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local buyers. The statute provided, among other things, for the establishment of a system of State inspection, grading, and weighing of grain, prohibited anyone from purchasing before such inspection, authorized the licensing of persons to grade, inspect, and weigh grain, and required payment to the farmer of the fair value of the grain, the value to be ascertained by fixing a so-called margin.

The court says in its opinion:

It is alleged that such legislation is in the interest of the grain growers and essential to protect them from fraudulent purchases, and to secure payment to them of fair prices for the grain actually sold. This may be true, but Congress is amply authorized to pass measures to protect interstate commerce if legislation of that character is needed.

The court here looked at the course of business as a whole, observed that "North Dakota is a great grain-growing State, producing annually large crops, particularly wheat, for transportation beyond its borders," that the complainant and other buyers of like character were owners of elevators and purchasers of grain bought in North Dakota, over 90 per centum of which was shipped to and sold at terminal markets in other States. It was therefore held that notwithstanding the sale of the grain by the farmer to the elevator operator took place within the State and that, as a matter of fact, some of the grain might be shipped from one point in the State to another point in the same State for consumption within the State, the State statute in question regulated interstate commerce by imposing burdens upon it and was therefore invalid. If it is unconstitutional for the State to regulate such sales as imposing a burden upon interstate commerce, it therefore follows that, being in interstate commerce, the Federal Government can regulate such sales.

(4) Sales in State Y by A to B of commodities in a current of commerce in which the greater part of the commodities originate in State X and they or their products are destined for consumption in State Z.

Examples:

(a) Spot sales of wheat upon the exchange. Future sales are merely contracts to sell and therefore are not sales subject to the provisions of the bill.

(b) Sales of cattle by the commission man in Chicago to the packer in Chicago, or to a stocker or feeder in Illinois or another State.

(c) Sales of meat food products by a packer at his branch house in the District of Columbia to a wholesaler in the District of Columbia, the meat food products to be distributed and sold by the wholesaler to retailers outside of the District.

The case of Stafford v. Wallace (1922, 258 U. S. 495), applied and extended the "current of commerce" principle enunciated in the Swift case (1905, 196 U. S. 375), and sustained the constitutionality of section 316 of the Packers and Stockyards Act of 1921 (c. 64, 42 Stat.. 159). It held in effect that the unregulated practices of a commission man in Chicago might cast an unreasonable burden upon that current of commerce comprised of the shipment of livestock from Western States into Chicago with the expectation that they would, after sale by the commission men, end their transit in other States, either as meat products converted by the packers, or as stockers or feeders fattened for slaughter; and that, therefore, the intrastate activities of the

commission men might be subjected to the regulatory power of Congress. The court said:

The stockyards are but a throat through which the current flows, and the transactions which occur therein are only incident to this current from the West to the East, and from one State to another. Such transactions can not be separated from the movement to which they contribute and necessarily take on its character. * * * Whatever amounts to more or less constant practice and threatens to obstruct or unduly to burden the freedom of interstate commerce is within the regulatory power of Congress under the commerce clause, and it is primarily for Congress to consider and decide the fact of the danger and meet it. This court will certainly not substitute its judgment for that of Congress in such a matter unless the relation of the subject to interstate commerce and its effects upon it are clearly nonexistent.

See also to same effect Chicago Board of Trade v. Olsen (1923, 262 U. S. 1), upholding the Grain Futures Act in its application to sales of grain upon exchanges, as a valid exercise of the power to regulate interstate and foreign commerce.

(5) Sales by A in State Y to B in State Y of a commodity that is received by A from State X and that is to be consumed in State Y. Examples:

(a) A Chicago packer sells his cattle food products at his branch house in Atlanta to a retailer in Atlanta.

(b) A miller in Minnesota sells his flour in New York to a retailer in New York.

Sale of a commodity after its interstate shipment, if consummated before the removal of the commodity from its original package or the container in which it underwent its interstate shipment, is a sale in interstate commerce subject to regulation by the Federal Government. This proposition has been well settled ever since the decision of Brown v. Maryland (1827, 12 Wheat. 419). The first sale of the substance after interstate shipment, if consummated after the removal from the original package or container, and all subsequent transactions, constitute transactions in intrastate commerce. (Armour & Co. v. North Dakota, 1916, 240 U. S. 510, 517; Savage v. Jones, 1912, 225 U. S. 501; Hebe Co. v. Shaw, 1919, 248 U. S. 297; Cleveland Macaroni Co. v. State Board of Health, D. C. 1919, 256 Fed. 376.)

