.

For, as was pointed out in Louisville & Nash-
ville Railroad Co. v. Kentucky, " while the police
power of a State cannot be directly exercised by
imposing a restriction or burden upon commerce
itself, this is not true with respect to the instru-
ments of such commerce; and with respect to
legislation respecting the instrumentalities of
commerce it was said in Chicago, Milwaukee, etc.»
Railway Co. i>. Solan2:

So long as Congress has not legislated upon the
particular subject, they are rather to be regarded as
legislation in aid of such commerce, and as a rightful
exercise of the police power of the State to regulate the
relative rights and duties of all persons and corpora-
tions within its limits.

1 161 U. S., 677. ■ 69 U. S., 133.

200 The Changing Order

In Sherlock et al v. Ailing,1 Mr. Justice Field
said:

It is true that the commercial power conferred
by the Constitution is one without limitation. It
authorizes legislation with respect to all the subjects
of foreign and inter-State commerce, the persons en-
gaged in it, and the instruments by which it is carried
on. And legislation has largely dealt, so far as com-
merce by water is concerned, with the instruments of
that commerce. It has embraced the whole subject
of navigation, prescribed what shall constitute
American vessels, and by whom they shall be navi-
gated; how they shall be registered or enrolled and
licensed; to what tonnage, hospital, and other dues
they shall be subjected; what rules they shall obey
in passing each other ; and what provision their owners
shall make for the health, safety, and comfort of their
crews. Since steam has been applied to the propulsion
of vessels, legislation has embraced an infinite variety
of further details, to guard against accident and
consequent loss of life.

The power to prescribe these and similar regulations
necessarily involves the right to declare the liability
which shall follow their infraction. Whatever, there-
fore, Congress determines, either as to a regulation
or the liability for its infringement, is exclusive of
State authority. But with reference to a great variety
of matters touching the rights and liabilities of persons
engaged in commerce, either as owners or navigators
of vessels, the laws of Congress are silent, and the laws
of the State govern.

1 93 U. S., 99.

Federal Control of Stocks and Bonds 201

It is recognized and implied in all of such state-
ments that when Congress does legislate on any
of these incidental subjects, "touching the rights
and liabilities of persons engaged in commerce"
its legislation becomes "the supreme law of the
land, anything in the constitution or laws of any
State notwithstanding."

So in Crutcher v. Kentucky, ' the Supreme Court
held an act of the Legislature of Kentucky requir-
ing the agent of a foreign express company to
take out a license on certain specified conditions
before carrying on express business between that
State and others, to be a regulation of interstate
commerce, and to that extent repugnant to the
Constitution.

Congress [said Mr. Justice Bradley] would un-
doubtedly have the right to exact from associations
of that kind any guarantees it might deem necessary
for the public security, and for the faithful transaction
of business; and as it is within the province of Con-
gress, it is to be presumed that Congress has done, or
will do, all that is necessary and proper in that regard.

To carry on interstate commerce is not a franchise or
a privilege granted by the State; it is a right which
every citizen of the United States is entitled to exercise
under the Constitution and laws of the United States;
and the accession of mere corporate facilities, as a
matter of convenience in carrying on their business,
cannot have the effect of depriving them of such right,

■ 141 U. S., 47.

202 The Changing Order

unless Congress should see fit to interpose some con-
trary regulation on the subject.

And [he adds] it has frequently been laid down by
this Court that the power of Congress over interstate
commerce is as absolute as it is over foreign com-
merce.

This statement of the law is cited with approval
in the prevailing opinion of the Supreme Court in the
recent cases of Western Union Telegraph Co. v.
Kansas, r and International Text-book Co. v. Pigg.2

The right of a corporation organized under the
laws of any State to engage in interstate commerce
therefore depends, first, upon the powers given to
it by the State of its creation, and second, upon
the will of Congress. In the absence of any expres-
sion by Congress of that will, it may conduct its
business in a State other than that of its creation,
in accordance with the comity extended to foreign
corporations of its class by such State, either
impliedly or by express legislation; and if there
be such legislation, then on compliance with its
requirements, provided such requirements do not
amount to creating a burden upon interstate
commerce, or conflict with any Federal regulation
of interstate commerce, or other rights secured by
the Federal Constitution.

The authorities on the subject of the right of
corporations to carry on business outside of the
State creating them, without interference from
State authorities, have been the subject of too much

x2i6 U. S., i, 19. 32i7 U. S., 91, 108.

Federal Control of Stocks and Bonds 203

well-known discussion to need more than passing
reference here to the decision in Bank of Augusta
v. Earle,1 and the very recent cases of Western
Union Telegraph Co. v. Kansas, 2 Pullman Car Co.
v. Kansas,3 and International Text-book Co. v.

Pigg.4

In Paul v. Virginia5 where the power of a State
to exclude foreign insurance companies from doing
business within its limits, except upon conditions
prescribed by it, was under discussion, the Court
said:

It is undoubtedly true, as stated by counsel, that the
power conferred upon Congress to regulate commerce
includes as well commerce carried on by corporations
as commerce carried on by individuals.

This state of facts forbids the supposition that it
was intended in the grant of power to Congress to
exclude from its control the commerce of corporations.
The language of the grant makes no reference to the
instrumentalities by which commerce may be carried
on; it is general, and includes alike commerce by
individuals, partnerships, associations and corpora-
tions.

But in that case it was held that issuing a policy
of insurance was not a transaction of commerce,
and that such contracts were not articles of com-
merce in the proper meaning of the word, although

1 13 Peters, 519, 589. 32i6 U. S., 1.

»2i6 U. S., 56. 4217 U. S., 91. «8 Wall., 168.

204 The Changing Order

the parties to such contracts were domiciled in
different States. These paragraphs from the
opinion in Paul v. Virginia were cited with ap-
proval in Western Union Telegraph Co. v. Kansas. r

The control of Congress being therefore sover-
eign and plenary over commerce among the States,
and the instrumentalities of such commerce, its
power to create national corporations to conduct
such commerce being established, its right to
prohibit such commerce when essential to the
public welfare being adjudged, even to the extent
of forbidding a State railroad corporation to carry-
in interstate commerce a commodity in which
it has any legal interest, direct or indirect, al-
though the effect of such prohibition would be
substantially to render buying and selling by an
interstate carrier of a commodity which it trans-
ports practically impossible; how can it be doubted
that Congress might repeal the act of 1866 and
forbid any railroad company to transport goods
in interstate commerce unless incorporated by
Congress?

But Congress has not seen fit to legislate in
that way. While in certain cases creating cor-
porations to build and operate railroads and
bridges, it has in general specifically empowered
corporations of States to transport passengers
and property in interstate commerce subject to
rules and regulations which it has from time to
time prescribed.

'216 U. S., 134.

Federal Control of Stocks and Bonds 205

In Cherokee Nation v. Kansas Railway Co.,1 it
was expressly held that in the execution of the
power to regulate commerce, Congress may employ
as instrumentalities corporations created by it or
by the States.

Congress had granted to the defendant in that
case, a corporation organized under the laws of
Kansas, the right to construct a railroad through
the Indian territory. Justice Harlan, writing the
opinion of the Court, said:

It is true that the company authorized to construct
and maintain is a corporation created by the laws of a
State, but it is none the less a fit instrumentality to
accomplish the public objects contemplated by the
Act of 1 884. Other means might have been employed,
but those designated in that act, although not indis-
pensably necessary to accomplish the end in view, are
appropriate and conducive to that end, and therefore
within the power of Congress to adopt. The question
is no longer an open one, as to whether a railroad is a
public highway, established primarily for the conven-
ience of the people, and to subserve public ends, and,
therefore, subject to governmental control and regula-
tion.

A State corporation availing of the powers con-
ferred by acts of Congress becomes thereby sub-
ject, in those respects in which Congress has
legislated, to all the conditions and limitations im-
posed by Congress on the exercise of those pow-

• 135 U. S., 641, 657.

206 The Changing Order

ers, as completely as though they were written
into the charter of such corporation.

This was made clear in Hale z>. Henkel, x where
the right of an officer or employee of a State
corporation, summoned before a grand jury as
a witness, to refuse to produce the books and docu-
ments of such corporation, upon the ground that
they would tend to incriminate the corporation
itself, was under discussion. The Court discrim-
inated between the rights of the witness, as an
individual, and the rights of the corporation, a
mere creature of the State, presumed to be in-
corporated for the benefit of the public, receiving
certain privileges and franchises and holding them
subject to the laws of the State and the limitations
of its charter; and held, that while an individual
might lawfully refuse to answer incriminating ques-
tions, unless protected by a statute, it did not follow
that a corporation vested with special privileges
and franchises could refuse to show its hand when
charged with an abuse of such privileges. So far as
the right of such corporation to carry on interstate
commerce was involved, the Court treated that as
a franchise derived from the Federal government
which entailed a corresponding responsibility to it.

Mr. Justice Brown, writing the opinion of the
Court, said:

It is true that the corporation in this case was
chartered under the laws of New Jersey, and that it

" 201 U. S., 43.

Federal Control of Stocks and Bonds 207

receives its franchise from the legislature of that State;
but such franchises, so far as they involve questions
of interstate commerce, must also be exercised in
subordination to the power of Congress to regulate
such commerce, and in respect to this, the General
Government may also assert a sovereign authority to
ascertain whether such franchises have been exercised
in a lawful manner, with a due regard to its own laws.
Being subject to this dual sovereignty, the General
Government possesses the same right to see that its
own laws are respected as the State would have with
respect to the special franchises vested in it by the
laws of the State. The powers of the General Govern-
ment in this particular in the vindication of its own laws,
are the same as if the corporation had been created by an
act of Congress.

In the light of these authorities, it may be confi-
dently asserted that while Congress may itself
create corporations for the purpose of carrying
on interstate commerce, it may also prescribe rules
and regulations under which a corporation created
by the laws of a State may conduct such commerce,
and that when it does so, such State corporation
may only engage in such commerce upon conformity
with the rules and regulations so laid down by
Congress; and these rules may have reference,
to use the language of Justice Johnson in Gibbons
v. Ogden, not only to the exchange of goods and
commodities, but to the subject, the vehicle, and
the agent of such commerce, and their various
operations.

Now, economists and courts alike have con-

208 The Changing Order

demned the reckless issue of stock and bonds by
railroad companies without adequate considera-
tion, which has come to be generally regarded as
an evil, certainly as demoralizing in its effect upon
the public as the carriage of lottery tickets from
one State to another. The twenty years period of
railroad receiverships and foreclosures, the records
of which fill many volumes of reports of decisions
of the Federal courts, testifies eloquently to the
practical effect of such unwarranted issues of se-
curities upon the ability of railroad companies to
properly perform their functions as instrumentali-
ties of interstate commerce; while the utterance
of stock for inadequate or fictitious considera-
tion, has furnished the opportunity for the most
irresponsible and speculative control of these
highways of commerce, and has resulted in the
injury which always follows a control of property
by those who have no real investment in it. Such
control, all experience demonstrates, will not
generally be exercised in the interest of the road,
and in such manner as to insure the safe, conserva-
tive management necessary to meet the require-
ments of the public and the proper discharge of the
obligations imposed upon the carrier by law. On
the contrary, it is almost inevitable that such con-
trol be employed for purely speculative purposes
and to secure immediate profit to those in tem-
porary control. It is this public aspect which lends
force to the conviction that "watered" and
"bonus stock" is one of the greatest abuses con-

Federal Control of Stocks and Bonds 209

nected with the management of corporations1;
and it is this effect upon the fitness of the carriers
to perform their duties under national legislation
which is relied upon to require and justify Federal
supervision and control of the subject.

Of course, the Federal government cannot con-
fer upon a State corporation power to borrow
money and issue obligations therefor, nor to
create and issue shares of stock. Only the power
which erected the corporation can vest it with
authority for those purposes. But under all the
rules and analogies, to which reference has been
made, Congress assuredly may regulate and re-
strain the State corporation in the exercise of these,
as well as of other, corporate powers, and may
prohibit it from issuing obligations or stock for
any purpose relating to interstate or foreign
commerce, except in accordance with rules and
restrictions prescribed by it for the purpose of
preventing the evils above referred to. In that
respect, the national government, having adopted
the State corporation as an agency of interstate
commerce, may subject it to the same regulations
with respect to the means of raising money for the
purpose of carrying on such commerce, as it could
impose upon a corporation of its own creation.
The end is legitimate, viz., the regulation of
interstate commerce; it is within the scope of the
Constitution. The means suggested are appro-

1 Mitchell, J., in Hospes v. N. W. Mfg. & Car Co., 48 Minn.,
174, 196; see also Handley v. Stutz, 139 U. S., 147-28.

210 The Changing Order

priate to correct an evil which has had in the past
a very real effect upon the ability of these instru-
mentalities to carry on commerce among the States
in conformity with rules and regulations constitu-
tionally established by Congress; and the means
are plainly adapted to that end. On reason, and
on authority, therefore, such legislation is within
the scope of the constitutional power of Congress.

