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CHAPTER XVIII

COMMERCE

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In the United States power in respect to commerce is divided between the State and the federal government. Foreign commerce, interstate commerce and commerce with Indian tribes (47) are regulated by Congress, while the regulation of commerce carried on wholly within the boundaries of a State is the function of the State government.

From the beginning of our national history to the present time two distinct policies have been advanced in reference to foreign goods: (1) the free-trade policy and (2) the policy of protection. The adherents of the free-trade policy, regarding free commercial intercourse between nations as a good thing in itself, contend that taxes on foreign goods should be levied, not with the view of keeping the goods out of the country, but with the view of raising the necessary revenue, and with that view only. The adherents of the protective policy, desiring to protect home producers from competition with foreign goods, would levy the customs, not so much with the view of raising revenue, as with the view of at least discouraging importations.

The essence of the free-trade argument is that, under normal conditions of production and competition, a country will satisfy its needs with the least possible effort. Those things that can be produced with the greatest economy at home will be so produced, and any surplus will be exchanged abroad for what other nations can produce with less effort. Commerce between two countries, each of which produces according to its natural resources, is always profitable to both countries, the free-traders contend, for each country exchanges that which it wants less for that which it wants more.

The argument of the protectionist is that by imposing high import duties upon certain classes of goods and thereby partly or wholly keeping them out of the country you encourage the production of those goods at home, and this encouragement results in new occupations and in a diversified industry at home. The additional producers thus called into being by the protective tariff are also consumers, and they buy at least a part of the country's surplus. Another argument for protection is based upon the difference in the standards of comfort and rates of wages in different countries. If there were no tariff hindrances the lower standard and the lower wage would be given the advantage in competition and workmen would suffer as a result.

Since passengers as well as goods are included in the term commerce, immigration is regulated by Congress. During the greater part of our history we encouraged immigration, for in the development of our country we needed all the brain and muscle we could get. Had it not been for the millions of immigrants who have come to us from England, Ireland, Scotland, Germany, Russia, Norway, Sweden, France, Italy, a large part of our country would still be a wilderness.

About 1880 Americans began to feel that immigration on a large scale was no longer desirable, and demanded that restraints be placed upon the admission of foreigners. First the Chinese were excluded. In 1882 Congress, in defiance of a treaty with China, prohibited Chinese laborers from coming into the United States, and but few of these people have entered since the exclusion law was passed. In the same year Congress ordered that the character of all immigrants be looked into and commanded that convicts, lunatics, idiots and other persons not able to take care of themselves should not be admitted into the United States, but should be sent back at the expense of the owners of the vessels upon which they came. By a law of 1885 it is made unlawful for certain classes of laborers to enter the United States, if they have previously entered into a contract to perform labor here, and any person brought here under a contract to perform labor can be sent back at the expense of the vessel which brings him here. As a further restriction upon immigration Congress has imposed a tax upon immigrants of eight dollars per person and has prohibited the admission of any illiterate alien who is over sixteen years of age. These restrictive laws have had the effect of checking immigration to some extent, but they have by no means solved the immigration problem: they have by no means been successful in keeping out all undesirable foreigners and letting in only those whose presence is beneficial.

I. Interstate Commerce Defined. Domestic commerce is that which is carried on within the United States, and consists of interstate commerce and intrastate commerce. It is not easy to draw clearly the line which separates interstate from intrastate commerce. Broadly speaking, when a commercial transaction begins in one State and ends in another, that transaction is a subject of interstate commerce, but when a commercial transaction begins and ends in the same State it is a subject of intrastate commerce. When a merchant ships his goods to a point within a State he engages in intrastate commerce; when he ships them to a point outside of the State he is engaged in interstate commerce. A railroad which has its termini and the whole length of its tracks within the State cannot be regarded as being engaged in interstate commerce, but a railroad which has its termini in different States must be so regarded. A river lying wholly within a State and having no connection with bodies of water extending beyond the boundaries of the State-a thing which rarely ever occurs—is an instrument of intrastate commerce, but a river wholly within a State connecting with navigable waters that extend beyond the boundaries of the State is regarded as an instrument of interstate commerce. Does a certain commercial act or a certain instrument of commerce, a river, a canal, a railroad,

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concern one State or more than one? If it concerns one State only it is an affair of intrastate commerce; if it concerns more than one State it is an affair of interstate commerce.

II. The Regulation of Interstate Commerce. The men of the convention treated the whole subject of commerce with a firm hand. They gave to Congress complete power to regulate commerce between the States (47). They forbade a State to lay tonnage (76) or any export or import duty without the consent of Congress (74). Within its borders a State can regulate its commerce in its own way, but goods and passengers that are on their way from one State to another are placed under the regulation of the federal government.

The power of Congress over interstate commerce is comprehensive and far-reaching. It extends to the instruments of commerce,—to canals and vessels and railways and telegraph lines, and to the persons engaged in it, as well as to the articles of commerce themselves. Under the provisions of the interstate commerce clause a State is not permitted to discriminate by taxation or otherwise against residents of other States, or against business carried on by them in the State.

III. The Interstate Commerce Commission. The most important agency for regulating interstate commerce is the Interstate Commerce Commission (p. 35), which was established by Congress in 1887. The law which created this commission requires that freight and passenger rates shall be just and rea

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