1. Under the Packers and Stockyards Act of 1921, c. 64, § 316,
42 Stat. 159, an order of the district court refusing a temporary
injunction in a suit to enjoin the enforcement of orders made under
the act by the Secretary of Agriculture, is appealable directly to
this Court. P.
258 U. S.
512.
2. It is for Congress to decide from its general information and
from the special evidence brought before it the nature of evils,
present or threatening, and to enact such legislation within its
power as it deems necessary to remedy them, and this environment
should be considered by the courts in interpreting the scope and
effect of the act in order to determine its validity. P.
258 U. S.
513.
3. Commerce among the states is not a technical legal conception
but a practical one, drawn from the course of business. P.
258 U. S. 518.
Swift & Co. v. United States, 196 U.
S. 375.
4. Streams of commerce among the states are under the national
protection and regulation, including subordinate activities and
facilities which are essential to such movements, though not of
interstate character when viewed apart from them. P.
258 U. S.
519.
5. Such a current of interstate commerce is found in the
uninterrupted movement of livestock from the West and Southwest
into the great stockyards at Chicago and elsewhere, where it is
sold by the consignee commission merchants to packers and livestock
dealers at the stockyards, and in the movement thence into other
states of the meat and other products of the animals slaughtered at
the packing establishments and the live animals which are resold at
the yards by the dealers for further feeding and fattening. P.
258 U. S.
514.
Page 258 U. S. 496
6. The commission merchants who receive the livestock as
consignees of the shippers and sell it to the packers and dealers
at the stockyards, and the dealers in reselling there to stock
farmers and feeders, are essential factors in this interstate
movement; their sales, though local transactions in that they
create a local change of title, do not interrupt the current but,
on the contrary, are indispensable to its continuity. P.
258 U. S.
516.
7. For the purpose of protecting this interstate commerce from
the power of the packers to fix arbitrary prices for livestock and
meat, through their monopoly, aided, as was thought, by their
control of stockyards, and from exorbitant charges, duplication of
commissions, and other deceptive practices in respect of prices, in
the passage of livestock through the stockyards, made possible by
collusion between the stockyards management and the commission men,
on the one hand, and the packers and dealers, on the other,
Congress, in connection with regulation of the packers, had power
to regulate business done in the stockyards. P.
258 U. S.
514.
8. A reasonable fear upon the part of Congress that acts,
usually lawful and affecting only intrastate commerce when
occurring alone, will probably and more or less constantly be
performed in aid of conspiracies against interstate commerce or
constitute a direct and undue burden upon it, serves to bring such
acts within the current of interstate commerce for federal
restraint. P.
258 U.S.
520.
9. It is primarily for Congress to consider and decide the
danger of such acts or practices, and to meet it, and it is not for
this Court to substitute its judgment in such a matter unless the
relation of the subject to interstate commerce and its effect upon
it are clearly nonexistent. P.
258 U. S.
521.
10. The Packers and Stockyards Act of 1921, which seeks to
regulate the business of the packers done in interstate commerce
and incidentally provides for supervision and control of facilities
furnished in stockyards in connection with the receipt, purchase,
and sale of livestock and its care, shipment, weighing, or handling
in interstate commerce, requiring commission men and dealers as
well as stockyard owners to register with the Secretary of
Agriculture, and prescribing that all rates and charges for
services and facilities in the yards and all practices concerning
the livestock passing through them shall be just, reasonable,
nondiscriminatory and nondeceptive, and that a schedule of such
charges be kept open for public inspection, only to be changed upon
notice to the Secretary of Agriculture, and empowering him to
inquire into and regulate such charges and practices, to prescribe
the forms of accounts and make rules and regulations for the
enforcement of the act, etc., is
Page 258 U. S. 497
not objectionable from the standpoint of the commission men and
dealers upon the ground that their business is merely intrastate,
but is within the power of Congress under the Commerce Clause. P.
258 U. S.
513.
Affirmed.