Again, the amount of stock which a carrier cor-
poration may issue, and the extent of the obligations
which it may incur, have a direct effect upon the
determination of the reasonableness of rates of
interstate transportation.

It is a principle of the common law that a com-
mon carrier must charge reasonable rates for his
services, and this is now the express mandate of
the Federal statute under which the power of
fixing the maximum rate to be charged is devolved
upon the Interstate Commerce Commission. It
is, however, well settled that in the exercise of this
power — as in the exercise of similar powers con-
ferred by State laws upon the State commissions —
the carrier may not be deprived of a reasonable
return upon its invested capital, because this
would be, in effect, the confiscation of private
property for public use ; or, in case of State action,
would tend to deprive the corporation — a person
within the meaning of the Fourteenth Amend-
ment— of property without due process of law.1

1 Railroad Commission cases, 116 U. S.f 307; Smyth v. Ames,
169 U. S., 466, 522.

Federal Control of Stocks and Bonds 211

In Chicago, Milwaukee, & St. Paul Railway
Company v. Minnesota1 the Court said:

If the company is deprived of the power of charging
reasonable rates for the use of its property, and such
deprivation takes place in the absence of an investiga-
tion by judicial machinery, it is deprived of the lawful
use of its property, and thus, in substance and effect,
of the property itself, without due process of law and
in violation of the Constitution of the United States;
and in so far as it is thus deprived, while other persons
are permitted to receive reasonable profits upon their
invested capital, the company is deprived of the equal
protection of the laws.

In Reagan v. Farmers Loan & Trust Company, a
which involved the question of the validity of
railroad rates established by the State Board of
Railroad Commissioners in Texas, the Court, in
determining the question whether or not the rates
prescribed were so unjust and unreasonable as to
work a practical destruction to rights of property
of the company affected thereby, entered upon an
examination of the amount of stocks and bonds
of the company outstanding which "were issued
for and represent value." As a result of such
inquiry, the Court found that the rates were "not
sufficient to enable the company to pay all the
interest on the bonds;" that the bonds and stock
outstanding represented money invested in the
construction of this road;

* 134 U. S., 418. » 154 u. S., 362.

212 The Changing Order

that the owners of the stock have never received a
dollar's worth of dividends in return for their invest-
ment. The road was thrown into the hands of a
receiver for default in payment of the interest on the
bonds. The earnings for the last three years prior
to the establishment of these rates were insufficient
to pay the operating expenses and the interest on the
bonds . . .

and that the operation of the tariff sought to be
enjoined so reduced the receipts as to be unjust and
unreasonable. The defendants therefore were en-
joined from enforcing the rates established by them.
In Smyth v. Ames1 the Court in determining
the validity of rates prescribed by the Railroad
Commission of the State of Nebraska, said:

If a railroad corporation has bonded its property
for an amount that exceeds its fair value, or if its
capitalization is largely fictitious, it may not impose
upon the public the burden of such increased rates
as may be required for the purpose of realizing profits
upon such excessive valuation or fictitious capitaliza-
tion; and the apparent value of the property and
franchises used by the corporation, as represented by
its stocks, bonds and obligations, is not alone to be
considered when determining the rates that may be
reasonably charged.

Again:

We hold, however, that the basis of all calculations
as to the reasonableness of rates to be charged by a

1 169 U. S., 466.

Federal Control of Stocks and Bonds 213

corporation maintaining a highway under legislative
sanction must be the fair value of the property being
used by it for the convenience of the public. And in
order to ascertain that value, the original cost of
construction, the amount expended in permanent
improvements, the amount and market value of its
bonds and stock, the present as compared with the
original cost of construction, the probable earning
capacity of the property under particular rates pre-
scribed by statute, and the sum required to meet
operating expenses, are all matters for consideration,
and are to be given such weight as may be just and
right in each case.

This necessarily elaborate and tedious inquiry
concerning the consideration for outstanding bonds
and stock, which is always a subject pressed for
consideration in such cases, would be entirely
obviated, and the work of the Interstate Commerce
Commission greatly facilitated, if before stock
and bonds were issued the consideration were
ascertained by the Commission to be full and
adequate.

In Knoxville v. Water Company,1 in determining
the validity of an ordinance of a city fixing the
maximum rates to be charged for water by the
defendant company, counsel for the company
urged "rather faintly," says Justice Moody in
writing the opinion, that the capitalization of the
company ought to have some influence in the case
in determining the value of the property. But the

«2I2U. S., I.

214 The Changing Order

Court said that it was a sufficient answer to the
contention —

that the capitalization is shown to be considerably in
excess of any valuation testified to by any witness, or
which can be arrived at by any process of reasoning.
The cause for the large variation between the real
value of the property and the capitalization in bonds
and preferred common stock is apparent from the
testimony. All, or substantially all, the preferred
and common stock was issued to contractors for the
construction of the plant, and the nominal amount
of the stock issued was greatly in excess of the true
value of the property furnished by the contractors.

The fact is, that while the amount of the issued
stock and bonds is not controlling upon the Court
in determining the effect of the establishment of
rates by a body delegated with legislative power
over the subject, yet it is always a factor of greater
or less importance, and is always the subject of
inquiry when the reasonableness of an order relat-
ing to rates is under consideration.

The enactment of a law regulating the issue of
stocks and bonds by railroad companies is not
nearly so radical a step as was the enactment of
the permissive act of 1866, or the Interstate Com-
merce Act of 1887. It certainly goes no further
than the acts regulating the ownership and devo-
lution of interests in ships employed in interstate or
foreign commerce, and involves no principle so
new and startling as the acts regulating the hours

Federal Control of Stocks and Bonds 215

of labor of employees, the relations between the
railroad companies and their employees, or of the
act of Congress prohibiting a railroad company
to carry from one State to another pursuant to
power vested in it by the State of its creation, a
commodity which it has produced and owns.

The growing strength of the National Government
in the United States [says Mr. Bryce] is largely due to
sentimental forces that were weak a century ago, and
to a development of internal communications which
was then undreamt of. *

In the debates in 1865 over the bill to authorize
the Cleveland and Mahoning Railroad Co., an
Ohio corporation, to construct its railroad from the
village of Youngstown, Ohio, to and into the State
of Pennsylvania to the city of Pittsburg, to estab-
lish it as a military, postal, and commercial railway
of the United States, and to guarantee its rights,
Representative Bland argued against the measure
lest it should prove a stepping-stone to the
formation of great congressional corporations,
strike down the rights of the States, and be the
entering wedge of centralized government. Sim-
ilar opposition has been made to every progressive
measure of commerce regulation. But the cen-
tralizing tendency steadily has gone on, and the
control of Congress over interstate railroad com-
panies has been exercised in an increasingly
comprehensive manner. Such progress is insep-

x The American Commonwealth, i., p. 358, 3d ed.

216 The Changing Order

arable from growth. The great arteries of com-
munication between different parts of the country
and the instrumentalities which control their
operation can only be properly regulated in the
public interest by the central national power;
a power which is sovereign, which is exclusive
when exercised ; and which should be exercised to
correct every evil of a public character which
experience demonstrates to be susceptible of cor-
rection only by national legislation.

XII

NEW STATES AND CONSTITUTIONS1

CURRENT discussion in and out of Congress
concerning the admission as States of the
Territories of Arizona and New Mexico has taken
a wide range, and has involved much debate
concerning the nature and effect of many of the
provisions contained in the constitutions proposed
by the new States respectively, not only as applic-
able to them, but as institutional features which
may be applied to other communities.

That a frequent recurrence to fundamental
principles is necessary to preserve the blessings
of liberty and keep government free, is recognized
and declared in the constitutions of more than
one of the States. 2

It is a fortunate circumstance, therefore, that
the nature of these proposed constitutions should
have been so prominently brought before the

1 Address before the Law School of Yale University, June 19,
1911.

aSee, e. g.t constitution of Vermont, 1777, Chap. I., par. XVI.;
Virginia Bill of Rights, 1776, Sec. 15; New Hampshire consti-
tution of 1792, Parti., Art. 38; Pennsylvania constitution of
1776, Declaration of Rights, Sec. XIV.

217

2i 8 The Changing Order

people as to provoke discussion, not only of their
provisions, but of the fundamental principles
upon which our system of government is founded
and maintained, and of the nature and effect upon
them of the conceptions underlying the organiza-
tion of one at least of these proposed new States,
and which, to a certain extent, already have been
adopted in some of the admitted States. *

While a free, enterprising, and progressive people
will not reject improvements simply because they
are new or untried, yet thoughtful Americans
must ever consider any radical changes proposed
in their government, state or national, in the
light of Washington's warning to resist with care
the spirit of innovation upon the principles of the
institutions established by the Constitution of the
United States, lest alterations in the forms of our
fundamental structures of government "impair
the energy of the system and undermine what
cannot be directly overthrown."

The Constitution of the United States estab-
lished a union of thirteen States, each of which had
been separately organized under a government
republican in form; that is to say, a government
in which it was recognized that the ultimate
sovereignty resided in the adult male people — with
some exceptions, differing in different States, de-
pendent upon color, race, condition of servitude,
or property qualifications. This sovereignty was

1 Constitution of Michigan, 1909, Art. XVII; Constitution of
Oklahoma, Art V.; Oregon, Laws of 1903, p. 244.

New States and Constitutions 219

exercised by means of a general scheme of govern-
ment under which (1) a constitution or funda-
mental law was formulated by delegates chosen
from among the qualified voters, in some cases
empowered to ordain and establish the constitu-
tion as binding upon all the people, and in others
merely to submit it, when formulated, for popular
approval, under conditions making the same bind-
ing upon all, if affirmatively approved by the votes
of a specified percentage of the qualified male
voters ; and (2) within the limitations prescribed in
such constitutions, laws were made by representa-
tives periodically chosen for such purpose, generally
distributed between two legislative bodies having
different tenures and qualifications; all laws to be
executed by governors and other executive officials
chosen for limited periods by popular vote, or
appointed by those so chosen ; the laws to be inter-
preted and applied by judges, generally appointed
to hold office during good behavior, but subject
to removal on joint address of both branches of the
legislature, or in proceedings for impeachment.

Differing in many details, the governments of
all the thirteen States in their general outlines were
conformable to the foregoing description, and
were all denominated republican.

The Constitution provided in Section 3 of Article
IV.:

New States may be admitted by the Congress into
this Union; but no new States shall be formed or

220 The Changing Order

erected within the jurisdiction of any other State;
nor any State be formed by the junction of two or more
States, or parts of States, without the consent of the
Legislatures of the States concerned, as well as of the
Congress.

By Section 4:

The United States shall guarantee to every State
in this Union a republican form of government, and
shall protect each of them against invasion; and on
application of the Legislature, or of the Executive
(when the Legislature cannot be convened), against
domestic violence.

The general purpose of the provisions in Section
4 was indicated in the debate over them in the
Constitutional Convention. Mr. Randolph said
they had two objects: (1) to secure republican
government, (2) to suppress domestic commotions.
He urged the necessity of both these provisions.
Mr. Madison moved to substitute "that the
Constitutional authority of the States shall be
guaranteed to them respectively agst. domestic
as well as foreign violence." But other delegates
objected to this as perpetuating the existing con-
stitutions of the States, some of which Mr. Houston
thought were very bad and ought to be revised and
amended. In reply to a suggestion that the
States should be left to suppress their own rebel-
lions, Mr. Gorham thought it would be very
strange were a rebellion known to exist and the
general government restrained from subduing it.

New States and Constitutions 221

At this rate [he said], an enterprising Citizen might
erect the standard of Monarchy in a particular State,
might gather together partizans from all quarters,
might extend his views from State to State, and
threaten to establish a tyranny over the whole, &
the Genl. Govt, be compelled to remain an inactive
witness of its own destruction. With regard to
different parties in a State [he humorously added], as
long as they confine their disputes to words they will
be harmless to the Genl. Govt. & to each other.1

Chief Justice Taney, in delivering the opinion
in Luther v. Borden,2 said that under the above
quoted provision of the Constitution —

it rests with Congress to decide what government is
the established one in a State. For as the United
States guarantee to each State a republican govern-
ment, Congress must necessarily decide what govern-
ment is established in the State before it can determine
whether it is republican or not. And when the sena-
tors and representatives of a State are admitted
into the councils of the Union, the authority of the
government under which they are appointed, as well
as its republican character, is recognized by the proper
constitutional authority. And its decision is binding
on every other department of the government, and
could not be questioned in a judicial tribunal.

