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federal Constitution forbidding states to emit bills of credit was substantially annulled, and an enormous amount of state bank paper, often without a sound currency basis, was put into circulation, with what results every student of "the middle period" of our history is well acquainted.
At length, in 1866, Congress determined to centralize the monetary control, and it accordingly passed an act
imposing a tax of ten per cent annually on all state bank issues. The tax was upheld by the Supreme Court of the United States in the case of Veazie Bank v. Fenno, and thus the states were forced out of the paper money business.1
The money of the United States now falls into two groups: paper and coin. The former embraces United States notes or, as they are more popularly known, Civil War "greenbacks," which are in circulation under the redemption act which went into effect in 1879, placing them on a gold basis; treasury notes issued under the act of 1890 for the purchase of silver (now repealed); gold certificates issued whenever the reserve in the Treasury is above $100,000,000; silver certificates issued for the purchase of silver under the Bland-Allison bill of 1878 (now repealed); and national bank notes. The whole system was put on a gold basis by act of Congress in 1900.
The preparation of the paper money of the United States is in charge of the bureau of engraving and printing in the Department of the Treasury. The coins are made at three United States mints Philadelphia, San Francisco, and New Orleans. In addition to the mints, federal assay offices are maintained at New York, St. Louis, Denver, Seattle, and a few other points where private persons may deposit gold and silver bullion and have its value determined by experts.
Under the monetary power, Congress has provided a system by which private associations known as national banks may be formed. The capital stock of the national bank varies according
It is impossible to give here even the most meagre outline of the long and complicated history of the American monetary system. For this, see the admirable work by Professor Dewey, Financial History of the United States.
2 The coins include gold pieces: $20, $10, $5, and $2.50; and the silver pieces: the dollar (no longer coined), the 50, 25, and 10 cent pieces, and the minor pieces: the nickel and the copper cent.
to the population of the city in which it is located. Each national banking concern is required to deposit with the comptroller of the currency at Washington United States bonds equivalent to twenty-five per cent of its capital stock in case the capitalization is under $150,000, and bonds equivalent to at least $50,000 if the capitalization is over $150,000; and in turn it may issue through the comptroller national bank notes equal to the par value of the United States bonds so deposited. In case a national bank fails and cannot redeem its notes, the comptroller may sell its bonds and apply the proceeds to the redemption.
To secure further elasticity for the currency, an act was passed in 1908 authorizing the formation of national bank associations (composed of not less than ten banks having an aggregate capital and surplus of at least $5,000,000), and empowering such associations to issue and circulate notes on the basis of certain specified securities. In 1908 there were in active operation 6,827 national banks with a combined capital of over $900,000,000; but very few of them saw fit to take advantage of this new law.
The general supervision of taxation and finance in all its branches is vested in the Secretary of the Treasury Department, who must scrutinize the annual collection and disbursement of seven or eight hundred million dollars and account accurately for every penny of it a huge bookkeeping undertaking. He must also master the theoretical and practical questions of finance, in order to make recommendations to Congress and to meet the demands of that body for expert advice; and he must secure a fair and impartial administration of the customs duties which are irritating to importers at best and doubly irritating when administered in an irregular and arbitrary fashion.
As in other departments of the federal government, of course, the work is distributed among offices and bureaus. Immediately under the Secretary of the Treasury are three assistant secretaries, a chief clerk, and a supervising architect. Each of the assistant secretaries has assigned to him certain definite duties. One assistant superintends the customs and special agents; another has general supervision of the preparation of money; and a third, control over the internal revenue office. To look after the accounts of the various departments which, of course, must
'This is the minimum.
Each has other duties as well.
draw their money from the public treasury, there is, in the Treasury Department, a group of auditors to each of whom is assigned a branch of accounts; while the general supervision of all the accounting, except that relating to the post-office, is vested in the comptroller of the treasury, who must be distinguished from the comptroller of the currency, an officer charged with supervising the national banking system.1
1 The receipt, custody, and disbursement of public moneys are placed in charge of the Treasurer of the United States; the issue of bonds and other financial paper of the United States is under the register of the treasury; the mints and assay offices are under the director of the mint; the superintendence of the internal revenue is vested in a commissioner of internal revenue; while the preparation of bonds, notes, and other similar paper is placed in charge of the bureau of printing and engraving. The work of the Treasury Department does not even end here. It embraces, in addition, the bureau of public health and marine hospital service which guards our ports against contagious diseases and makes provision for disabled seamen.
THE REGULATION OF COMMERCE
The Power of Congress Judicially Interpreted
CONGRESS has power to regulate commerce with foreign nations, among the several states, and with the Indian tribes; and it may make all laws necessary and proper to carry this power into effect. The term "interstate commerce" has been interpreted by a long line of judicial decisions to include the carriage of passengers, the transportation of commodities, and the transmission of ideas, orders, and information by telephone or telegraph from a point in one state to a point in another.2 In a word, it covers traffic and intercourse in its broadest sense regardless of the changes which time and mechanical ingenuity have wrought. It does not, however, include life, fire, and marine insurance or ordinary contractual relations, even though the latter are incident to the conduct of interstate business.
Notwithstanding the seeming clearness of this definition of the power of Congress over interstate commerce, it is very difficult to draw the line between acts affecting commerce wholly within a state and acts affecting commerce between states.3 In general we may say, however, that the Supreme Court has upheld state legislation primarily designed for legitimate local purposes, although it may impinge at points on interstate traffic.
Federal Control of Interstate Commerce
The statutes now in force regulating interstate commerce may be classified into three groups: (1) those controlling railways and common carriers; (2) those designed to prevent trusts and
This power is subject to the limitation that Congress cannot lay duties on exports from any state, give preference to the ports of one commonwealth over those of another, or compel vessels bound from one state to another to enter, clear, or pay duties in any state.
'For the constitutional provisions and an important illustrative case, see Readings, p. 343.
*For an illustrative case, see Readings, p. 348. See below, chap. xxii.
combinations in restraint of trade; and (3) those aimed at miscellaneous objects, such as the pure food law and the law imposing liability on railway corporations for injuries to their employees.
In the beginning of the railway era in the United States, Congress made no attempt to devise a large and far-sighted plan of public control, but negligently devoted its attention to granting generous favors to railway corporations. As a result all early railway legislation deals with grants of public lands, concessions of "rights of way," the remission of duties on railway materials imported from abroad, and kindred measures favoring a rapid development of the railway system.
There was practically no agitation for regulation in the interest of the public until the close of the Civil War. In 1868, the House committee on roads and canals reported that Congress had power to regulate interstate railways, secure the safety of travellers, and prescribe uniform and equitable rates and adequate connections; but the House failed to act. Again, in 1872, on a recommendation embodied in the President's message, a Senate committee devised a comprehensive plan for regulating railways, but there was no practical outcome. In and out of Congress, however, railway regulation had become the subject of earnest discussion. The connection of many Congressmen with great railway interests was notorious, and it was believed, with good reason, that railway corporations were buying support in the national legislature.
At length, in 1885, when it was apparent that the demand for reform could be no longer disregarded, the Senate appointed a committee which conducted a long investigation into the operation of railways throughout the United States and made a presentation of such notorious abuses that Congress was compelled to act. The result was the law of 1887, creating an Interstate Commerce Commission and providing certain regulations for common carriers.
This original act, the amendatory and supplementary acts, the decisions of the courts, and the orders and decisions of the Commission now constitute a formidable body of federal law, and it is impossible to give here more than a brief statement of the general principles.2
1 For an extract from this Report, see Readings, p. 352.