These cases involve the constitutionality of the Packers and
Stockyards Act of 1921, approved August 15, 1921, so far as that
act provides for the supervision by federal authority of the
business of the commission men and of the livestock dealers in the
great stockyards of the country. They are appeals from the orders
of the District Court for the Northern District of Illinois
refusing to grant interlocutory injunctions as prayed. The bills
sought to restrain enforcement of orders of the Secretary of
Agriculture in carrying out the act, directed against the
appellants in No. 687, as the commission men in the Union
Stockyards of Chicago, and against the appellants in No. 691, as
dealers in the same yards. The ground upon which the prayers for
relief are based is that the Secretary's orders are void because
made under an act invalid as to each class of appellants. The bill
in No. 687 makes defendants the Secretary of Agriculture and the
United States attorney for the Northern District of Illinois,
averring that the latter is charged with the duty of enforcing the
severe penalties imposed by the act for failure to comply with
orders of the Secretary thereunder. The bill in No. 691 makes the
United States attorney the only defendant, with the same
averment.
The two bills in substance allege that the Union Stockyards
& Transit Company was incorporated by the State of Illinois in
1865, and given authority to acquire, construct, and maintain
enclosures, structures, and railway lines for the reception,
safekeeping feeding, watering, and for weighing, delivery, and
transfer, of cattle and livestock of every description, and to
carry on a public livestock
Page 258 U. S. 498
market, with all the necessary appurtenances and facilities;
that it is the largest stockyards in the world, and in 1920 handled
15,000,000 head of livestock of all descriptions, including cattle,
calves, hogs, and sheep, shipped mainly from outside the State of
Illinois; that the livestock are loaded at the point of origin and
shipped under a shipping contract which is a straight bill of
lading, consigning them to the commission merchants at the yard;
that, on arrival, the livestock are at once driven from the cars by
the commission merchant, who is the consignee, to the pens assigned
by the stockyards company to such merchant for his use; that they
are then in the exclusive possession of the commission merchant,
and are watered and fed by the stockyards company at his request;
that, with the delivery to the commission merchant, the
transportation is completely ended; that all the livestock
consigned to commission merchants are sold by them for a commission
or brokerage, and not on their own account; that they are sold at
the stockyards, and nowhere else; that the commissions are fixed at
an established rate per head; that the commission men remit to the
owners and shippers the proceeds of sale, less their commission and
the freight and yard charges paid by them; that the livestock are
sold (1) to purchasers, who buy the same for slaughter at packing
houses, located at the stockyards or adjacent thereto; (2) to
purchasers, who buy to ship to packing houses outside the State of
Illinois for slaughter; (3) to purchasers, who buy to feed and
fatten the same, and (4) to dealers or traders; that about on-third
of all the livestock received are sold to the dealers; that not
until after the delivery of the livestock to the commission
merchants and the transportation has completely ceased does the
business of the dealers begin; that they do not buy or sell on
commission, but buy and sell for cash exclusively for their own
profit; that the greater part of livestock received by commission
men at
Page 258 U. S. 499
the yards are in carload or trainload lots, and a substantial
part are not graded or conditioned to meet the specific
requirements of the buyers; that the dealers, after purchase, put
the livestock in pens assigned to them by the stockyards owner and
do the sorting and classification; that the dealers buy in open
market in competition with each other; that they pay the expense of
the custody, care, and feeding and watering the stock while they
hold them; that they sell promptly, and have nothing to do with the
shipment of the livestock they sell from the yards to points
outside.
In the bill in No. 691, the appellants aver that they are
members of the Chicago Live Stock Exchange and of the National Live
Stock Exchange, the members of which are dealers in all the
stockyards of the country, numbering 2,000, and that they bring
their bill for all of them who may choose to join and take the
benefit of the litigation.
The chairman of the Committee of Agriculture, in reporting to
the House of Representatives the bill which became the act here in
question (May 18, 1921, 67th Congress, 1st Session, Report No. 77,
to accompany H.R. 6320), referred to the testimony printed in the
House Committee Hearings of the 66th Congress, 2d Session,
Committee on Agriculture, vols. 220-2 and 220-3, as furnishing the
contemporaneous history and information of the evils to be remedied
upon which the bill was framed.