"The guaranty," said Chief Justice Waite in a
later case3 —

1 Records of the Federal Convention, Farrand, vol. ii., p. 48.

2 7 Howard, 1-42.

3 Minor v. Happersett, 21 Wall., 162, 175.

222 The Changing Order

is of a republican form of government. No particular
government is designated as republican, neither is the
exact form to be guaranteed, in any manner especially
designated. Here, as in other parts of the instrument,
we are compelled to resort elsewhere to ascertain
what was intended.

The guaranty necessarily implies a duty on the part
of the States themselves to provide such a govern-
ment. All the States had governments when the
Constitution was adopted. In all, the people partici-
pated to some extent, through their representatives,
elected in the manner specially provided. These
governments the Constitution did not change. They
were accepted precisely as they were, and it is, there-
fore, to be presumed that they were such as it was the
duty of the States to provide. Thus we have unmistak-
able evidence of what was republican in form, within the
meaning of that term as employed in the Constitution.

The general scheme of government running
through the constitutions of all the eleven States
which had adopted constitutions at the time of the
adoption of the Federal Constitution, the salient
outlines of which have been indicated, and even
that embodied in or established under the char-
ters of Connecticut and Rhode Island, constituted
the American system of republican government
which Chief Justice Fuller in In Re Duncan1
said was that whose distinguishing feature —

is the right of the people to choose their own officers
for governmental administration and pass their own

1 139 U. S., 449, 461.

New States and Constitutions 223

laws in virtue of the legislative power reposed in
representative bodies, whose legitimate acts may be
said to be those of the people themselves.

The nature of the governments established in
the States is therefore a matter of necessary con-
cern to Congress, for it must guarantee to each
State a republican form of government, and as
the national government must also protect every
State against domestic violence, common prudence
requires a careful scrutiny of the qualifications of
a new applicant for admission to the family of
States, in order to determine whether or not its elec-
torate is properly qualified to maintain stable and
peaceable conditions under the particular form of
republican government which it proposes to adopt.

The Council of Safety, meeting at Halifax,
North Carolina, on August 9, 1776, recommended
to the people of that "now Independent State"
the election of delegates to represent them in
Congress, and that the greatest attention be paid
to such election, particularly in view of this impor-
tant consideration:

That it will be the Business of the Delegates then
Chosen not only to make Laws for the good govern-
ment of, but also to form a constitution for, this
State; that this last, as it is the Corner Stone of all
Law, so it ought to be fixed and Permanent, and that
according as it is well or ill Ordered, it must tend in
the first degree to promote the happiness or Misery
of the State.1

1 Lobingier, The People's Law, p. 152.

224 The Changing Order

Among the principles which the political expe-
rience of the colonists had supplied was "the idea
of a constitution superior to legislative enact-
ments, and of certain natural rights secured by
such a constitution/*1

" Unquestionably/ ' says Professor George El-
liott Howard in his introduction to Judge Lobin-
gier's interesting work entitled The People's Law,
or Popular Participation in Law-Making, — "Un-
questionably the American people have made three
great contributions to the political organism and
to political science : the constitutional convention,
the written constitution, and constitutional law. "
He further points out that while each of these
institutions has an earlier history more or less
distinct, yet that

as a distinct political organ, with a special function to
perform — an organ to be compared to a court, an
executive, or a legislature — the constitutional con-
vention was born and developed in America. As a
representative body, created according to definite
principles to discharge a single special function, that
of enacting organic as opposed to mere statute law,
it first made its appearance, fully differentiated, in
the Massachusetts convention of 1780 (the type of
subsequent state constitutional conventions) and in
the national convention of 1787. Since then it has
gained its own law and its own literature, and it has
taken its proper place in the Staatsrecht of the world.

1 Dodd, The Revision and Amendment of State Constitutions,
p. 2.

New States and Constitutions 225

In like manner, he says, while in English and
Colonial history there were forerunners of consti-
tutions—

Nevertheless, the written constitution as an actuality,
as a recognized and permanent form of organic law, is
essentially the product of American political evolution.

Hence Professor Stimson says:

The Constitution is the permanent will of the
people ; a law is but the temporary act of their repre-
sentatives, who have only such power as the people
choose to give them.1

It was in the light of these principles that the
constitution of Massachusetts was framed in 1780
— that constitution which has been described as
4 'the most perfect expression of the American the-
ory as understood at the close of the Revolution,' '
and which has not only remained as the funda-
mental law of the great Commonwealth of Massa-
chusetts to this day, but which has also served
as a model for many others. It has called forth
the highest encomiums from even the advocates
of latter-day democracy2 and must ever remain
a monument to the patriotism, sagacity, and states-
manship of the illustrious men who framed it.

With even greater patience, skill, and foresight
the delegates to the National Convention of 1787
wrought out a Constitution for the union of States.

1 The American Constitution p. 7.
a See Lobingier, pp. 171, 177-9.
15

226 The Changing Order

They sought to construct a fundamental law for the
Union with the same view to permanence and stabil-
ity as that with which the Massachusetts constitu-
tion was framed ; in order to secure the blessings of
liberty and good government , not only to themselves,
but to their posterity. Justice Story said of it:

The constitution unavoidably deals in general lan-
guage. It did not suit the purposes of the people, in
framing this great charter of our liberties, to provide
for minute specifications of its powers, or to declare
the means by which those powers should be carried
into execution. It was foreseen that this would be
a perilous and difficult, if not an impracticable, task.
The instrument was not intended to provide merely
for the exigencies of a few years, but was to endure
through a long lapse of ages, the events of which were
locked up in the inscrutable purposes of Providence.
It could not be foreseen, what new changes and
modifications of power might be indispensable to
effectuate the general objects of the charter; and
restrictions and specifications, which, at the present,
might seem salutary, might, in the end, prove the
overthrow of the system itself. Hence, its powers
are expressed in general terms, leaving to the legis-
lature, from time to time, to adopt its own means to
effectuate legitimate objects, and to mould and model
the exercise of its powers, as its own wisdom, and the
public interests should require. «

In providing in the Constitution for the admis-
sion of new States, it was specified that they might

1 Martin v. Hunter, I Wheat., 304-26.

New States and Constitutions 227

be admitted as States "into this Union." There
was to be no discrimination between them and the
original thirteen States. This was the deliberate
conclusion of the Convention. Various proposi-
tions looking to a different result were submitted. s
Gouverneur Morris suggested that "the rule of
representation ought to be so fixed as to secure to
the Atlantic States a prevalence in the national
councils. " Elbridge Gerry expressed a like view. 2
It was proposed by another to apportion represen-
tation among the States "upon the principles of
their wealth and number of inhabitants." But
the contrary view prevailed.

What Congress understood this constitutional
provision to mean, was shown when Vermont and
Kentucky, the first two States to be admitted, were,
by acts of Congress passed respectively March 4,
1 79 1, and June 1, 1792, each, "received and
admitted into this Union as a new and entire
member of the United States of America.' '
Tennessee was admitted in 1796 as "one of the
United States of America," "on an equal footing
with the original States in all respects whatso-
ever;" and substantially the same language was
employed with respect to all the States subse-
quently admitted.

It is the almost universal judgment of our people
that the convention decided wisely in providing
for the admission of States without discrimination

1 Elliott's Debates, vol. v., pp. 155-6, 128, 228.
3 Ibid., pp. 279, 310.

228 The Changing Order

between the original and the later ones, but it is
interesting to note in passing that the fundamental
laws for the creation of the three other great
federations of English-speaking states — those of
British North America, Australasia, and South
Africa — all contain provisions authorizing the
federal parliament to admit new states upon such
conditions as it may deem expedient to impose, and
to discriminate as between the original members
of the union and those subsequently admitted. '

No uniformity of procedure to be observed in
the admission of States was established by the
Constitution, nor has resulted from common prac-
tice. A constitution was adopted by the Legisla-

1 Commonwealth of Australia Constitution Act, July 9, 1900,
Chap. VI.—

"121. The Parliament may admit to the Commonwealth
or establish new States, and may upon such admission or
establishment make or impose such terms and conditions,
including the extent of representation in either House of
Parliament, as it thinks fit."

Modern Constitutions, by W. F. Dodd, vol. i., p. 65. The
Constitution of Australia, by W. H. Moore, Melbourne, 1910.

The British North America Act (March 29, 1867), Section
146 —

" . . .on such terms and conditions in each case as
are in the addresses expressed and as the queen thinks fit to
approve, subject to the provisions of this act."

The British North America Act, 1871. The British North
America Act, 1886. Modern Constitutions, pp. 220, 221, 224.

South Africa Act, 1909, Sees. 149-150 — "on such terms
and conditions as to representation and otherwise in each case
as are expressed in the addresses and approved by the King.
..." Brand, The Union of South Africa, Oxford, 1909.

New States and Constitutions 229

ture of Vermont in March, 1787, which, after
reciting that —

it is absolutely necessary, for the welfare and safety
of the inhabitants of this State, that it should be
henceforth a free and independent State, and that a
just, permanent, and proper form of government
should exist in it, derived from and founded on the
authority of the people only, agreeable to the direction
of the honourable American Congress,

declared that —

We, the Representatives of the freemen of Vermont,
in General Convention met, ... do, by virtue of
authority vested in us by our constituents, ordain,
declare and establish the following Declaration of
Rights and Frame of Government, to be the Constitu-
tion of this Commonwealth, and to remain in force
therein forever unaltered, except in such articles as
shall hereafter on experience be found to require
improvement, and which shall, by the same authority
of the people, fairly delegated, as this Frame of
Government directs, be amended or improved, for the
more effectual obtaining and securing the great end
and design of all government hereinbefore men-
tioned.1

The act of Congress approved February 18,
1 79 1, merely recites that the State of Vermont has
petitioned Congress "to be admitted a member
of the United States," and enacts that on
March 4, 1791, the said State "be received and

1 Thorpe's American Charters, etc., vol. vi., p. 3751.

230 The Changing Order

admitted into this Union as a new and entire
member of the United States of America."

The act admitting Kentucky into the Union,
passed February 4, 1791,1 recited that the Com-
monwealth of Virginia had consented that the
District of Kentucky, within its jurisdiction,
should be formed into a new State, and that a con-
vention of delegates, chosen by the people of the
district, had petitioned Congress to consent, and
it was thereupon enacted that the said district
be formed into a new State, separate from and
independent of Virginia, and be received and
admitted into the Union "as a new and entire
member of the United States of America."

The act of June 1, 1796, declared that

The whole of the territory ceded to the United
States by the State of North Carolina shall be one
State, and the same is hereby declared to be one of the
United States of America, on an equal footing with the
original States in all respects whatever, by the name
and title of the State of Tennessee.2

A constitution had been adopted for that State
in February, 1796, but no reference to it is con-
tained in the act admitting the State into the
Union.

The first enabling act of Congress, or act specifi-
cally authorizing the inhabitants of a portion of
territory to form for themselves a constitution and
State government upon which to be admitted into

1 Poore, Charters and Constitutions, vol. i., p. 647. a Id. vol ii.,
1676.

New States and Constitutions 231

the Union, was that providing for the admission
of the State of Ohio, approved April 30, 1802. *
It authorized:

All male citizens of the United States, who shall have
arrived at full age, and resided within the said territory
at least one year previous to the day of election, and shall
have paid a territorial or county tax, and all persons hav-
ing in other respects the legal qualifications to vote for
representatives in the general assembly of the territory,

to choose representatives to form a convention, to
first determine by a majority of the whole number
elected whether it be expedient to form a constitu-
tion and State government, and if so, by ordinance
to provide for electing representatives to form a
constitution or frame of government, "provided
the same shall be republican and not repugnant
to " the Ordinance for the government of the North-
western Territory. The convention so authorized
met and framed a constitution, which was not sub-
mitted to the people,2 but Congress, by act approved
February 19, 1803, declared that the State of Ohio
had become one of the United States of America. 3, 4

1 Poore, Charters and Constitutions, vol. ii., p. 1453. a Id., 1455.

3 Id., 1464.

4 The Ordinance of 1787 for the government of the Northwest-
ern Territory provided in Article V. for the formation of States and
their admission into the Union, and that whenever any of said
States should have sixty thousand free inhabitants therein, they
should be at liberty to form a permanent constitution and State
government, "Provided, the Constitution and government so to
be formed shall be republican, and in conformity to the principles
contained in these articles. . . . "

232 The Changing Order

The first effort to bind a new State to terms and
conditions other than those to which it would be
subject in like manner as all other States under
and by force of the provisions in the Constitution
of the United States was expressed in the Enabling
Act for Louisiana, passed February 20, 181 1.1

That act authorized

all free white male citizens of the United States, who
shall have arrived at the age of twenty-one years,
and resided within

the territory described in the act

at least one year previous to the day of election, and
shall have paid a territorial, county, district or parish
tax : and all persons having in other respects the legal
qualifications to vote for representatives in the general
assembly of the said territory,

to choose representatives to form a convention to
frame a constitution and State government for the
people within the territory, and by Section 3 that
if it be determined to be expedient so to do, then
the convention might

in like manner declare, in behalf of the people of the
said territory, that it adopts the constitution of the
United States; whereupon the said convention shall
be, and hereby is, authorized to form a constitution
and state government, for the people of the said terri-
tory: Provided, the constitution to be formed, in
virtue of the authority herein given, shall be republi-

1 2 Stat., 641.

