been questioned. Telephonic messages are, of course, covered by it. No case involving the transmission of wireless messages has arisen, but without doubt they would be treated as coinmerce, and the same would be true of messages and persons carried by balloons and other apparatus for the navigation of the air.

§ 291. Commerce Embraces Water Navigation.

Commerce includes navigation of the water, and, where this navigation is for the transportation of persons or goods to or from foreign countries or among the States, it is brought within the authority given to the Federal Government by the commerce clause. This was established once for all in Gibbons v. Ogden." In that famous case, Marshall says: "The subject to be regulated is commerce. . The counsel for the appellee would limit it to traffic, to buying and selling, or the interchange of commodities, and do not admit that it comprehends navigation. This would restrict a general term applicable to many objects, to one of its significations. Commerce, undoubtedly, is traffic, but it is something more; it is intercourse. It describes commercial intercourse between nations and parts of nations, in all its branches, and is regulated by prescribing rules for garrying on that intercourse. The mind can scarcely conceive a system for regulating commerce between nations, which shall exclude all laws concerning navigation, which shall be silent on the admission of the vessels of one nation into the ports of the other, and be confined to prescribing rules for the conduct of individuals in the actual employment of buying and selling, or of barter. The word used in the Constitution, then, comprehends, and has been always understood to comprehend, navigation within its meaning; and a power to 8 The authority of the Federal Government derived from the grant to it of admiralty and maritime jurisdiction is broader than this, extending as it does to all the public navigable waters whether wholly within or between the States. See Chapter LV.

99 Wh. 1; 6 L. ed 23.

regulate navigation is as expressly granted as if that term had been added to the word 'commerce.'" 10

§ 292 The Transportation of Persons is Commerce.

That the transportation of persons is commerce was at first denied by Justice Barbour in the opinion which he rendered in New York v. Miln," but this doctrine was at once overruled, and has not since been questioned. "Commerce among the States," the court say in the Lottery Case,12 "embraces navigation, intercourse, communication, traffic, the transit of persons, and the transmission of messages by telegraph."

§ 293. Bills of Exchange not Articles of Commerce.

In Nathan v. Louisiana13 the court lay down the doctrine that the buying and selling of foreign bills of exchange, while to be sure an aid to, and an instrument of, commerce, is not itself commerce. "The individual," say the court, "who uses his money and credit in buying and selling bills of exchange, and who thereby realizes a profit is not engaged in commerce, but in supplying an instrument of commerce. He is less connected with it than the ship builder, without whose labor foreign commerce could not be carried on." And also: "A bill of exchange is neither an export nor an import. It is not transmitted through the ordinary channels of commerce, but through the mail." 14

10 At the time the Constitution was adopted almost all the commerce then being carried on among the States was by water, and there is considerable ground for believing that those who framed and adopted the commerce clause had exclusively in mind commerce by water. As to this see Prentice, Federal Power over Carriers and Corporations (1907).

11 11 Pet. 102; 9 L. ed. 648.

12 Champion v. Ames, 188 U. S. 321; 23 Sup. Ct. Rep. 321; 47 L. ed. 492. 138 How. 73; 12 L. ed. 992.

14 Commenting on this case, Prentice and Egan say: "It seems, in view of the remarkable development of the banking system within the past fifty years, and its importance in relation to commerce, that the regulation of

§ 294. Insurance not Commerce.

The writing, selling, and transmission of insurance policies has been held not to be commerce.

That the business of fire insurance is not interstate commerce was decided in Paul v. Virginia.