It appeared from the data before the committee that, for more
than two decades, it had been charged that the five great packing
establishments of Swift, Armour, Cudahy, Wilson, and Morris, called
the "Big Five," were engaged in a conspiracy in violation of the
Anti-Trust Law to control the business of the purchase of the
livestock, their preparation for use in meat products, and the
distribution and sale thereof in this country and abroad. In 1903,
a bill in equity was filed by the United States to enjoin further
conduct of this alleged conspiracy as a
Page 258 U. S. 500
violation of the Anti-Trust Law, and an injunction issued.
United States v. Swift, 122 F. 529. The case was taken on
appeal to this Court, which sustained the injunction.
Swift v.
United States, 196 U. S. 375. In
1912, these same defendants, or their successors in business, were
indicted and tried for such violation of the Anti-Trust Law, and
acquitted.
See House Committee Hearings before Committee
on Agriculture, 1820, vol. 220-2, subject, Meat Packer Legislation,
718. It further appeared that, on February 7, 1917, the President
directed the Federal Trade Commission to investigate and report the
facts relating to this industry and kindred subjects. The
Commission reported that the "Big Five" packing firms had complete
control of the trade from the producer to the consumer, had
eliminated competition, and that one of the essential means by
which this was made possible was their ownership of a controlling
part of the stock in the stockyards companies of the country. The
Commission stated its conclusions as follows:
"The big packers' control of these markets is much greater than
these statistics indicate. In the first place, they are the largest
and in some cases practically the only buyers at these various
markets, and as such hold a whip hand over the commission men who
act as the intermediaries in the sale of livestock."
"The packers' power is increased by the fact that they control
all the facilities through which livestock is sold to themselves.
Control of stockyards comprehends control of livestock exchange
buildings, where commission men have their offices; control of
assignment of pens to commission men; control of banks and cattle
loan companies; control of terminal and switching facilities;
control of yardage services and charges; control of weighing
facilities; control of the disposition of dead animals and other
profitable yard monopolies, and in most cases control of all
packing house and other business sites. Packer-owned
Page 258 U. S. 501
stockyards give these interests access to records containing
confidential shipping information, which is used to the
disadvantage of shippers who have attempted to forward their
livestock to a second market."
Summary of Report of the Federal Trade Commission on
Meat-Packing Industry, July 3, 1918.
Following the report of the Federal Trade Commission, and before
the passage of this act, a bill in equity for injunction was filed
in 1920, in the Supreme Court of the District of Columbia, in
which, on February 27th of that year, was entered a decree against
the same Big Five packers, consented to by them, with the saving
clause that it should not be considered as an admission that they
had been guilty of violations of law. The decree enjoined the
packers from doing many acts in pursuance of a combination to
monopolize the purchase and control the price of livestock, and the
sale and distribution of meat products and of many byproducts in
preparation of meats and in unrelated lines, not here relevant, and
from continuing to own or control, directly or indirectly, any
interest in any public stockyard market company in the United
States, or in any stockyard market journal, or in any stockyard
terminal railroad or in any public cold storage warehouse. House
Committee Hearings, Committee on Agriculture, 1920, vol. 220-2, p.
720, "Meat Packer Legislation."
It appears from these committee hearings that the dealers do not
buy fat cattle generally, or largely compete with packers in such
purchases. They buy either the thin cattle, known as "stockers and
feeders," which they dispose of to farmers and stock feeders, to be
taken to the country for farm use and fattening, or they buy mixed
lots, and cull out of them the fat cattle. These they dispose of to
packers, either directly or through commission men. The proportion
of all the hogs passing through the yards in 1919 handled by these
traders, speculators, or scalpers, as they are indifferently
called, was 30 percent. Of all
Page 258 U. S. 502
the butcher cattle, they handled 20 percent, of the beef cattle,
10 percent, and of "the stockers and feeders," 80 percent. At
Kansas City, this last figure was higher, reaching 95 percent.
Committee Hearings, p. 2140.
It was conceded that, of all the livestock coming into the
Chicago stockyards and going out, only a small percentage, less
than 10 percent, is shipped from or to Illinois.
The complaints of the shippers of livestock against the charges
and practices working to their prejudice in the conduct of the
stockyards, the commission men, and the dealers were: first,
suppression of competition in purchases through agreement, by which
one packer would buy a carload or trainload of cattle and turn over
half of it to the only other packer buying in the local market.