New States and Constitutions 233

can, and consistent with the constitution of the United
States; that it shall contain the fundamental prin-
ciples of civil and religious liberty; . . . *

besides certain other specified provisions.

It was further provided that if such constitution
should be adopted by the State, it should be trans-
mitted to Congress, and if it were not disapproved
by Congress at its next session after receipt thereof,
the said State should be admitted into the Union
upon the same footing with the original States.
A constitution was adopted by the convention in
conformity with the provisions of the Enabling Act,
and, on April 8, 18 12, Congress passed an act
reciting compliance with the previous requirements
and declaring that the said State was admitted into
the Union,

on an equal footing with the original states, in all
respects whatever, by the name and title of the State
of Louisiana : Provided, That it shall be taken as a con-
dition upon which the said state is incorporated in the
Union, that . . . all . . . conditions and terms
contained in the third section of the act, the title
whereof is hereinbefore recited, shall be considered,
deemed and taken, fundamental conditions and terms,
upon which the said state is incorporated in the
Union.2

In the case of Permoli v. First Municipality 3 it
was sought to have it adjudged that an ordinance
of the First Municipality of the City of New

1 2 Stats, at L., 642. a Id., 703. a Howard, 588.

234 The Changing Order

Orleans prohibiting the carrying to or exposing in
any of the Catholic churches of that municipality
any corpse, or the celebration by any priest of a
funeral at such churches, and requiring all funeral
rites to be performed in a designated obituary
chapel, was void, as being in violation of the pro-
visions of the above-mentioned Enabling Act, as
well as of the act admitting the State into the
Union upon condition that its constitution should
contain the fundamental principles of civil and
religious liberty. But the Court pointed out that
the Constitution of the United States makes no
provision for protecting the citizens of the respec-
tive States in their religious liberties, leaving that
subject entirely to the State constitutions and
laws; that all that Congress intended by the Enab-
ling Acts was to declare in advance, to the people
of the territories, the basic principles their con-
stitutions should contain:

. . . this was every way proper under the circum-
stances [said Mr. Justice Catron]; the instrument
having been duly formed and presented, it was for the
national legislature to judge whether it contained
the proper principles, and to accept it if it did, or
reject it if it did not. Having accepted the con-
stitution and admitted the state, "on an equal footing
with the original states in all respects whatever,"
in express terms, by the act of 1812, Congress was
concluded from assuming that the instructions con-
tained in the act of 181 1 had not been complied with.
No fundamental principles could be added by way of

New States and Constitutions 235

amendment, as this would have been making part of
the state constitution; if Congress could make it in
part, it might, in the form of amendment, make it
entire. The conditions and terms referred to in the
act of 1 8 12, could only relate to the stipulations con-
tained in the second proviso of the act of 181 1 involv-
ing rights of property and navigation; and in our
opinion were not otherwise intended.

A similar question arose in the case of Pollard's
Lessee v. Hagan, x where it was held that a declara-
tion contained in the compact entered into between
the United States and Alabama, when the latter
State was admitted into the Union, as a condition
to her admission, would be void if inconsistent
with the Constitution of the United States.

It was pointed out by the Court that all con-
stitutional laws are binding on the people in the
new States and the old ones, whether they consent
to be bound by them or not.

Every constitutional act of Congress [said Mr.
Justice McKinley] is passed by the will of the people
of the United States, expressed through their repre-
sentatives, on the subject-matter of the enactment;
and when so passed it becomes the supreme law of the
land, and operates by its own force on the subject-
matter in whatever state or territory it may happen
to be.

Notwithstanding these decisions, rendered in
1845, and the very clear provisions of the Con-

1 3 How., 212.

236 The Changing Order

stitution, Congress has proceeded in many sub-
sequent acts for the admission of new States to
prescribe terms and conditions purporting to bind
the new State, which conditions the new State was
required to accept by ordinance expressed to be
"irrevocable without the consent of the people of
the State and of the United States." Such con-
ditions were imposed with respect to Missouri in
1821 (3 Stat., 645), Nebraska in 1864 (13 Stat., 47),
Colorado in 1875 (18 Stat., 474), North Dakota,
South Dakota, Montana, and Washington in 1889
(25 Stat., 676), Utah in 1894 (28 Stat., 107), and
Oklahoma in 1906 (34 Stat., 267).

The Enabling Act of the State of Oklahoma,
passed June 16, 1906 (34 Stat. 267), provided
that the constitution to be adopted for the new
State

shall be republican in form, and make no distinction
in civil or political rights on account of race or color,
and shall not be repugnant to the Constitution of the
United States and the principles of the Declaration
of Independence.

The capital of the State, it was enacted, shall
be temporarily at Guthrie, and shall not be
changed therefrom previous to 191 3, but shall
after that year be located by the electors of said
State at an election to be provided for by the
Legislature.

The act further required the convention to
provide in the constitution so to be adopted :

New States and Constitutions 237

First. That perfect toleration of religious senti-
ment shall be secured, and that no inhabitant of said
State shall ever be molested in person or property
on account of his or her mode of religious worship,
and that polygamous or plural marriages are forever
prohibited.

Second. That the manufacture, sale, barter, giv-
ing away, or otherwise furnishing . . . intoxicat-
ing liquors within those parts of said State, now known
as the Indian Territory and the Osage Indian Reserva-
tion, and within any other parts of said State which
existed as Indian reservations . . . [shall be pro-
hibited.]

Sixth. That said State shall never enact any law
restricting or abridging the right of suffrage on account
of race, color, or previous condition of servitude.

And finally,

That the constitutional convention provided for
herein shall, by ordinance irrevocable, accept the
terms and conditions of this Act.

The convention was held, a constitution and an
"ordinance irrevocable" adopted, and thereupon
Oklahoma was admitted to the Union by pro-
clamation of President Roosevelt, November 16,
1907. Three years later, on December 29, 1910,
its Legislature passed an act providing for the
removal of the capital from Guthrie to Oklahoma
City, notwithstanding its covenant with the United
States not to so remove prior to 19 13. Whatever

238 The Changing Order

might be said of the ethics of this act, the Supreme
Court of the United States in the very recent case
of Coyle v. Smith, decided May 29, 191 1, ' held that
the power to locate its own seat of government and
to determine when and how it should be changed
from one place to another was essentially and
peculiarly a State power, which was acquired by
Oklahoma when it was admitted into the Union
on an equality with the other States, and that
Congress might not, as a condition to the admis-
sion of a new State, constitutionally restrict its
authority or impose upon it any limitations not
common to the other States of the Union. "It
may well happen," said Mr. Justice Lurton, in
delivering the opinion of the Court,

that Congress should embrace in an enactment intro-
ducing a new State into the Union legislation intended
as a regulation of commerce among the States or with
Indian tribes situated within the limits of such new
State, or regulations touching the sole care and dis-
position of the public lands or reservations therein,
which might be upheld as legislation within the sphere
of the plain power of Congress. But in every such
case such legislation would derive its force not from any
agreement or compact with the proposed new State,
nor by reason of its acceptance of such enactment as a
term of admission, but solely because the power of
Congress extended to the subject, and, therefore,
would not operate to restrict the State's legislative
power in respect of any matter which was not plainly
within the regulating power of Congress.
1 221 U. S., 559.

New States and Constitutions 239

An interesting variation from the rules observed
with respect to the admission of all other States
is furnished by the case of the State of Utah.
It is familiar history that the especial problem
with which the national government had to grapple
during the territorial days of Utah, was the institu-
tion of polygamy, or plural marriages, a problem
which led to the drastic legislation of Congress
repealing the charter of the "Church of Jesus
Christ of Latter Day Saints," commonly known
as the Mormon Church, the appointment of a
receiver of its property and the application of it
on principles of cy pres — all of which were sustained
by the Supreme Court of the United States in the
case of Mormon Church v. United States. x When,
therefore, Congress came to deal with the estab-
lishment of a government for Utah, upon its
admission as a State into the Union, it provided
for the formation of a constitution and State
government for the proposed State which should
be "republican in form and make no distinction
in civil or political rights on account of race or
color, except as to Indians not taxed, and not to be
repugnant to the Constitution of the United States
and the principles of the Declaration of Independ-
ence." The Enabling Act further required the
constitutional convention to provide by ordinance,
irrevocable without the consent of the United
States, and the people of said State, among other
things,

1 136 U. S., 1.

240 The Changing Order

That perfect toleration of religious sentiment shall
be secured and that no inhabitant of said State shall
ever be molested in person or property on account of
his or her mode of religious worship: Provided, That
polygamous or plural marriages are forever prohibited.

The constitutional convention thereupon framed
and the people adopted a constitution, which con-
tained in itself, as Article 3 thereof, the above-
mentioned required provisions, and declared that
such provisions "shall be irrevocable without the
consent of the United States and the people of
this State." Nevertheless, by the twenty-third
article of the constitution, provision was made for
the adoption of any amendment to the constitu-
tion without exception, by the vote of two thirds
of the members of each house of the Legislature,
and of a majority of the electors of the State
voting thereon. So that this so-called irrevocable
ordinance thus stipulated in one part of the con-
stitution to be beyond change without the con-
sent of the United States and the people of the
State, under the subsequent articles may be
modified or repealed at any time by the vote of a
majority of each house of the Legislature of the
State, confirmed by that of a majority of the
qualified electors voting thereon. Perfect toler-
ation of religious sentiment, and the prohibition of
polygamous or plural marriages, sought to be
accomplished by Congress, therefore rest for their
continuance, not upon any binding compact
between the State and the general government,

New States and Constitutions 241

but solely upon the continued willingness of a
majority of the qualified electors of the State to
retain such provisions as a part of its fundamental
law.

It is well to keep clearly in mind the precise
conditions under which new States are admitted
into the Union, and the powers and privileges
which they will possess after such admission, in
determining whether or not a particular applicant
shall be received into full fellowship in the nation.

Prior to the admission of the State of Oklahoma
no radical departure in the general scheme of
State government from the recognized common
standard was proposed by the constitution of any
new State. Every one of them, judged' by the
principles above referred to, and tested by the
general schemes embodied in the constitutions of
the original States, could be fairly said to be
republican in character, and to contain nothing
inconsistent with the principles of the Federal
Constitution. Every one presented a government
which in general conformed to the type which
has become recognized as the American representa-
tive republican form of government.

The constitution of Oklahoma presented new
considerations, and was the occasion of much
discussion and considerable hesitation over its
approval.

The special census of Oklahoma and Indian
Territory which were combined into the State
of Oklahoma, taken as of July 1, 1897, showed a
16

242 The Changing Order

total population of 1,414,042. Of this number,
334,035 were white males upwards of twenty-one
years of age. The vote on the adoption of the
Constitution was, for its adoption, 180,333;
against it, 75,059; total, 253,392. The total vote
was therefore upwards of seventy-five per cent,
of the entire number of adult white males, and
the total vote on the constitution was nearly
nineteen per cent, of the entire population. It
obviously met with the approval of the general
body of the people of the State. By proclamation
dated November 16, 1907, President Roosevelt
declared that —

The said constitution and government of the pro-
posed State of Oklahoma are republican in form, and
that the said constitution makes no distinction in civil
or political rights on account of race or color and is
not repugnant to the Constitution of the United States
or to the principles of the Declaration of Independence,
and that it contains all of the six provisions expressly
required by Section 3 of the said act to be therein
contained1 . . .

and declared it to be admitted as a State into the
Union.

Mr. Bryce, in The American Commonwealth ,
notes that the chief of the tendencies revealed by
the constitutions of the last forty years is for the
constitutions to grow longer. This, he says, is
an absolutely universal rule.2 Woodrow Wil-

* 35 Stat., Part 2, p. 2 161. » Vol. i„ p. 454 (3d ed.).

