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CHAPTER XXXVII.

THE MACHINERY OF FEDERAL REGULATION OF COMMERCE.

Regulation of commerce before 1789, 241. The commerce clause of the Constitu-
tion, 242. Powers of the President regarding commerce, 243. Commercial func-
tions of Department of State, 244. The Department of War, 245. Department
of the Treasury, 246. The customs service, 246. Revenue cutter service, 248.
Life-saving service, 249. Marine Hospital, 249. Bureau of Public Health, 250.
Quarantine service, 250. The Post Office Department, 251. Department of
Justice, 251. Department of the Navy, 252. Hydrographic Office, 252. Depart-
ment of the Interior, 253. The Department of Agriculture and the Weather
Bureau, 254. Department of Commerce: the lighthouse service, 255; the Bureau
of the Census, 256; the Coast and Geodetic Survey, 257; the Bureau of Foreign and
Domestic Commerce, 258; the Bureau of Standards, 260; Steamboat-Inspection
Service, 261; the Bureau of Navigation, 262; the Bureau of Corporations, 263.
Department of Labor, 263. Independent governmental and international agencies,
264. The judiciary and legislative agencies, 265.

From the earliest days of its history the United States Government has been active in the control and regulation of commerce. Before the outbreak of the Revolutionary War the American colonists were accustomed to the regulation of commercial matters by the British Government, and it is not surprising that, when independence was declared, the Continental Congress should have proceeded to regulate trade matters. While it possessed no authority to do so, its action was nevertheless respected by the several States during the revolutionary crisis. As early as 1775 the Continental Congress opened American ports to the ships of all countries, prohibited the slave trade, and assumed the management of the post-office. The first treaty of commerce (with France) providing for reciprocal trade was negotiated along with the treaty of alliance in 1778. But these de facto powers did not become de jure at once. The colonists had not entirely learned the lesson of cooperation. The Articles of Confederation, adopted by Congress in 1777, and ratified by all of the States by 1781, gave Congress no power to make commercial regulations.

The various State governments not only placed varying restrictions upon foreign trade, but often imposed burdensome duties on interstate traffic as well, and retaliation-commercial war in fact-was the result. Effective regulation of trade under the Articles of Confederation was impossible, and furthermore, individual States obstinately prevented the adoption of several amendments to the Articles which were then brought forward with a view to conferring upon Congress a certain degree of regulative power.

The unfortunate commercial situation was the chief reason for the change in the form of government effected by the adoption of the Federal Constitution in 1789. Of the various powers conferred by that instrument on the Federal authorities none were more important than

those relating to the control of domestic and foreign trade, and to the various institutions with which the operations of commerce are closely related. Among all the influences which contributed to the economic prosperity of the Republic during the early years of its existence, none was more potent than the system of commercial regulation, the adoption of which was made possible by the Constitution.

The commerce clause, Article I, section 8, of the Constitution, provides that "the Congress shall have Power. .. to regulate Commerce with foreign Nations, and among the several States and with the Indian Tribes." Additional clauses of the same article and section grant to Congress the power "to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;" and "to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the Government of the United States, or in any department, or officer thereof." The power thus conferred has from time to time been broadly construed by the Supreme Court, and as a consequence the activities of the Federal Government in the regulation of foreign and domestic trade have constantly increased.

Commerce has so many phases and touches so many sides of national life, that it would be impossible to place under a single officer or even in a single department all the governmental functions relating to it. Each of the three great branches of the Federal Government, the executive, the legislative, and the judicial, has a part in the regulation of trade. The President and the various executive departments immediately under him, the Federal Congress, with its permanent and special committees, and the Federal courts, from the beginning, had commercial functions to perform, and with the rapid increase in the volume and complexity of the trade of the nation and with the steady growth of Federal control, the machinery for the regulation of commerce became more elaborate and complex. In 1903 it was found advisable by Congress to create a new executive department, the Department of Commerce and Labor, under the jurisdiction of which was placed a large number of bureaus, boards, offices, and services which had formerly been attached to other executive departments. In 1913 this policy of segregation of work in department matters relating to commerce was further carried out by creating a Department of Labor separate from the Department of Commerce. It must not be supposed, however, that all of the governmental services which relate to this field have been placed under the Secretary of Commerce. All of the executive departments, as well as Congress and certain Federal courts, exercise commercial functions, and there is a large number of subordinate bureaus and offices which have a part in the work of aiding and regu

lating the interstate and foreign trade of the nation. It is the purpose of this chapter to give briefly the history of the administrative regulation of commerce by the various divisions of the Federal Governmental machinery.1

POWERS OF THE PRESIDENT REGARDING COMMERCE.