Second, "wiring on." A shipper would send a carload or trainload of
stock to one stockyard. Finding the market unsatisfactory, he would
ship them further east. The packers' agents were promptly advised
at the second stockyards and, controlling the price there, they
made it the same as at the first stockyards, though the shipper had
paid the freight, and had to stand the "shrink" of the cattle from
the journey. Third, the charges in the stockyards for hay and other
facilities were excessive. Fourth, the duplication of commissions
through the collusion of the commission men and the dealers, by
which commission men would sell at a lower price to dealers than to
outside buyers, and drive the latter to buying from dealers through
commission men, forcing two commissions. Fifth, the monopoly
conferred by the stockyards owner on a company in which packers
were largely interested, of buying, at a fixed price of $5 a head,
all dead cattle for rendering purposes, when they were worth more.
Sixth, the frequency with which commission men reported to shippers
that livestock had been crippled and had to be sold in that
condition at a lower price, arousing suspicion as to the fact
Page 258 U. S. 503
and if it was a fact, as to the cause of the crippling. Pages
22-24; also 466
et seq., 1086; 2125, 2244,
et
seq. Committee of House Hearings, Committee of Agriculture,
vol. 220-2, 66th Congress,2d Session.
Page 258 U. S. 512
MR. CHIEF JUSTICE TAFT, after making the foregoing statement of
the case, delivered the opinion of the Court.
Section 316 of the Packers and Stockyards Act of 1921 makes
applicable to suits for injunction against the orders of the
Secretary of Agriculture the same procedure, original and
appellate, provided in the Act of October 22, 1913, c. 32, 38 Stat.
208, 219, 220, for suits for injunction against the orders of the
Interstate Commerce Commission. The latter act gives a right to a
direct appeal to this Court from the granting or refusing an
interlocutory injunction. Hence, the appeals herein are properly
prosecuted.
In each bill the averments are sufficient, if the act be
invalid, to show equitable grounds for injunction in the severe
penalties incurred for failure to comply with the act before
opportunity can be given to test its validity.
Ex parte
Young, 209 U. S. 123.
We have framed the statement of the case not for the purpose of
deciding the issues of fact mooted between the packers and their
accusers before the Federal Trade Commission or the Committees of
Agriculture in Congress, but only to enable us to consider and
discuss the act whose validity is here in question in the light of
the environment
Page 258 U. S. 513
in which Congress passed it. It was for Congress to decide from
its general information and from such special evidence as was
brought before it, the nature of the evils actually present or
threatening, and to take such steps by legislation within its power
as it deemed proper to remedy them. It is helpful for us in
interpreting the effect and scope of the act in order to determine
its validity to know the conditions under which Congress acted.
Chicago Board of Trade v. United States, 246 U.
S. 231,
246 U. S. 238;
Danciger v. Cooley, 248 U. S. 319,
248 U. S.
322.
The Packers and Stockyards Act of 1921 seeks to regulate the
business of the packers done in interstate commerce and forbids
them to engage in unfair, discriminatory, or deceptive practices in
such commerce, or to subject any person to unreasonable prejudice
therein, or to do any of a number of acts to control prices or
establish a monopoly in the business. It constitutes the Secretary
of Agriculture a tribunal to hear complaints and make findings
thereon, and to order the packers to cease any forbidden practice.
An appeal is given to the circuit court of appeals from these
findings and orders. They are to be enforced by the district court
by penalty if not appealed from and if disobeyed. Title III
concerns the stockyards, and provides for the supervision and
control of the facilities furnished therein in connection with the
receipt, purchase, sale, on commission basis, or otherwise, of
livestock, and its care, shipment, weighing, or handling in
interstate commerce. A stockyards is defined to be a place
conducted for profit as a public market, with pens in which
livestock are received and kept for sale or shipment in interstate
commerce. Yards with a superficial area less than 20,000 square
feet are not within the act. Stockyard owners, commission men, and
dealers are recognized and defined, and the two latter are required
to register. The act requires that all rates and charges for
services and facilities in the stockyards and all practices in
Page 258 U. S. 514
connection with the livestock passing through the yards shall be
just, reasonable, nondiscriminatory, and nondeceptive, and that a
schedule of such charges shall be kept open for public inspection,
and only be changed after ten days' notice to the Secretary of
Agriculture, who is made a tribunal to inquire as to the justice,
reasonableness, and nondiscriminatory or nondeceptive character of
every charge and practice, and to order that it cease, if found to
offend, with the same provisions for appeal and enforcement in
court as in the case of offending packers. The Secretary is given
power to make rules and regulations to carry out the provisions, to
fix rates, or a minimum or maximum thereof, and to prescribe how
every packer, stockyard owner, commission man, and dealer shall
keep accounts.