15

interstate and foreign bills of exchange might in time fall within the federal commercial power. Where such bills represent payment for articles brought from other States, they may perhaps be considered to bear the same relation to the purchase, sale and exchange of commodities that freights and fares bear to their transportation. From another standpoint, bills of exchange may be said, in their relation to transportation of money, to bear some analogy to the relation which a system of free interchange of cars would bear to railroad traffic conducted in the absence of such a system. It is true, both of bills of exchange and of such a system of interchange of cars, that their relation to interstate transportation is in that they make such transportation to some extent unnecessary; and yet a State may not forbid this free interchange of cars, because to do so would place a new burden upon commerce among the States. To say that an interstate bill of exchange is merely evidence of the transfer of title to personal property located in another State is not only to ignore the fact that money, as the circulating medium, is essential to all commerce, but when sustained the argument seems to prove too much. If the bill of exchange be merely evidence of indebtedness in another State, it may be taxed at the discretion of the State within which it is drawn (Kirtland v. Hotchkiss, 100 U. S. 491; 25 L. ed. 558); and it might, therefore, be prohibited by the State; for 'questions of power do not depend on the degree to which it may be exercised' (Brown v. Maryland, 12 Wh. 419; 6 L. ed. 678). If this could be done, the statement that no burden could be placed upon interstate commerce by a State would be subject to substantial modification. It seems possible that the rule which would be applied in such a case would be stated in Erie Railway Co. v. State (31 N. J. L. 531), where it was held that whenever the taxation of a commodity would amount to a regulation of commerce, within the prohibition of the Constitution, so will the taxation of an inseparable incident or necessary concomitant of such commerce.' In People v. Raymond (34 Cal. 492), an act providing for the raising of revenue from a tax upon foreign and inland bills, and passengers, was held not to be in the nature of a police regulation, but an attempt at the regulation of com merce, and therefore void. On the other hand, in Ex parte Martin (7 Nev. 140) a statute requiring the fixing of revenue stamps to foreign bills of exchange was held to be a legitimate exercise by the State of its power of taxation." Commerce Clause of the Constitution, p. 48.

6

15 8 Wall. 168; 19 L. ed. 357. See also Liverpool & L. L. & Fire Ins. Co. v. Mass., 10 Wall. 566; 19 L. ed. 1029; Philadelphia Fire Assn. v. New York, 119 U. S. 110; 7 Sup. Ct. Rep. 108; 30 L. ed. 342.

That the business of marine insurance is not interstate commerce was held in Hooper v. California.16

In New York Life Ins. Co. v. Craven1 these cases are cited with approval and applied to life insurance, the court saying: “We repeat, the business of insurance is not commerce. The contract of insurance is not an instrumentality of commerce. The making of such a contract is a mere incident of commercial intercourse, and in this respect there is no difference whatever between insurance against fire and insurance against the perils of the sea. And we add, or against the uncertainty of man's mortality."

In Paul v. Virginia a state law which forbade any insurance company not incorporated by the State, from doing business in the State without a license, was held valid as not a regulation of, or restraint upon, interstate commerce. To the argument that insurance is intercourse for the purpose of exchanging sums of money for promises of indemnity against losses, Justice Field, who rendered the majority opinion of the court, said: "The defect of the argument lies in the character of the business. Issuing a policy of insurance is not a transaction of commerce. The policies are simply contracts of indemnity against loss by fire, entered into between the corporations and the assured, for a consideration paid by the latter. These contracts are not articles of commerce, in any proper meaning of the word. They are not subjects of trade and barter offered in the market as something having an existence and value independent of the parties to them. They are not commodities to be shipped or forwarded from one State to another, and then put up for sale. They are like other personal contracts between parties which are completed by their signatures and the transfer of the consideration. Such contracts are not interstate transactions, though the parties may be domiciled in different States. The policies do not take effect not executed contracts until delivered by the agent in Virginia.

16 155 U. S. 648; 15 Sup. Ct. Rep. 207; 39 L. ed. 297. 17 178 U. S. 389; 20 Sup. Ct. Rep. 962; 44 L. ed. 1116.

are

They are, then, local transactions and are governed by the local law. They do not constitute a part of the commerce between the States any more than a contract for the purchase and sale of good in Virginia by a citizen of New York whilst in Virginia would constitute a portion of such commerce."

In Hooper v. California the court emphasizes the distinction between interstate commerce or an instrumentality thereof, and the mere incidents of which insurance is one which may attend the carrying on of such commerce. "This distinction," the court declares, "has always been carefully observed, and is clearly defined by the authorities cited. If the power to regulate interstate commerce applied to all the incidents to which said commerce might give rise and to all contracts which might be made in the course of its transaction, that power would embrace the entire sphere of mercantile activity in any way connected with the trade between the States; and would exclude state control over many contracts purely domestic in their nature."

These decisions of the court in Paul v. Virginia and Hooper v. California, which have since served as the basis of decisions with reference to other forms of insurance, have, since their rendition, been severely criticized. And, especially during recent years, when, with the enormous growth of insurance companies doing a business national in character, the need for federal regulation has seemed urgent to many, arguments have been put forth to show why the doctrine of the Supreme Court should be overruled, and companies doing an insurance business in more than one State be held to be engaged in interstate commerce.

The act of 1903 which created the Department of Commerce and Labor provides that the Department shall have the power "to gather, compile, publish and supply useful information concerning corporations doing business within the limits of the United States as shall engage in interstate commerce or in commerce between the United States and any foreign country, including