New States and Constitutions 243

son says in his work, The State: "The danger
is that constitution making will become with us
only a cumbrous mode of legislation."1 In the
constitution of Oklahoma it has become so.
That constitution is of inordinate length. It is
divided into 24 articles and 312 sections, and it
fills 70 closely printed octavo pages. A large
part of its provisions are matters which may
be the proper subjects of legislation, but which
have no place in the fundamental law, tested by
established American standards. While providing
for a bicameral Legislature, it reserves to the people
powers of initiative and referendum respecting leg-
islation. Eight per cent, of the entire number of
qualified voters are given the right to propose laws,
and fifteen per cent, amendments to the constitu-
tion. The referendum of any law passed by the
Legislature may be ordered by petition signed by
five per cent, of the qualified voters. Percentages
are to be based on the total number of votes cast
at the last preceding general election for the State
officer receiving the highest number of votes cast
at such election. A measure rejected on refer-
endum cannot again be proposed within three
years, except on petition of twenty-five per cent, of
the qualified voters. The constitution may be
amended in any particular, if agreed to by a major-
ity of the members elected to each house, and
then voted for by a majority of all the electors
voting upon the proposition. But it is provided

1 Ed. of 1899, p. 475.

244 The Changing Order

that no convention shall be called by the Legisla-
ture to propose alterations, revisions, or amend-
ments to the constitution, or to propose a new
constitution, unless the law for it be first approved
by the people, on a referendum vote. The question
of such proposed convention must be submitted to
the people at least once in twenty years. These
provisions, however, are not to impair the right of
the people to amend by vote on an intitiative
proposition.

The Oklahoma Enabling Act also provided for
submitting to the people of the Territories of
Arizona and New Mexico the question whether or
not they should become one State, and, if so, then
for a convention to frame a constitution for such
State and to provide for its admission into the
Union. A vote was had on this proposition and
the decision was in the negative.

Subsequently, on June 20, 1910, an act was
passed providing for the admission of the Terri-
tories as separate States.1 This act authorized
the election of delegates in each Territory to a
convention empowered to form a constitution and
provide a government for the proposed State, which
constitution "shall be republican in form and
make no distinction in civil or political rights on
account of race or color, and shall not be repugnant
to the Constitution of the United States and the
principles of the Declaration of Independence."

The convention was further required to provide

1 36 Stats., 557.

New States and Constitutions 245

"by an ordinance irrevocable without the consent
of the United States and the people of said State — "
a number of provisions. The constitution, when
formed, was to be submitted for the approval of the
qualified voters of the Territory at a convention
to be held to consider the same, and

when said constitution and such provisions thereof as
have been separately submitted shall have been duly
ratified by the people of New Mexico as aforesaid a
certified copy of the same shall be submitted to the
President of the United States and to Congress for
approval, together with a statement of the votes cast
thereon and upon any provisions thereof which were
separately submitted to and voted upon by the people.
And if Congress and the President approve said con-
stitution and the said separate provisions thereof, or,
if the President approves the same and Congress fails
to disapprove the same during the next regular session
thereof, then and in that event the President shall
certify said facts to the Governor of New Mexico, who
shall, within thirty days after the receipt of said
notification from the President of the United States,
issue his proclamation for the election of the state and
county officers, etc.

A similar provision was made as to Arizona.

When the result of the election should be cer-
tified to the President, he was required imme-
diately to issue his proclamation announcing the
result of said election so ascertained.

And upon the issuance of said proclamation by the
President of the United States, the proposed state of

246 The Changing Order

New Mexico shall be deemed admitted by Congress
into the Union, by virtue of this Act, on an equal foot-
ing with the other States — s

and in like manner as to Arizona.

There has been some discussion as to the precise
function of the President under these provisions,
and the criteria governing his action in approving
or disapproving the constitution to be submitted
pursuant thereto. It is quite clear that Congress
may not delegate to the President its power to
determine whether or not a State shall be ad-
mitted into the Union. Article 4, Section 4, of
the Constitution declares "New States may be
admitted by the Congress into this Union.' ' But
that Congress may exercise a legislative power
to take effect upon the ascertainment by the
President of a specified fact, is well established.
In such case the President is not exercising a
delegated legislative power, but is the mere agent
of the law-making department to ascertain and
declare the event upon which its expressed will is
to take effect.2 While therefore Congress may
not empower the President to admit a Territory as
a State whenever it shall present to him a con-
stitution which meets with his individual approval,
it may provide for the admission of a State when-
ever it shall adopt a constitution which shall be
republican in form, and make no distinction in

1 36 Stat., 561.

2 See Field v. Clark, 143 U. S., 649, 692; Buttfield v. Stranahan,
192 U. S., 470, 476.

New States and Constitutions 247

civil or political rights on account of race or color,
and shall not be repugnant to the Constitution of
the United States and the principles of the Declar-
ation of Independence ; and empower the President
to ascertain and determine whether a particular
constitution meets that description. If, therefore,
the President should act pursuant to the provisions
of the above-mentioned act, it would be presumably
upon the ascertainment that the constitution
presented met the requirements specified by
Congress; no other consideration being submitted
for his determination. But Congress is not bound
to approve the constitution and admit a State, even
though it do conform with the conditions specified
in the Enabling Act . Congress may , because of the
general nature of the institutions provided in the
proposed constitution; because of the conditions
under which the constitution was adopted ; because
of the character or number of the electorate upon
whose vote it was adopted ; or because of any other
reason which it may deem sufficient, or without any
reason, reject a proposed constitution in toto, or
require it to be modified in any given particular
as a condition to admitting the State.

To be sure, except in so far as it might conflict
with some provision of the Federal Constitution,
the new State might immediately after its admis-
sion into the Union amend its constitution or
adopt a new one, x and Congress would be powerless

1 As Arizona did with respect to provisions for the recall of
judges, after the admission to statehood.

248 The Changing Order

to prevent. Its only protection against such an
act would be to require it to embody provisions so
regulating the means of amendment as to ensure
against hasty or ill-considered changes. Thus,
e. g.y it might require the constitution to provide
that it should only be amended with the consent
of at least a majority of all the qualified voters of
the State.

The constitution of New Mexico was adopted
by the convention and submitted to the people of
that Territory. The returns of the Thirteenth
Census gave New Mexico, in 19 10, a total popula-
tion of 327,301, of which 76,233 were native-born
males over twenty-one years of age, and 4269
naturalized foreign-born males over twenty-one
years of age, making an apparent total voting
population of 80,502. There were cast for the
constitution 31,742 votes; against it 13,399 votes,
or a total of 45,141 on the question of its adoption,
— being about fifty-six per cent, of the total
number of the qualified voters, and slightly less
than fourteen per cent, of the total population.

The constitution so adopted, while exhibiting
the tendency to undue length and minutiae above
noted, yet compares favorably in that respect with
the constitution of Oklahoma. It contains 22
articles divided into 257 sections, and fills 38 ordi-
nary printed octavo pages.

Legislative power is vested in a Legislature
divided into two chambers and there is a provision
reserving to the people the power to disapprove,

New States and Constitutions 249

suspend, and annul any law enacted by the Legis-
lature except appropriation and health laws, etc.
This right must be exercised by petition signed
by not less than ten per cent, of the qualified
electors in each of three fourths of the counties,
and in the aggregate by not less than ten per cent.
of the qualified electors of the State, as shown by
the total number of votes cast at the last preceding
general election. The question of the approval
or rejection of such laws must be submitted to the
electorate at the next general election; and if a
majority of the legal votes cast thereon, and not
less than forty per cent, of the total number of such
votes, be cast at such general election for the rejec-
tion of such law, it shall be annulled and thereby
repealed, with the same effect as if the Legislature
had then repealed it. If such petitions be signed
by not less than twenty-five per cent, of the
qualified electors under each of the foregoing
conditions, and filed with the secretary of state
within ninety days after the adjournment of the
session of the Legislature at which the law was
enacted, the operation of the law shall be thereby
suspended and the question of its approval or
rejection shall be likewise submitted to a general
vote at the next ensuing general election. If a
majority of the votes cast thereon, being not less
than forty per cent, of the total number of votes
cast at such general election be cast for the rejec-
tion of such law, it shall be thereby annulled;
otherwise it shall go into effect. In the matter of

250 The Changing Order

amending the constitution, there is a marked
reaction towards earlier standards. The framers
of this proposed constitution evidently propose
that any changes in it shall be supported by
an active public demand. They have therefore
provided that the constitution may be amended
by the vote of two thirds of all members elected
to each of the two houses of the Legislature, vot-
ing separately, and submitted to the electors of
the State for their approval or rejection. But the
proposal must be ratified by a majority of the
electors voting thereon and by an affirmative vote
equal to at least forty per cent, of all the votes cast
at said election in the State in at least one half
of the counties thereof. In that event, and not
otherwise, such amendment shall become a part
of the constitution. Not more than three amend-
ments may be submitted at one election, and if
two or more amendments are proposed they shall
be so submitted as to enable the electors to vote
on each of them separately. Provision is also
made for a constitutional convention to revise or
amend the constitution, at any time within twenty-
five years by three fourths vote of the members
elected to each house, at any time after twenty-
five years by two thirds votes of the members of
each house; and that in either event the question
of calling a convention shall be submitted to the
electors at the next general election. If a majority
of the electors voting at such election in the State,
and in at least one half of the counties thereof,

New States and Constitutions 251

shall vote in favor of calling a convention, the
Legislature shall at the next session provide by law
for calling the same. The compact with the
United States required by the Enabling Act is
embodied in the twenty -first article of the constitu-
tion, which is declared to be irrevocable without
consent of the United States and the people of
the State ; and that no change or abrogation of its
provisions in whole or in part shall be made by any
constitutional amendment without the consent of
Congress.

This constitution has received the formal
approval of the President and is now before the
Congress. x

In very marked contrast with the constitution
of New Mexico, both as to the number of votes cast
for its adoption, the percentage of the whole
population voting with respect to it, and the
provisions of the constitution itself, is the con-
stitution of Arizona, which was adopted by the
people of that Territory on February 9 , 1 9 1 1 . The
returns of the Thirteenth Census give Arizona
in 1910 a total population of 204,354, of which 155,-

1 By joint resolution of Congress approved Aug. 21, 191 1, the
admission of New Mexico and Arizona respectively was provided
for, conditioned upon the modification in specified particulars of
the tentative constitutions theretofore adopted by them (37
Stats, at L., 39), and by proclamations dated respectively Jan.
6, 1912, and Feb. 14, 1912, President Taft declared that these
conditions had been complied with, and that New Mexico and
Arizona respectively were admitted into the Union on the same
footing as the other States (37 Stats, at L., vol. ii., pp. 1723,
1728).

252 The Changing Order

550 are native born, and 48,804 foreign born. Of
this population, 118,576 are males, and 85,778 are
females. The total number of white males over
twenty-one years of age is 65,133, of which number
39,427 are native born and 5896 naturalized
citizens, so that the total voting population is,
apparently, 45,323. There were cast for the
constitution 12,187 votes, against it 3822 votes,
or a total of 16,009 on the question of its adoption,
being about thirty -five per cent, of the total number
of qualified voters, and slightly less than eight
per cent, of the total population. The vote for
the constitution was by less than twenty-seven
per cent, of the voting population, and about six
per cent, of the total population.

Congress may well consider whether or not a
Territory in which only thirty-five per cent, of the
qualified electors exhibit sufficient interest to vote
upon the adoption of the fundamental law on
which it seeks admission to the Union, gives evi-
dence of that capacity for self-government which
is so essential to the maintenance of free institutions.

The constitution thus adopted by the vote of this
small percentage of the people of Arizona contains
provisions without precedent in any constitution
ever submitted to Congress for approval by an
applicant for admission to statehood. While declar-
ing generally that the powers of the government
shall be divided into three separate departments,
the legislative, the executive, and the judicial,
and vesting the legislative authority in a Legisla-

New States and Constitutions 253

ture consisting of a senate and house of repre-
sentatives, provision is made for the exercise of
legislative power by small percentages of the
qualified electors. Under the power to initiate
legislation, ten per cent, of the qualified electors
are authorized to propose any measure, and
fifteen per cent, to propose any amendment to the
constitution. Under the referendum power, five
per cent, of the qualified electors may order the
submission to the people at the polls of any meas-
ure, or of any item, section, or part of any measure
enacted by the Legislature, except public health
laws, etc.; and no act passed by the Legislature
shall become operative for ninety days after the
close of its session, in order to allow opportunity
for referendum petitions to be filed. Any measure
referred to a vote of the qualified electors under
the initiative or referendum shall become a law
when approved by a simple majority of the votes
cast thereon; and the veto power of the governor
shall not extend to initiative or referendum
measures approved by a majority of the qualified
voters. The total number of all votes cast for all
candidates for governor at the last preceding
general election, is made the basis on which the
number of qualified electors required to sign the
petition shall be computed. These rights of ini-
tiative and referendum are also reserved to the
qualified electors of every incorporated city, town,
and county, as to all local, city, town, or county
matters on which such incorporated cities, towns,

254 The Changing Order

or counties shall be empowered by general laws
to legislate. Under the power of the initiative,
fifteen per cent, of the qualified electors may pro-
pose measures on such matters, and ten per cent,
may propose the referendum on legislation enacted
by or within such city, town, or county. If two
or more conflicting measures or amendments to the
constitution shall be approved by the people at
the same election, the measure or amendment
receiving the highest number of votes shall prevail
in all particulars as to which there is conflict.