In McDermott v. Wisconsin (1913, 228 U. S. 115) the Supreme Court sustained the power of Congress to regulate the labeling of foods up to the first sale after the completion of interstate transportation, regardless of the removal from the container used in interstate transportation. Intimations in the McDermott case (p. 134) and in Weigle v. Curtice Brothers Co. (1919, 248 U. S. 285, 287-8) and Hipolite Egg Co. v. U. S. (1911, 220 U. S. 45, 57) indicate that where necessary for the protection and adequate enforcement of regulations of sales in interstate commerce, the Federal power may extend its regulations to subsequent transactions in intrastate commerce. Such regulation, it would seem, would extend to all subsequent transactions which unregulated were a burden upon interstate commerce, and once admitting the power to regulate, the regulation may take the form of the imposition of a fee as well as the imposition of labeling requirements.

An additional case upon the point is Binderup v. Pathe Exchange (1923, 44 Sup. Ct. 96). It was there held that Congress might extend its jurisdiction to a shipment made from one point in a State to another point in the same State, where the shipper was a mere

holding agent for the manufacturer and had received from the manufacturer in the course of interstate commerce moving-picture films which were to be distributed to lessees of the manufacturer from time to time. The court said (p. 99):

Does the circumstance that in the course of the process the commodity is consigned to a local agency of the distributers, to be by that agency held until delivery to the lessee in the same State, put an end to the interstate character of the transaction and transform it into one purely intrastate? We think not. It was merely halted as a convenient step in the process of getting it to its final destination.

(6) Sales by A in State X to B in State X for consumption in State X.

Examples:

(a) A cattle raiser in Kansas sells to a local butcher in the same State.

(b) A cattle raiser in Kansas slaughters his cattle for market in Kansas.

(c) A corn raiser in Iowa sells his corn to a hog raiser in Iowa.

The occurrence of the transactions listed above will be comparatively rare when considered in their relation to the aggregate of transactions occurring in the United States in respect of such agricultural commodities. Like the transactions discussed under paragraphs (3), (4), and (5) above, the transactions here considered are in intrastate commerce. Nevertheless, such transactions may be regulated under the power to regulate commerce among the several States and with foreign nations, if unregulated the transactions cast an undue burden on interstate or foreign commerce. It is believed such a burden will be found to exist in the cases above considered, except the case presented in paragraph (c).

The doctrine of the power of Congress to regulate under the commerce power intrastate transactions originated in the extension of the navigation and steamboat inspection laws to vessels engaged solely in intrastate commerce. It was extended under the Interstate Commerce Act to the obtaining of information with regard to the intrastate revenues and expenditures of the carrier and to intrastate rates that unregulated discriminated against competing interstate rates or cast undue burden upon the total interstate rate structure of the country.

Under the Safety Appliances Act the doctrine was extended to the regulation of the equipment on cars hauling only intrastate freight. Under the Food and Drugs Act and similar Acts the doctrine was applied in respect of sales of commodities occurring after the completion of interstate shipment and after the removal of the commodity from its original package. Finally, under the Sherman Act, the Packers and Stockyards Act and the Grain Futures Act the doctrine was extended to trade agreements in restraint of interstate or foreign trade and to sales in intrastate commerce if a part of the current of commerce in connection with the marketing of cattle and grain. (Navigation laws: The City of Salem (1889, 37 Fed. 846). Railroad expenditures: Interstate Commerce Commission v. Goodrich Transit Co. (1912, 224 U. S. 194). Railroad safety appliances: Southern Railway Co. v. U. S. (1911, 222 U. S. 20). Railroad rates: Houston and Texas Railway v. U. S. (1914, 234 U. S. 342); American Express Co. v. Caldwell (1917, 244 U. S. 617); Illinois Central Railroad Co. v.

Public Utilities Commission (1918, 245 U. S. 493); Railroad Commission of Wisconsin v. C. B. & Q. R. R. Co. (1922, 257 U. S. 563). Sherman Act: U. S. v. Reading (1912, 226 U. S. 324); Swift and Co. v. U. S. (1905, 196 U. S. 375); American Column Co. v. U. S. (1921, 257 U. S. 377); Binderup v. Pathe Exchange (1923, 44 Sup Ct. 96). Packers and Stockyards Act and Grain Futures Act: Stafford v. Wallace (1922, 258 U. S. 495); Chicago Board of Trade v. Olsen (1923, 262 U. S. 1).)

There would thus seem to be a long line of decisions standing for the principle that certain intrastate transactions may be regulated under the commerce power, if unregulated they cast undue burdens upon interstate or foreign commerce.