The bills aver that the Secretary has given the notice which
requires appellants to register, and has announced proposed rules
and regulations, prescribing the form of rate schedules, the
required reports, including daily accounts of receipts, sales, and
shipments, forbidding misleading reports to depress or enhance
prices, prescribing proper feed and care of livestock, and
forbidding a commission man to sell livestock to another in whose
business he is interested, without disclosing such interest to his
principal.
The object to be secured by the act is the free and unburdened
flow of livestock from the ranges and farms of the West and the
Southwest through the great stockyards and slaughtering centers on
the borders of that region, and thence in the form of meat products
to the consuming cities of the country in the Middle West and East,
or, still, as livestock, to the feeding places and fattening farms
in the Middle West or East for further preparation for the
market.
The chief evil feared is the monopoly of the packers, enabling
them unduly and arbitrarily to lower prices to
Page 258 U. S. 515
the shipper, who sells, and unduly and arbitrarily to increase
the price to the consumer, who buys. Congress thought that the
power to maintain this monopoly was aided by control of the
stockyards. Another evil which it sought to provide against by the
act was exorbitant charges, duplication of commissions, deceptive
practices in respect of prices, in the passage of the livestock
through the stockyards, all made possible by collusion between the
stockyards management and the commission men, on the one hand, and
the packers and dealers, on the other. Expenses incurred in the
passage through the stockyards necessarily reduce the price
received by the shipper, and increase the price to be paid by the
consumer. If they be exorbitant or unreasonable, they are an undue
burden on the commerce which the stockyards are intended to
facilitate. Any unjust or deceptive practice or combination that
unduly and directly enhances them is an unjust obstruction to that
commerce. The shipper, whose livestock are being cared for and sold
in the stockyards market, is ordinarily not present at the sale,
but is far away in the West. He is wholly dependent on the
commission men. The packers and their agents and the dealers, who
are the buyers, are at the elbow of the commission men, and their
relations are constant and close. The control that the packers have
had in the stockyards by reason of ownership and constant use, the
relation of landlord and tenant between the stockyards owner, on
the one hand, and the commission men and the dealers, on the other,
the power of assignment of pens and other facilities by that owner
to commission men and dealers, all create a situation full of
opportunity and temptation, to the prejudice of the absent shipper
and owner in the neglect of the livestock, in the
mala
fides of the sale, in the exorbitant prices obtained, and in
the unreasonableness of the charges for services rendered.
The stockyards are not a place of rest or final destination.
Thousands of head of livestock arrive daily by
Page 258 U. S. 516
carload and trainload lots, and must be promptly sold and
disposed of and moved out, to give place to the constantly flowing
traffic that presses behind. 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 cannot be
separated from the movement to which they contribute and
necessarily take on its character. The commission men are essential
in making the sales, without which the flow of the current would be
obstructed, and this whether they are made to packers or dealers.
The dealers are essential to the sales to the stock farmers and
feeders. The sales are not in this aspect merely local
transactions. They create a local change of title, it is true, but
they do not stop the flow; they merely change the private interests
in the subject of the current, not interfering with, but, on the
contrary, being indispensable to, its continuity. The origin of the
livestock is in the West; its ultimate destination, known to, and
intended by, all engaged in the business, is in the Middle West and
East, either as meat products or stock for feeding and fattening.
This is the definite and well understood course of business. The
stockyards and the sales are necessary factors in the middle of
this current of commerce.
The act therefore treats the various stockyards of the country
as great national public utilities to promote the flow of commerce
from the ranges and farms of the West to the consumers in the East.
It assumes that they conduct a business affected by a public use of
a national character and subject to national regulation. That it is
a business within the power of regulation by legislative action
needs no discussion. That has been settled since the case of
Munn v. Illinois, 94 U. S. 113. Nor
is there any doubt that in the receipt of livestock by rail and in
their delivery by rail the stockyards are an interstate
commerce
Page 258 U. S. 517
agency.