It will be observed that there is no requirement
respecting the minimum number of votes which
must be cast, in order that an act of the legislature
may be overruled, or a law directly enacted upon
the initiative, or the constitution amended in any
particular. All that is required is that the measure
shall be proposed, or the machinery set in motion
by the above-mentioned small percentages of
the qualified electors who voted for governor at the
previous election, and then, if a majority of the
votes cast at the popular election is in favor of
the proposed action or measure, it becomes effective,
no matter how small a proportion of the total
electorate of the State may be the vote, and with-
out the slightest regard to its territorial distribu-
tion. Thus, if we should assume that the total of
the vote cast for all candidates for governor at the
last preceding election was that cast upon the
proposition to adopt this proposed constitution,
viz., 16,009, then the constitution could be amended

New States and Constitutions 255

on the proposal of fifteen per cent, of that number,
or 2402 votes — that is less than one and two tenths
per cent, of the whole population, or about five and
one fourth per cent, of the whole body of qualified
electors of the State, — and carried by a majority of
the 16,009 votes cast, that is, by 8,005 votes, — or,
indeed, for that matter, by any smaller number
which might constitute a majority of the votes
cast on the proposition to amend.

The end of the institution, maintenance and admin-
istration of government [runs the preamble to the
constitution of Massachusetts] is to secure the exist-
ence of the body-politic, to protect it, and to furnish
the individuals who compose it with the power of
enjoying, in safety and tranquillity, their natural rights
and the blessings of life. ... It is the duty
of the people, therefore, in framing a constitution of
government, to provide for an equitable mode of
making laws, as well as for an impartial interpretation
and a faithful execution of them ; that every man may,
at all times, find his security in them.1

The uncertain sands of shifting popular inclina-
tion, upon which the security of life, liberty, and
property depend under the constitution of Arizona,
are far remote from the conceptions of the framers
of either the Massachusetts constitution of 1780
or the Constitution of the United States.

But this is not all. Every public officer in the
State of Arizona holding a public office, either by

1 Poore's Charters and Constitutions, p. 956.

256 The Changing Order

election or appointment, whether it be executive,
legislative, or judicial, is made subject to recall by
qualified electors for the district for which he is
elected to such office, which district may include
the whole State. Electors to the number of
twenty -five per cent, of the vote cast at the last
preceding general election for all of the candidates
for the office held by such officer, may, by petition,
demand his recall. This petition must contain a
general statement in not more than two hundred
words of the grounds of such demand, and unless
the officer against whom it is directed shall offer
his resignation within five days after it is filed,
a special election must be ordered, to be held not
less than twenty nor more than thirty days after
such order, to determine whether he shall be
recalled. On the ballots at said election shall be
printed the reasons as set forth in the petition for
demanding his recall, and in not more than two
hundred words, the officer's justification of his course
in office. Unless he otherwise request, in writing,
his name shall be placed as a candidate on the
official ballot without nomination. Other candi-
dates for the office may be nominated to be voted
for at such election, and the candidate who shall
receive the highest number of the votes cast shall
be declared to be elected for the remainder of the
term; and thereupon, if the incumbent does not
receive the highest number of votes cast, he shall
be deemed to be removed from office, upon
qualification of his successor. Such recall petition

New States and Constitutions 257

may be circulated against any officer after he has
held his office for a period of six months, and
against a member of the Legislature at any time
after five days from the beginning of the first
session after his election.

After one recall petition and election no further
recall petition shall be filed against the same officer
during the term for which he was elected, unless
petitioners signing such petition shall first pay into
the public treasury which has paid such election ex-
penses all expenses of the preceding election.

Subject only to this provision, any number of
recall petitions may be directed at the same official
until his ejection shall have been secured.

Provision is also made for amending the constitu-
tion by a vote of a majority of the members elected
to each of the two houses of the Legislature, and
submission to popular vote. No convention may
be called by the Legislature to propose amendments
to the constitution, or a new constitution, unless
the law providing for such convention shall first
be approved by the people on a referendum vote
at a regular or special election; and any amend-
ments, alterations, revisions, or new constitution
proposed by such convention shall be submitted
to the electors at a general or special election, and
be approved by the majority of the electors voting
thereon before the same shall become effective.

The advocates of the scheme of so-called popular
government embodied in the Arizona constitution
17

258 The Changing Order

have vigorously opposed the approval of that of
New Mexico as reactionary, and have as strenu-
ously asserted the republican character of the
plan proposed for Arizona. It is an interesting
paradox that the whole tendency of modifications
in the established forms of republican government
advocated as accomplishing a greater popular
participation in government, is to confer power
upon a small minority of the people to control not
only the making of laws, but of constitutions.

The postulate of American political faith is that
governments derive their just powers from the
consent of the governed. Taken in the literal,
etymological sense of the term, no government has
ever existed — certainly not on this continent —
which was framed with the active conscious agree-
ment of all those who were to be subject to it;
while, of course, all government has rested, and
must necessarily rest upon the more or less passive
acquiescence or assent of those governed.

The Massachusetts constitution of 1780 recites
that —

The people of this commonwealth have the sole and
exclusive right of governing themselves as a free,
sovereign, and independent State; [and that] the people
alone have an incontestable, unalienable and inde-
feasible right to institute government, and to reform,
alter, or totally change the same when their protection,
safety, prosperity, and happiness require it.1

v x Poore's Charters and Constitutions, 958.

New States and Constitutions 259

Yet the right under that constitution to choose
representatives to the general assembly is limited
to male persons

being twenty-one years of age, and resident in any
particular town in this commonwealth, for the space
of one year next preceding, having a freehold estate
within the same town, of the annual income of three
pounds, or any estate of the value of sixty pounds.

The right of suffrage, it was held by the Supreme
Court of the United States in Minor v. Happersett, x
is not a necessary incident to citizenship of the
United States, and whether women shall be allowed
to vote or no is a matter left entirely to the dis-
cretion of the State governments. In his opinion
in that case, Chief Justice Waite points out that
when the Federal Constitution was adopted, in no
State were all the citizens permitted to vote, and
he summarizes2 the various qualifications required
in the different States as a condition to participa-
tion in elections. In no instance were women,
married or single, given the right of suffrage.
They were expressly excluded from suffrage in
nearly all the States by the express provision of
their constitution and laws. "In all," to quote the
language of the Chief Justice, "the people partici-
pated to some extent, through their representatives
elected in the manner specifically provided."

The fact is, that even government by folkmoot
or town meeting, was government by a certain

1 21 Wall., 163. 'See p. 172 et seq.

260 The Changing Order

number of the community, less than all, assuming
to represent those who, from motives of policy
or tradition, were excluded from participation by
those who were strong enough to exclude them.
So at an early date, in this country, the unwieldy
nature of government by a large assembly of the
adult male population, possessing agreed qualifica-
tions to entitle them to participate, brought about
the plan of choosing a practicable number of dele-
gates to meet and enact "such laws and ordinances
as shall be judged to be good and wholesome for
the whole."

This plan of the qualified electorate choosing
representatives to make laws, naturally led to the
formulation of charters or constitutions prescrib-
ing the rules and limitations within which such
representatives should act, and in nearly all of
these constitutions, certain inalienable rights are
enumerated which must be preserved, and which
lawmakers must not trench upon.

In the framing of the early State constitutions,
as indeed in most of the later ones, care was
observed to secure their approval by as large a
number of the adult male population as was
practicable. In general, the delegates were
chosen by votes at a special election, and after
their work was completed it was submitted to the
qualified electors for their assent. The sense of
obligation felt by delegates engaged in the high
duty of framing the fundamental law is expressed
in the address issued by Mr. Bowdoin, the Presi-

New States and Constitutions 261

dent of the Massachusetts constitutional con-
vention of 1779, enjoining upon the members of
the convention the exertion of their best abilities
in framing "a new and a good Constitution of
Government," and stating that "as the framing
it, and its acceptance, when framed, must greatly
depend on the collective wisdom of the Convention
being had, in the final determination on every
part of it, but which cannot be had without a
general and constant attendance, " he was directed
by vote of the convention "to enjoin upon the
members, from its necessity and importance, A

CONSTANT AND GENERAL ATTENDANCE accord-
ingly."1

It is not to be wondered that a constitution so
framed should have remained to this day, with
but little amendment, as the living fundamental
law of the great Bay State.

In order to secure the widest possible popular
concurrence in the choice of delegates to the
Pennsylvania convention of 1777, commissioners
were appointed by the assembly

To go to the house or place of residence of each and
every freeman entitled to vote for members of Gen-
eral Assembly within their respective townships,
buroughs, wards or districts, or to take some other
opportunity of meeting with them,

to secure from every freeman, in writing, his vote
or answer to the proposition, which should be

1 Lobingier, pp. 172-3.

262 The Changing Order

put in a box provided for the purpose and returned
to the general assembly. x

Unfortunately, the British invasion suspended
the carrying out of this rather novel but highly
commendable plan; but subsequently, by a more
orthodox method, delegates were chosen by
popular election who prepared the constitution
which remained the fundamental law of Pennsyl-
vania until 1838.

Framed, therefore, by delegates especially
chosen for the purpose, with the design of estab-
lishing a permanent and stable form of government,
until a recent date the constitutions of all the
States avoided detail, and laid down merely the
general outlines of the frame of government, within
whose limits details were to be supplied from time
to time by the Legislature constituted accord-
ing to its terms; and provisions were embodied
with respect to amendments, calculated to se-
cure deliberate, matured action, and especially to
require the active concurrence in the changes
proposed of an actual majority of the qualified
electors.

Jefferson's proposed constitution for Virginia
contained a provision that none of the fundamental
laws and principles of government should be re-
pealed or altered but by the personal consent of
the people, at meetings held in the respective
counties, the people of two thirds of the counties to
give their suffrage for any particular alteration.2

1 Lobingier, p. 151. a Ibid., p. 146.

New States and Constitutions 263

This Jeffersonian theory of making the alteration
of the constitution dependent not only upon a
certain percentage of the vote cast, but upon the
consent of a specified percentage of the geograph-
ical subdivisions of the State, as we have seen,
is embodied in the proposed constitution of New
Mexico.1 The first constitution of Georgia re-
quired the consent of a majority of the counties
to any amendment. The Massachusetts consti-
tution of 1780 was to take effect upon a vote of
two thirds of the free whites voting upon it.

In general, the State constitutions prior to the
very recent ones, required the vote of at least a
majority, sometimes of two thirds of each of the
houses of the Legislature in favor of a proposed
amendment, sometimes at two successive sessions
of the Legislature, to be followed by submission
to popular vote and adoption by at least a majority
of all votes cast with respect to the proposition;
sometimes by a certain proportion of the entire
qualified electorate. There would seem to be
little use in choosing a convention of delegates to
carefully and painstakingly frame a constitution,
if, after adoption by popular vote, no stability or
degree of permanency is secured, but the funda-
mental law may be changed as readily as, and per-
haps more readily than an ordinary act of the
Legislature. The system which was the evolu-

1 This provision was attacked in Congress with such success
that the people of New Mexico were compelled to modify it
as a condition to admission into the Union (see 37 Stats.,
vol. i., p. 39; vol. ii., p. 1723).

264 The Changing Order

tion of American growth and institutions; the dis-
tinctively American plan of government under
fundamental law, framed with a view to its con-
tinuance unless changed with equal solemnity,
is absolutely at variance with the new scheme of
government by initiative, referendum, and recall
embodied in the constitutions of Oklahoma and
Arizona: a scheme which, as Mr. Bryce has pointed
out in The American Commonwealth ,x first made
its appearance in modern Europe as a provision
of the French constitution framed by the national
convention in 1793, and which has peculiarly
flourished as a feature of the government of
Switzerland.2 The real question presented is
whether or not all the people shall be governed
by representatives chosen for the purpose in an
orderly, regular way, acting in accordance with a
well-matured fundamental law, adopted by the
active concurrence of at least a majority of the
adult male population; or by casual minorities
acting without direct responsibility, under the hap-
hazard system of initiative or referendum.

