nomenal rise in food prices from January, 1916 to March, 1917 has not entailed as great a hardship as might at first be supposed. Dr. Reitell's investigation showed this to be particularly true of the iron and steel and other "war" industries. On the other hand, as has been pointed out, for the salaried employes and trade unionists working on wage contracts it has meant a considerable hardship. On the whole it seems probable that wages are increasing less rapidly than food prices, and that in consequence standards of living in the long run are slowly falling.

CONSTITUTIONALITY OF FEDERAL REGULATION OF PRICES ON FOOD AND FUELS

BY CLIFFORD THORNE,

Lawyer, Chicago.

A question has been raised in the minds of some eminent gentlemen who are in entire accord with the policy of regulating prices on food and fuels concerning the constitutional power of the federal government to regulate prices on commodities or services, other than those which are strictly public in character, like a railroad which has received certain privileges from the public in return for which it is subject to public regulation.

THE ISSUES

Two issues are involved: (1) the extent of jurisdiction by the federal government as distinguished from the several states over the subjects in question; and (2) does the police power of either a state or of the federal government include the authority to fix prices on such articles as food and fuels at a time like the present.

Our position is that Congress has the constitutional authority to establish or to authorize some tribunal to establish reasonable maximum prices on food and fuels during the period of the war. In support of this position we will briefly outline the fundamental principles of law which are involved. During the discussion of the cases we should bear in mind constantly:

A. The vital connection between the production and equitable distribution, at reasonable prices, of food and fuels, with the whole

defense program of the federal government, (1) in the manufacture and transportation of war munitions, and (2) in the efficient sustenance of the nation during the world war, wherein the other principal combatants have found it necessary to take over many of their industries, or to control the prices on these basic commodities during practically every stage of their participation in the conflict. B. The monopolistic character of these enterprises at the present

time.

C. The effect of no regulation and control upon the general welfare of the public-directly, through their own purchases; and indirectly, but nevertheless more powerfully, in the advancing charges of railroads and public utilities of all kinds.

OUTLINE OF LEGAL PROPOSITIONS

The legal propositions which we hope to sustain may be summarized as follows:

1. In the interpretation of the Constitution the trend of the court decisions has been to limit the police power of the Congress to those subjects over which the federal government is given jurisdiction or control; all not so specifically granted being reserved to the several states.

2. The exercise of the police power to provide for the common defense carries with it all that which is necessary for the safety and welfare of the people during the period of the war, many things being permissible in a time of war which are prohibited in a time of peace. The safety of the state is of supreme importance.

3. The exercise of the police power over commerce, by either the state or federal governments, on subjects properly within their respective jurisdictions, has been sustained as to various matters, including:

The prevention of interference with the freedom of commerce by combinations in restraint of trade.

The prevention of nuisances.

The prevention of unreasonable charges, either excessive or discriminatory in character.

I

In the interpretation of the Constitution, the trend of the court decisions has been to limit the police power of Congress to those subjects over which the federal government is given jurisdiction or control; all those not specifically granted being reserved to the several states.

The above proposition is not subject to argument. There can be no question on the proposition that the Constitution grants to

the federal government the power to: (a) provide for the common defense; and (b) regulate interstate commerce.

A question of some difficulty frequently arises when we attempt to draw the line between state and interstate commerce. In the case entitled United States v. E. C. Knight Co., 156 U. S., 1, the court held that the manufacture of sugar within the bounds of a given state did not constitute a restriction upon interstate commerce and thereby subject to the federal anti-trust act. The court went so far as to state:

Contracts, combinations, or conspiracies to control domestic enterprise in manufacture, agriculture, mining, production in all its forms, or to raise or lower prices or wages, might unquestionably tend to restrain external as well as domestic trade, but the 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.1

The foregoing dictum in so far as it referred to a combination to raise or lower prices not being subject to the federal act was reversed in the later case of Addyston Pipe and Steel Co. v. U. S., 175 U. S., 211.