United States v. Union Stock Yards Co.,
226 U. S. 286. The
only question here is whether the business done in the stockyards,
between the receipt of the livestock in the yards and the shipment
of them therefrom, is a part of interstate commerce or is so
associated with it as to bring it within the power of national
regulation. A similar question has been before this Court, and had
great consideration in
Swift v. United States,
196 U. S. 375. The
judgment in that case gives a clear and comprehensive exposition,
which leaves to us in this case little but the obvious application
of the principles there declared.
The
Swift case presented to this Court the sufficiency
of a bill in equity brought against substantially the same packing
firms as those against whom this legislation is chiefly directed,
charging them as a combination of a dominant proportion of the
dealers in fresh meat throughout the United States not to bid
against each other in the livestock markets of the different
states, to bid up prices for a few days, in order to induce the
cattle men to send their stock to the stockyards, to fix prices at
which they would sell, and to that end to restrict shipments of
meat when necessary, to establish a uniform credit to dealers, and
to keep a black list, to make uniform and improper charges for
cartage, and finally to get less than lawful rates from the
railroads, to the exclusion of competitors, and all this in a
conspiracy and single connected scheme to monopolize the supply and
distribution of fresh meats throughout the United States. In
holding the bill good, this Court said (p.
196 U. S.
396):
"The scheme as a whole seems to us to be within reach of the
law. The constituent elements, as we have stated them, are enough
to give to the scheme a body and, for all that we can say, to
accomplish it. . . . It is suggested that the several acts charged
are lawful, and that intent can make no difference. But they are
bound together
Page 258 U. S. 518
as the parts of a single plan. The plan may make the parts
unlawful.
Aikens v. Wisconsin, 195 U. S.
194,
195 U. S. 206. The statute
gives this proceeding against combinations in restraint of commerce
among the states and against attempts to monopolize the same.
Intent is almost essential to such a combination and is essential
to such an attempt."
Again (pp.
196 U. S.
396-397):
"Although the combination alleged embraces restraint and
monopoly of trade within a single state, its effect upon commerce
among the states is not accidental, secondary, remote, or merely
probable. . . . Here, the subject matter is sales, and the very
point of the combination is to restrain and monopolize commerce
among the states in respect of such sales."
Again (pp.
196 U. S.
398-399), in answer to the objection that what was
charged did not constitute a case involving commerce among the
states, the Court said:
"Commerce among the states is not a technical legal conception,
but a practical one, drawn from the course of business. When cattle
are sent for sale from a place in one state, with the expectation
that they will end their transit, after purchase, in another, and
when in effect they do so, with only the interruption necessary to
find a purchaser at the stockyards, and when this is a typical,
constantly recurring course, the current thus existing is a current
of commerce among the states, and the purchase of the cattle is a
part and incident of such commerce. What we say is true at least of
such a purchase by residents in another state from that of the
seller and of the cattle. . . ."
The application of the commerce clause of the Constitution in
the
Swift case was the result of the natural development
of interstate commerce under modern conditions. It was the
inevitable recognition of the great
Page 258 U. S. 519
central fact that such streams of commerce from one part of the
country to another, which are ever flowing, are in their very
essence the commerce among the states and with foreign nations,
which historically it was one of the chief purposes of the
Constitution to bring under national protection and control. This
Court declined to defeat this purpose in respect of such a stream
and take it out of complete national regulation by a nice and
technical inquiry into the noninterstate character of some of its
necessary incidents and facilities, when considered alone and
without reference to their association with the movement of which
they were an essential but subordinate part.
The principles of the
Swift case have become a fixed
rule of this Court in the construction and application of the
commerce clause. It latest expression on the subject is found in
Lemke v. Farmers' Grain Co., ante, 258 U. S. 50. In
that case, it was held, on the authority of the
Swift
case, that the delivery and sale of wheat by farmers to local grain
elevators in North Dakota, to be shipped to Minneapolis, when
practically all the wheat purchased by such elevators was so
shipped, and the price was fixed by that in the Minneapolis market,
less profit and freight, constituted a course of business, and
determined the interstate character of the transaction.