At the head of the executive branch of the government stands the President of the United States. His influence upon commerce is exerted in numerous ways, his appointing power being first in importance. Upon the character of the men whom he selects for such offices as Secretary of Commerce or Interstate Commerce Commissioner depends in large measure the efficiency of governmental control of commerce. While, indeed, appointments are made "by and with the advice and consent of the Senate," in practice the President is but little restricted by the Senate in naming men to fill cabinet positions. Furthermore, by virtue of his power of removal, of the broad powers of direction which he exercises over the work of the executive departments, and by means of his ordinance power, the President exerts great authority over the machinery of regulation. A recent example of the exercise of the ordinance power will serve to illustrate its importance. On November 13, 1912, President Taft by proclamation established the tolls which are to be levied on ships passing through the Panama Canal, and on November 21, 1913, President Wilson fixed the rules for determining the tonnage upon which vessels shall pay the tolls that are levied, thereby affecting the commerce, not only of the United States, but of the world, to the extent of determining the conditions under which the Panama Canal may be used.

Another and very specific way by which the power of the President is exercised over commerce is through his special authority over foreign relations. The Secretary of State gives to diplomatic relations his special attention, but upon the President personally depends in large measure the success of negotiations with other powers as regards commercial privileges, and the rights of aliens in trade with and in the United States.2

While the treaty-making power is exercised by the President, by and with the advice and consent of the Senate, he is obliged to respect the power of Congress over commerce, and must observe in commercial treaties the policies established by the laws of Congress. Conflicts have arisen with respect to the power of the President and Congress in relation to commercial treaties, but the Supreme Court has declared3

'It will be noticed that much of the language used in this part of this volume is in the present tense. In giving a history of the agencies of government for the regulation of commerce it seems advisable, and, indeed, almost necessary, to state what the commercial functions of the several departments and bureaus now are and to state when and how those powers and duties concerning commerce were conferred upon the existing agencies of the government. "Present" conditions are those of 1913.

Fairlie, The National Administration of the U. S., of America, 29.
United States vs. Lee Yen Tai, 185 U. S. 213.

that " as Congress may by statute abrogate, so far at least as this country is concerned, a treaty previously made by the United States with another nation, so the United States may by treaty supersede a prior act of Congress on the same subject." The act or treaty which bears the most recent date is controlling, and the President may therefore, in effect, if he can secure the consent of the Senate, supersede Congressional action by the negotiation of commercial (or other)

treaties.

The President, acting through the State Department, prepares the formal draft of a treaty and then seeks the "advice and consent," that is the ratification, of the Senate. The difficulty of securing the approval of two-thirds of the Senators present has sometimes required the negotiation of a new treaty or the acceptance by the countries parties to the treaty of amendments proposed by the Senate as conditions precedent to favorable action. The Senate's rejection of, or failure to accept, a treaty has given rise to some of the "executive agreements" which the President has made with foreign countries. President Roosevelt's agreement with Santo Domingo in 1905, whereby the supervision of Dominican finances was undertaken by American citizens, arrangements were made for paying the foreign debt, and American battleships were sent to the island, followed the refusal by the Senate to ratify a treaty the chief terms of which were those embodied in the executive agreement.

The use by the President of his military powers to keep open the channels of interstate commerce during strikes and riots makes him the ultimate authority to whom appeal must be made in times of crisis to keep the machinery of commerce going. The President is, in fact, the supreme director, while the ten great administrative departments, at the head of each of which is a Cabinet officer of his selection, comprise in large part the mechanism through which he acts.

COMMERCIAL FUNTIONS OF THE DEPARTMENT OF STATE.

Logically, it might seem better to consider the commercial functions of the ten departments by beginning with the Department of Commerce, to which is now intrusted the fulfillment of most of the functions under consideration. In order, however, to show more effectively the historical growth of the administrative bodies dealing with commerce, the departments will be considered chronologically.1

The Department of Foreign Affairs was created by Congress July 27, 1789, and on September 15 following the present title was adopted. The department was the successor of the Department of Foreign Affairs, created in 1781 to handle matters which had, since 1775, been delegated to committees of Congress.2 The early functions of the

1History of the Department of State of the United States, 1901, 14.
2Checklist of United States Public Documents, 1789–1909, p. 891.

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