By the constitution of Oklahoma, suffrage is
restricted to male citizens, except at school dis-
trict elections or meetings; and by a recent con-
stitutional amendment3 adopted in deliberate
disregard of its solemn compact with the United

1 Vol. i., p. 465.

9 2 Dodd, Modern Constitutions, p. 258.

3 Amendment as section 4A of Article 3 of Constitution Session
Laws, 1910, p. 285. See also Atwater v. Hassett, in Pacific
Rep., 812.

New States and Constitutions 265

States, all negroes have been, in effect, disfran-
chised; so that out of a total population of 1,414,-
042 (according to the 1907 census), not exceeding
334,035 white males of the age of twenty-one
years and upwards are permitted to vote. Fifteen
per cent, of this number, or 50,105 electors, may
set in motion a proposition to amend the funda-
mental law, which will become effective if ap-
proved by a majority of those voting on the
proposition, no matter how small a percentage
of the whole population or of the qualified voting
population that number may be.

The proposed constitution of Arizona also re-
stricts the suffrage to male citizens of the United
States of the age of twenty-one years or over, who
shall have resided in the State one year immedi-
ately preceding the election (Art. VII., sec. 2), so
that, out of a total population of 204,354, according
to the last census, not exceeding 45,323 white males
of twenty-one years and upwards are permitted to
vote. Fifteen per cent, of this number, or 6799
electors, may set in motion a proposition to amend
the fundamental law, which will become operative
if approved by a majority of those voting on the
proposition, — no matter how small that number
might be.

In other words, under the scheme of govern-
ment proposed in the constitution of Arizona, as
in that of Oklahoma, all the fundamental rights of
person and property which are not specifically
guaranteed and secured by the Constitution of

266 The Changing Order

the United States, but which are left as the sub-
jects of State concern — such as the right of religious
toleration — are at the mercy of a small minority
of the population. Of course, it may be said that
eternal vigilance is the price of liberty, and that
citizens who fail to assert their rights and to be
vigilant in their protection, cannot complain if
they find them undermined, impaired, or destroyed.
Professor Lobingier argues that statutes which
require the concurrence of a majority of the
electors in constitutional changes should be con-
strued so as to require only the consent of a
majority of those voting on a proposition — not a
majority of all the electors. He says:

From the standpoint of public policy, however, it
would seem that those decisions are soundest which
construe the language wherever possible as requiring
only a majority of those actually participating in the
vote on the submitted proposition. To declare a
constitution or amendment rejected by reason merely
of the indifference of those who, while in attendance
at the polls, are so unmindful of the privilege of
popular ratification as to neglect its exercise when
opportunity offers, is certainly to impair its benefits
and often to impair its employment when not
needed.1

But if the constitution is the expression of the
will of the whole people, is it not rather to be
presumed that, if a majority of the people really
feel that a change in the fundamental law is

1 The People's Laws, p. 330.

New States and Constitutions 267

necessary, they will affirmatively so express them-
selves? Let it be necessary to secure the vote of
an actual majority of the qualified votes to a
proposed constitutional amendment, and, if the
change is really desirable in the interest of all the
people, that fact will be made manifest, and
the vote will be secured. The anxiety of the ad-
vocates of the referendum, initiative, and recall to
have them operative at the instance of small
minorities of a restricted electorate, furnishes
abundant evidence that it is they — not those who
oppose these innovations — who do not trust "the
people" or even a majority of the people; but
that, under the guise of serving the people, they
are seeking to lay hands on the power of the
people and to arrogate to themselves the popular
tribunate.

Bearing in mind the practical workings of
everyday life in a busy, prosperous, commercial
community, it is apparent that a large number of
the community, generally the most productive
portion of the community, do not, and cannot,
give constant attention to the affairs of govern-
ment. Under a scheme of government such as
that proposed in the Arizona constitution, a small
minority of the qualified electors organized to
accomplish any particular purpose can mold
the laws, and the constitution, to accomplish
their purposes before the great majority of the
electors are even aware of what is going on. The
propositions submitted to the electors under the

268 The Changing Order

scheme of initiative and referendum are fixed, and
put before the voters without the advantage of
the examination, discussion, and debate which have
been, throughout the whole history of English-
speaking peoples, the crucible in which legislative
projects have been tried out before enactment into
law. It is an abuse of language to call such a
scheme of government "popular." It is an at-
tempt to create a government of all the people,
by a minority of the people, for a small minor-
ity of the people. To adopt it, would be to sub-
stitute for the institutions which are the growth
and evolution of centuries of English and American
experience, the devices of French revolution and
Swiss socialism.

XIII

THE THEORY OF CONSTITUTIONAL GOV-
ERNMENT IN 1787 AND IN 19121

ON December 12, 1787, by the decisive vote
of 46 to 23, Pennsylvania, the second of the
States to take such action, solemnly expressed its
concurrence in the new charter, which created a
nation of what theretofore had been a mere confed-
eration of separate sovereignties. Immediately
after the result was known, as the chronicle of the
time tells us,

the convention (accompanied by his excellency the
President, the Vice-President, and the members of
the Supreme Executive Council ; also by several mem-
bers of Congress, the faculty of the University, the
magistrates and militia officers of the City) went in
procession to the Court House, where the ratifica-
tion of the Constitution of the United States was read,
amidst the acclamations of a great concourse of citi-
zens. A detachment of the militia train of artillery
(in uniform) fired a federal salute, and the bells of
Christ Church were rung on this joyful occasion;

1 Address at the Annual Banquet of the Pennsylvania Society
in the city of New York, December 14, 1912.

269

270 The Changing Order

after this, the Convention returned to the State House
and subscribed the two copies of the ratification. At
three o'clock they met and dined with the members
of the Supreme Executive Council, several members
of Congress and a number of citizens, at Mr. Epple's
tavern ; where the remainder of the day was spent in
mutual congratulations upon the happy prospect of
enjoying once more, order, justice and good govern-
ment in the United States.

The lead of Pennsylvania was rapidly followed
by the other States, and more than the requisite
number having ratified the Constitution, on July
4, 1788, the twelfth anniversary of the Declaration
of Independence, the good citizens of Pennsyl-
vania celebrated with joyful hearts the adoption
of that Constitution which they believed would
"form a more perfect union " than the Con-
federation of the States had been, and would
"establish justice, insure domestic tranquillity,
provide for the common defence, promote the
general welfare, and secure the blessings of
liberty" to the people of the United States and
their posterity.

The new charter of government was not adopted
without opposition. In Pennsylvania, as else-
where, there was a considerable minority who
fought against it until the last moment. Their
objections were, in effect, first that the consolida-
tion of powers in the new government would be de-
structive of the States ; second, that the separation
of the executive, legislative, and judicial powers

Constitutional Gov't in 1787 and 191 2 271

of government was not complete; and, third, and
above all, that the Constitution contained no bill
of rights. The fifteen amendments proposed in
the Pennsylvania convention by Mr. Whitehill
contained in substance those which were sub-
sequently formulated and proposed to the legis-
latures of the several States by the first Congress,
and which, having been ratified by the requisite
number of States between September, 1789, and
December, 1791, became the first ten amendments
to the Constitution. Their adoption removed
practically every serious objection which had
been urged against the Constitution, and left it as
the expression of the will of the whole people.
With the exception of the nth Amendment, which
became effective January 8, 1798, adopted to relieve
the wounded susceptibilities of the States, follow-
ing the decision in the case of Chisholm against the
State of Georgia, that the Federal courts had
jurisdiction under the Constitution of suits by
citizens against the States; and the 12th Amend-
ment, which took effect September, 1804, modify-
ing the provisions of Article II. so as to provide for
specific and separate votes for President and
Vice-President in the Electoral College and in the
Congress, no amendments to the Constitution were
adopted until the 13th, 14th, and 15th Amend-
ments which followed the Civil War, and which
embodied the results of a contest respecting
slavery, which, admittedly, had been left unsettled
by the framers of the Constitution, because then

272 The Changing Order

incapable of solution, and which could only be
settled by the arbitrament of war.

Of the government under this Constitution,
Daniel Webster said, in 1850:

We have a great, popular, constitutional govern-
ment, guarded by law and by judicature, and de-
fended by the affections of the whole people. No
monarchical throne presses these States together, no
iron chain of military power encircles them; they
live and stand under a government popular in its form,
representative in its character, founded upon prin-
ciples of equality, and so constructed, we hope, as to
last forever.

It did survive one of the greatest internecine
struggles recorded in history. The war amend-
ments to it, perpetuated the removal of slavery
from the permissible domestic institutions of the
States, and imposed restrictions upon State
action concerning individuals, which, in effect,
extended as limitations upon the powers of the
States, some of the provisions of the Bill of Rights,
which the first ten amendments had made restric-
tive upon the national legislature.

The establishment of this Constitution and the
growth and development of the national govern-
ment under it, for a century commanded the pride
of Americans and the admiration of the world.
Every new citizen was required by law, as he still
is, to declare his attachment to its principles;
every officer of the government to swear that he

Constitutional Gov't in 1787 and 1912 273

would support and defend it. The Constitution
was the Ark of the American Covenant, and the
author of The American Commonwealth, writing
in 1888, said that reverence for it "is itself one of
the most wholesome and hopeful elements in the
character of the American people."

The one hundredth anniversary of its adoption
was celebrated in 1889, with joyful festivities
throughout the United States, and paeans were sung
in all parts of the country in praise of the great
men whose wisdom and patriotism and prescience
had framed for a little confederation of thirteen
States, containing but three millions of people,
a charter of government adequate to the growing
needs of a compact nation of thirty-six States with
a population of seventy millions or more.

Perhaps in the very excess of this praise is to be
found the first germ of that analysis and criticism
which has resulted in a modern school of political
thought which finds little in the Constitution
to praise, much to criticize, and a great deal to
alter. It was because certain Athenians became
tired of hearing Aristides called "The Just"
that they united in the movement to ostracize
him; and the constant and extreme assertions of
the excellences of the Constitution perhaps have
led men to charge it with responsibility for con-
ditions which might have arisen under any con-
stitution, and, without stopping to consider whether
or not those evils had any necessary connection
with the mere form and structure of government,

IS

274 The Changing Order

to make it the goat upon which to load responsi-
bility for all the political sins which had become
odious to the people.

The author of The American Commonwealth
was too wise a student of political history to be
misled by the chorus of gratulation which Ameri-
cans were singing when he was writing the first
edition of that great work, and they were celebrat-
ing the hundredth anniversary of the adoption of
the Constitution.

I might plead [he wrote] that America changes so
fast that every few years a new crop of books is
needed to describe the new face which things have put
on, the new problems that have appeared, the new
ideas germinating among her people, the new and
unexpected developments for evil as well as for good
of which her established institutions have been found
capable.

But I doubt whether even that sagacious ob-
server of our national affairs could have foreseen
how rapid would be the change in the attitude of a
large part of the American people towards their
constitutional institutions which has taken place
since 1887. Then, the Constitution was praised
because of the nice distribution of the legislative,
executive, and judicial powers of government
provided for in it; separate in the independence
of their functions, but correlated by the partici-
pation of the individual representatives of one
branch in the exercise of some of the functions of

Constitutional Gov't in 1787 and 191 2 275

the others. To-day, a school of thought, number-
ing many adherents, maintains that all constitu-
tions founded on the separation of powers are weak
and ailing, and that, as a matter of fact, the doc-
trine of the separation of powers of government is
the prime cause of the corruption of American
politics; that its scheme is not made for, and
is not susceptible of, conversion to democratic
use.

The Constitution was praised as providing ade-
quate checks and balances to prevent the destruc-
tive results of the sudden, uninformed impulse of
the people; but the modern doctrine is that the
system of checks and balances exists for the pur-
pose of preventing the people's rule; that the
impulses of the people are never uninformed, and
their actions are always just.

Democracy [the late E. L. Godkin once wrote] really
means a profound belief in the wisdom as well as the
power of the majority, not on certain occasions, but
at whatever time it is consulted.

The progressive democracy of to-day extends
the same principle to casual majorities of those
voting on any question, however small a propor-
tion of the whole electorate, and imputes to them
impeccable and — temporarily, at least — conclu-
sive wisdom. This is a very recent development
of democratic theory. Only twenty-two years
ago, Mr. Grover Cleveland, speaking of the framers
of the Constitution at the centennial anniversary

276 The Changing Order

of the organization of the Supreme Court of the
United States, said:

Though bitter experience had taught them that the
instrumentalities of government might trespass upon
freedom, and though they had learned in a hard school
the cost of the struggle to wrest liberty from the
grasp of power, they refused, in the solemn work they
had in hand, to take counsel of undue fear or distract-
ing perturbation, and they calmly and deliberately
established as a function of their government a check
upon unauthorized freedom and a restraint upon
dangerous liberty.