If the equalization fee is imposed upon all sales in interstate commerce, but not upon sales in intrastate commerce, the direct burden upon and discrimination against the former and in favor of the latter is readily apparent. In the first place, every producer would seek to sell his commodity in intrastate commerce, rather than offering it, in the normal and usual course, for sale for interstate shipment. Not only would he thus avoid the payment of the fee, but the free and unhampered flow of commerce between the States would be interfered with and postponed. In the next place, a commodity which has been sold in interstate commerce and in respect of which the fee has been paid will be unable to sell in competition with the commodity sold in intrastate commerce. For example, if the fee is fixed at 10 cents a bushel, a bushel of wheat sent from North Dakota to Minnesota must be sold for a higher price than the wheat grown and sold in Minnesota, and the latter will have a 10-cent advantage. If any fee is imposed, it must necessarily include all sales, whether interstate or intrastate in character, if it is to be effective and if the former are not to be placed at an unfair advantage. Finally, as discussed on page 68, interstate sales would have to pay an increased equalization fee to compensate the share of the fosses and administrative expenses which are an incident to the increased price obtained on intrastate as well as interstate sales and which should therefore be borne by both classes of sales.

Recent cases seem to establish, beyond any question, that Congress may regulate intrastate commerce to the extent necessary to make effective whatever regulations it has imposed in the exercise of its power to regulate commerce with foreign nations and among the several States.

In the Minnesota Rate cases (1913, 230 U. S. 352, 399), the court said:

The authority of Congress extends to every part of interstate commerce, and to every instrumentality or agency by which it is carried on; and the full control by Congress of the subjects committed to its regulation is not to be denied or thwarted by the commingling of interstate and intrastate operations. This is not to say that the Nation may deal with the internal concerns of the State, as such, but that the execution by Congress of its constitutional power to regulate interstate commerce is not limited by the fact that intrastate transactions may have become so interwoven therewith that the effective government of the former incidentally controls the latter. This conclusion necessarily results from the supremacy of the national power within its appointed sphere.

The Wisconsin Rate case (1922, 257 U. S. 563) lays down the rule that the Federal Government may regulate intrastate commerce to the extent necessary efficiently to regulate interstate commerce, and

that where a substantial disparity between intrastate rates and interstate rates exists, so that a real discrimination operates against and obstructs interstate commerce, the former may be placed on the same level with the latter.

Such orders as to intrastate traffic are merely incidental to the regulation of interstate commerce and necessary to its efficiency. Commerce is a unit and does not regard State lines, and while, under the Constitution, interstate and intrastate commerce are ordinarily subject to regulation by different sovereignties, yet when they are so mingled together that the supreme authority, the Nation, can not exercise complete effective control over interstate commerce without incidental regulation of intrastate commerce, such incidental regulation is not an invasion of State authority.

In the case of U. S. v. Ferger (1919, 250 U. S. 199), the validity of an act of Congress punishing forgery and utterance of bills of lading for fictitious shipments in interstate commerce was in question. It was contended that there was and could be no commerce in a fraudulent and fictitious bill of lading, and therefore that the power of Congress could not embrace such a pretended bill. The court said:

We

But this mistakenly assumes that the power of Congress is to be necessarily tested by the intrinsic existence of commerce in the particular subject dealt with, instead of by relation of that subject to commerce and its effect upon it. say mistakenly assumes, because we think it clear that if the proposition were sustained, it would destroy the power of Congress to regulate, as obviously that power, if it is to exist, must include the authority to deal with obstructions to interstate commerce (In re Debs, 158 U. S. 564), and with a host of other acts which, because of their relation to and influence upon interstate commerce, come within the power of Congress to regulate, although they are not interstate commerce in and of themselves.

In Dayton-Goose Creek Ry. v. United States (1924, 44 Sup. Ct. 169), in reply to the objection that the recapture clause, by reducing the net income from intrastate rates, violated the Tenth Amendment dealing with the reserved powers of the States, the court said:

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In solving the problem of maintaining the efficiency of an interstate commerce railway system which serves both the States and the Nation, Congress is dealing with a unit in which State and interstate operations are often inextricably commingled. * * The control of the excess profit due to the level of the whole body of rates is the heart of the plan. To divide that excess and attempt to distribute one part to interstate traffic and the other to intrastate traffic would be impracticable and defeat the plan. This renders indispensable the incidental control by Congress of that part of the excess possibly due to intrastate rates which, if present, is indistinguishable.

In the case of United States v. Reading (1912, 226 U. S. 324), in which the defendant companies, engaged in railroad and mining activities, were found to be unlawfully restraining trade, it was said:

Much of the coal so bought was sold in Pennsylvania and all of the contracts were made in that State and the coal was also there delivered to the buying defendants. That the defendants were free to sell again within Pennsylvania or transport and sell beyond the State is true. That some of the coal was intended for local consumption may also be true.

But the general market contemplated was the market at tidewater, and the sales were made on the basis of the average price at tidewater. The mere fact that the sales and deliveries took place in Pennsylvania is not controlling when, as here, the expectation was that the coal would, for the most part, fall into and become a part of the well-known current of commerce between the mines and the general consuming markets of other States. The purchase and delivery within the State was but one step in a plan and purpose to control and dominate trade and commerce in other States for an illegal purpose.

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