The distinction between the manufacture and a contract to sell, was clearly made by the court in the Knight Case, and that distinction has been followed in subsequent decisions. While holding that the federal act did not apply to the police regulation of a manufacture within a state, the court held, however, that:

It will be perceived how far-reaching the proposition is that the power of dealing with a monopoly directly may be exercised by the general government whenever interstate or international commerce may be ultimately affected. The regulation of commerce applies to the subjects 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 purposes 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.2

In the Addyston Pipe and Steel Company Case, 175 U. S., 211, the principle in the Knight Case was restated in the following language:

The case was decided upon the principle that a combination simply to control manufacture was not a violation of the act of Congress because such a contract or

1 United States v. E. C. Knight Co., 156 U. S., 16.

2 Ibid., p. 13.

combination did not directly control or affect interstate commerce, but that contracts for the sale and transportation to other states of specific articles were proper subjects for regulation because they did form a part of such commerce.'

A commodity need not have commenced its journey beyond the bounds of a state, and yet it may still have been sold for delivery in another state. A combination among dealers may be subject to federal regulation. In the language of the court in the Addyston Case:

Decisions regarding the validity of taxation by or under state authority, involving sometimes the question of the point of time that an article intended for transportation beyond the state ceases to be governed exclusively by the domestic law and begins to be governed and protected by the national law of commercial regulation, are not of very close application here. The commodity may not have commenced its journey and so may still be completely within the jurisdiction of the state for purposes of state taxation, and yet at the same time the commodity may have been sold for delivery in another state. Any combination among dealers in that kind of commodity, which in its direct and immediate effect, forecloses all competition and enhances the purchase price for which such commodity would otherwise be delivered at its destination in another state, would in our opinion be one in restraint of trade or commerce among the states, even though the article to be transported and delivered in another state were still taxable at its place of manufacture.*

The same principle that was enunciated in the Addyston Case was recognized in Swift & Co. v. U. S., 196 U. S., 375. In this case the rule applicable to the particular combination in restraint of trade was distinguished from that described in the Knight Case, supra. The combination for the control of the purchase and sale of cattle was held to be in violation of the federal act.

The injunction, however, refers not to trade among the states in cattle, concerning which there can be no question of original package, but to trade in fresh meats, as the trade forbidden to be restrained, and it is objected that the trade in fresh meats described in the second and third sections of the bill is not commerce among the states, because the meat is sold at the slaughtering places, or when sold elsewhere may be sold in less than the original packages. But the allegations of the second section, even if they import a technical passing of title at the slaughtering places, also import that the sales are to persons in other states, and that the shipments to other states are part of the transaction-"pursuant to such sales"-and the third section imports that the same things which are sent to agents are sold by them, and sufficiently indicates that some at least of the sales are of the original packages. Moreover, the sales are by persons in one state

'Addyston Pipe and Steel Co. v. U. S., 175 U. S., 240.

to persons in another. But we do not mean to imply that the rule which marks the point at which the state taxation or regulation becomes permissable necessarily is beyond the scope of interference by Congress in cases where such interference is deemed necessary for the protection of commerce among the states. Nor do we mean to intimate that the statute under consideration is limited to that point.

In harmony with these principles is the act relative to the inspection by federal authorities of livestock at the various markets."

II

The exercise of the police power to provide for the common defense carries with it all that which is necessary for the safety and welfare of the people during the period of the war; many things being permissable in a time of war which are prohibited in times of peace. The safety of the state is of supreme importance.

This principle was splendidly stated in one of the Federalist letters, as follows:

As the duties of superintending the national defense and of securing the public peace against force or domestic violence involves a provision for casualties and dangers to which no possible limits can be assigned, the power of making that provision ought to know no other bounds than the exigencies of the nation and the resources of the community."

In a very old and celebrated decision by the Supreme Court of Pennsylvania in 1788, the clear distinction is made as to the necessarily wide power of Congress or of the federal government, during a state of war.

The case was this: Congress, perceiving that it was the intention of the British army to possess themselves of Philadelphia, and being informed that considerable deposits of provisions, etc., were made in that city, entered into a resolution on the eleventh of April, 1777, that a committee should be appointed to examine into the truth of their information; and if it was found true, to take effectual measures, in conjunction with the Pennsylvania Board of War, to prevent such provisions from falling into the hands of the enemy.

On this state of facts the court held:

On the circumstances of this case, two points arise;

1st. Whether the appellant ought to receive any compensation, or not? and 2nd. Whether this court can grant the relief which is claimed?

Swift & Co. v. U. S., 196 U. S., 375, 399..

I Supp. Rev. Stat., p. 938, as amended in II Supp. Rev. Stat., p. 404. "The Federalist, Letter 31.