To-day the junior Senator from Oklahoma, per-
haps the most prominent exponent of the new
so-called Code of the People's Rule, tells us that the
system of checks and balances was established by
the Federalists for the purpose of putting an end
to popular rule, and should be done away with —
as it has been under the constitution of his State,
and by those of a number of other States adopted
during the last dozen years.

The Constitution was long praised for the repre-
sentative character of the government which it
established: but the modern theory is that repre-
sentatives of the people cannot be relied upon to
carry out the people's will, and that the people
must themselves, therefore, by direct action, make
their own laws, and directly control the execution
of those laws by the officials of their government.

The constitutional theory of government was,

Constitutional Gov't in 1787 and 191 2 277

that the people should choose by popular vote
representatives who should be entrusted with ample
powers, and given a reasonable time within which
to work out the results which should justify them-
selves to the people when they were thoroughly
informed concerning them. The recent ' ' popular ' '
theory is that the representatives be given but little
power, their actions be directly circumscribed by
minute restrictions, their work be subject at all
times to direct interference by popular vote, and
themselves subject to summary removal from office
at the instance of a small minority of the people,
and upon the vote of a bare majority of a perhaps
equally small minority.

The objection which weighed most with the
people when the Constitution was under considera-
tion, was that it contained no Bill of Rights; and
the prompt adoption of the first ten amendments
evidenced the jealous determination of the people,
by a distinct declaration of limitations upon the
power of government over the individual citizen,
to protect the humblest as well as the most power-
ful individual against the abuse of power. These
provisions were, however, only limitations upon
the powers of the national government itself.
After the Civil War, a belief in the necessity of
protecting the freedmen and their descendants
against invasion of their newly established right
to liberty, led to the extension of the same prin-
ciples against action by the States, through the
adoption of the 14th Amendment. But as Judge

278 The Changing Order

Swayze has pointed out in his admirable review
of the subject in a recent Harvard Law Review:

The fourteenth amendment does not protect the
citizen against alleged cruel and unusual punishment
under State authority, nor secure trial by jury in civil
or criminal cases, nor the right to bear arms, nor
immunity from prosecution except after indictment
by a grand jury, nor the right to be confronted by
witnesses. In these respects the federal bill of rights
restricts the federal tribunals only —

and for protection in those respects the citizen
is still wholly dependent upon the institutions of
his State.

Bills of Rights were — and still are — common to
the organic laws of almost every State. They
were made effective — until recently — by provisions
against amendment, except by so large a vote as
to clearly evidence the change to be the deliberate
judgment of the whole people. They, and the Bill
of Rights embodied in the Federal Constitution,
constitute what Senator Root has so eloquently
described as the

covenant between overwhelming power and every
weak and defenseless one, every one who relies upon
the protection of his country's laws for security to
enjoy the fruits of industry and thrift, every one who
would worship God according to his own conscience,
however his faith may differ from that of his fellows,
every one who asserts his manhood's right of freedom
in speech and action — a solemn covenant that between

Constitutional Gov't in 1787 and 1912 279

the weak individual and all the power of the people,
and the people's officers, shall forever stand the eternal
principles of justice, defined and made practically
effective by specific rules in those provisions which
we call the limitations of the Constitution.

But the new school rejects as unworthy all such
limitations upon the immediate popular exercise of
power, and reduces Bills of Rights to mere counsels
of perfection. It abandons all ideas of permanency
in the fundamental law. The constitution is to be
changed as lightly as are codes of legal procedure.
In Oregon, for example, its constitution was not
changed between 1859 and 1902 — a period of forty-
three years . B et ween 1 902 and 191 o — eight years
— it was amended twelve times. This constitution
tinkering is the inevitable result of reducing con-
stitutions to the category of statutes. Especially
does the new school object to the American prin-
ciple of judicial determination of whether or not
a given legislative act falls within or exceeds the
limitations set by the constitution upon legislative
power, and seeks instead to submit to the deter-
mination of a temporary popular majority the
making, the constitutionality, the interpretation,
and the enforcement of laws.

To accomplish these ends, constitutions have
been adopted in a number of States which intro-
duce those institutions known as the initiative and
the referendum in lawmaking, the recall of officials
of government by popular vote, the imperative
mandate to public bodies and officials, and other

280 The Changing Order

provisions tending to pure democracy, taken largely
from the institutions of Switzerland. These new
constitutions are become, in effect, elaborate stat-
utes, repealable and alterable by a majority of
those voting upon propositions to change them, set
in motion by a small percentage of the electorate.
Senator Owen, in his The Code of the People's
Rule, says:

Reports of the favorable workings of such a system
in Switzerland began to be published in this country
in 1 89 1. The following year there were declarations
for the system by the American Federation of Labor
and the Knights of Labor, while the newly organized
People's Party, which had absorbed the Farmers'
Alliance, recommended that the subject be studied.

The advantages of the new system to the ac-
complishment by large, well-organized bodies of
particular classes of men, of changes in govern-
ment sought in the interests of such classes, are
apparent, and the organizations referred to quickly
saw in this new governmental machinery an op-
portunity to increase their influence in legis-
lation, and their power to mold governmental
action to their own advantage. To the well-
directed and systematic efforts of those associa-
tions may be attributed, in large measure, the
astonishing progress made in the adoption of the
new system in many of the States. The system
lends itself easily to the establishment of class
government.

Constitutional Gov't in 1787 and 1912 281

But that fact alone would not adequately explain
the rapid extension of the Swiss institutions in the
United States.

The initiative and referendum with respect to
legislation, in varying forms, have been adopted in
at least seventeen States; the unlimited recall of
public officials in six, and movements looking to
the profound modification of the fundaments of
State government are mooted in others. The
independence of the judicial establishment has
been destroyed by an elective judiciary with short
terms of office and small salaries, subject to sum-
mary removal from office by popular vote; and a
Senator of the United States has recently proposed
an amendment to the Constitution of the United
States which would make the correct interpretation
of statutes the subject of popular vote, in the face
of judicial exposition. These tendencies cannot
be ignored, because too many people have given
their adherence in some degree to them; and it
becomes the patriotic duty of every citizen to
analyze carefully the causes of the discontent with
existing political and social conditions, which has
led to the adoption of these modifications in our
constitutional scheme, as remedies necessary to
the public welfare in the eyes of those who have
espoused them, and to endeavor, if possible, to
meet those evils, without destroying a fabric of
government which has so long and so well served
the needs of American civilization.

Discontent with the existing order of things, as

282 The Changing Order

Mr. Lowell once said, "pervaded the atmosphere
wherever the conditions were favorable, long
before Columbus, seeking the back door of Asia,
found himself knocking at the front door of Amer-
ica. ' ' And he added :

I say wherever the conditions are favorable, for it
is certain that the germs of disease do not stick or
find a prosperous field for their development and nox-
ious activity unless where the simplest sanitary pre-
cautions have been neglected. ... It is only when
the reasonable and practicable are denied that men
demand the unreasonable and impracticable; only
when the possible is made difficult that they fancy
the impossible to be easy.

One of the principal exponents of this new demo-
cratic movement ascribes to "machine rule" in
politics the cause of all the evil which, in his opin-
ion, can only be cured by the adoption of the
scheme of government embodied in the initiative,
referendum, recall, imperative mandate, direct
election of senators, etc., and he gives to our dis-
tinguished guest of this evening, Mr. Bryce, the
credit for having first formulated in a word-picture
the whole evil institution known as "the Machine,"
in the first edition of his great work on The
American Commonwealth — a work which, from
the moment of its publication, has been the most
complete, the most authoritative, and the most
just description of the political and social institu-
tions of this country thus far written. It was the

Constitutional Gov't in 1787 and 191 2 283

lifting of the veil in this book, and its widespread
sale, Senator Owen says, that, together with other
reform literature, "created a mighty reform sen-
timent, which, combined with startling exposures
of the machine-rule system year after year, has
produced far-reaching results."

The evils of machine rule, arose largely by reason
of the apathy of the individual voter and the
dormant condition of the public conscience. It
was because reasonable and practicable reforms
in party government were denied by those who
profited by it, that the extreme changes in our
governmental system have been so enthusiastically
adopted. The "machine/' in its most offensive
sense, and the "boss," or political leader who
directed its operations, were nourished upon the
spoils system, which, to a large extent has been
removed, by reforms in the civil service of the
Nation and the States, under which the merit
system of appointments to public office and a
security of tenure have been established. The
machine, too, was nourished by the management
of large contributions for campaign purposes,
made by corporations and representatives of
interests seeking undue advantages in legislation
and governmental action. But that evil has been
greatly restricted by various acts of Congress and
of the State legislatures; measures whose enact-
ment was compelled by public sentiment, in most
cases without resort to "initiated" or "referred"
legislation. It is entirely possible by further

284 The Changing Order

legislation to utterly extirpate it. These con-
cessions however, were made grudgingly and
slowly; and the popular determination that they
should be permanent, found expression in the
adoption of the new institutions held out as
furnishing a means of perpetuating the reforms
and preventing a recurrence of the evils. Worthy
citizens, impatient at the slowness of reform un-
der constitutional restrictions, turned to the new
institutions as a patient longing for speedy cure
turns from the regular practitioner to a quack
doctor.

That the remedy may be worse than the disease
is a reasonable apprehension. Nearly a century
ago, Chief Justice Marshall pointed out the dan-
gers of putting too many things in a constitution :

A constitution to contain an accurate detail of all
the subdivisions of which its great powers will admit
and of all the means by which they may be carried
into execution, would partake of the prolixity of a
legal code, and could scarcely be embraced by the legal
mind. It would probably never be understood by the
public. Its nature requires, therefore, that only its
great outlines should be marked, its more important
objects designated, and the minor ingredients which
compose these objects be deduced from the nature of
the objects themselves.

But the great Chief Justice was speaking of a
constitution founded upon confidence that the
people as a whole would be vigilant in the exercise

Constitutional Gov't in 1787 and 1912 285

of their political rights and duties, and that they
could and would entrust the powers of their gov-
ernment to those whom they trusted, and who
would worthily discharge that trust. The mod-
ern changes in government are framed in a pro-
found distrust of those who are to exercise the
powers of the State; and the vast detail of the
new constitutions, the enormous number of
elective offices created by them, the shortness of
terms, and the uncertainty of tenure, only empha-
size the same point of view. No government so
founded and so maintained can long exist.

It is, I think, safe to say that every one of the
evils of modern politics is susceptible of removal
within the limits of our established forms of
constitutional government, without destruction of
its representative republican character. Party
machinery is, of course, wholly unrestricted by the
framework of the Constitution. But the needed
reforms cannot be accomplished and perpetuated,
on the one hand, by any short cut to political
happiness, such as reformers eager for popular
applause would suggest; nor, on the other hand,
without the abandonment by every citizen of that
apathy which results, in the face of even a clam-
orous public campaign, in less than a majority of
the electorate voting upon propositions to radically
change the fundamental law of a State. Above
all, there is no easy way of securing good govern-
ment. The virtuous citizen who thinks he can
secure political Utopia by merely signing a postal

286 The Changing Order

card or a petition, may some day awaken to the
discovery that he has lost all that makes for
stability in government and the maintenance of a
right to life, liberty, and the pursuit of happiness.
In the Pennsylvania Gazette for December 26,
1787, is printed a letter from a correspondent
answering certain objections which had been
made to the new Constitution by Mr. Mason. It
concludes with this exhortation:

I entreat you, my fellow citizens, to read and
examine the new Constitution with candor, examine
it for yourselves; you are most of you as learned as
the objector, and certainly as able to judge of its
virtues or vices as he is.

In the same paper is printed a despatch from
Boston, announcing the selection of delegates to
the constitutional convention from Massachusetts,
which closes with the statement that there could
be no doubt of the adoption of the new Constitu-
tion "provided that a spirit of candor, concession,
and an openness to conviction should pervade the
minds of the delegates chosen for the Convention. "

In like manner I entreat you, my fellow-citizens,
to carefully consider the causes for that discontent
which has caused so large a number of our fellow-
citizens to turn from those institutions of govern-
ment which are peculiarly American, and which
were framed by the most ardent lovers of liberty —
liberty regulated under law — who ever lived in
any land, in any time. Consider them; and weigh

Constitutional Gov't in 1787 and 191 2 287

and examine the advantages and the disadvantages
of the proposed remedies; consider whether the
evils may not be cured without the destruction of
our traditional institutions; examine all this in a
spirit of candor, concession, and openness to con-
viction; and as the writer from whom I have
quoted said, in closing his letter in December, 1787 :

God grant that prejudice may not make us blind to
our best interest.

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