Accordingly, a state statute which sought to regulate the price and
profit of such sales and was found to interfere with the free flow
of interstate commerce was declared invalid as a violation of the
commerce clause. Similar confirmation of the principle of the
Swift case is to be found in
Dahnke v. Bondurant,
257 U. S. 282, in
Eureka Pipe Line v. Hallanan, 257 U.
S. 265, and in
United Fuel Co. v. Hallanan,
257 U. S. 277; in
Western Union Co. v. Foster, 247 U.
S. 105,
247 U. S. 113;
United States
v.
Page 258 U. S. 520
Reading, 226 U. S. 324,
226 U. S.
367-368;
Ohio R. Co. v. Worthington,
225 U. S. 101,
225 U. S. 108,
and
Loewe v.Lawlor, 208 U. S. 274,
208 U. S.
301.
It is manifest that Congress framed the Packers and Stockyards
Act in keeping with the principles announced and applied in the
opinion in the
Swift case. The recital in § 2, par. b, of
Title I of the act, quoted in the margin, leaves no doubt of this.
[
Footnote 1] The act deals with
the same current of business, and the same practical conception of
interstate commerce.
Of course, what we are considering here is not a bill in equity
or an indictment charging conspiracy to obstruct interstate
commerce, but a law. The language of the law shows that what
Congress had in mind primarily was to prevent such conspiracies by
supervision of the agencies which would be likely to be employed in
it. If Congress could provide for punishment or restraint of such
conspiracies after their formation through the Anti-Trust Law as in
the
Swift case, certainly it may provide regulation to
prevent their formation. The reasonable fear by Congress that such
acts, usually lawful and affecting only intrastate commerce when
considered alone, will probably
Page 258 U. S. 521
and more or less constantly be used in conspiracies against
interstate commerce or constitute a direct and undue burden on it,
expressed in this remedial legislation, serves the same purpose as
the intent charged in the
Swift indictment to bring acts
of a similar character into the current of interstate commerce for
federal restraint. 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 effect upon it are clearly nonexistent.
In
United States v. Ferger, 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 pretended bill. In upholding the act, this Court, speaking
through Chief Justice White, answered the objection by saying:
"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 the relation of that
subject to commerce and its effect upon it. We 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
Page 258 U. S. 522
commerce, come within the power of Congress to regulate,
although they are not interstate commerce in and of
themselves."
The Transportation Act of 1920 presents a close analogy to this
case. It authorizes supervision by the Interstate Commerce
Commission of intrastate commerce, where it is so carried on as to
work undue, unreasonable advantage or preference in favor of
persons or localities in intrastate commerce, as against those in
interstate commerce, or any undue, unjust, or unreasonable
discrimination against interstate commerce itself.
Railroad
Commission v. Chicago, Burlington & Quincy Railroad Co.,
257 U. S. 563.
That case followed the
Minnesota Rate Cases, 230 U.
S. 352,
230 U. S.
432-433;
Houston & Texas Ry. v. United
States, 234 U. S. 342,
234 U. S. 351;
Illinois Central R. Co. v. Public Utilities Commission,
245 U. S. 493;
Baltimore & Ohio Ry. Co. v. Interstate Commerce
Commission, 221 U. S. 612,
221 U. S. 618;
Southern Ry. Co. v. United States, 222 U. S.
20,
222 U. S. 26-27;
Second Employers' Liability Case, 223 U. S.
1,
223 U. S. 48,
223 U. S. 51. The
principle of these cases is thus clearly stated by the court in
Minnesota Rate Cases, (p.
230 U. S.
399):
"The authority of Congress extends to every part of interstate
commerce, and to every instrumentality and 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. "
Page 258 U. S. 523
In § 311 of the act, quoted in the margin, [
Footnote 2] Congress gives to the Secretary of
Agriculture, in respect to intrastate transactions that affect
prejudicially interstate commerce under his protection, the same
powers given to the Interstate Commerce Commission in respect to
intrastate commerce which affects prejudicially interstate railroad
commerce in paragraph 4, § 13, as amended in § 416 of the
Transportation Act of 1920. This was the paragraph and section
which were enforced in
Railroad Commission v. Chicago,
Burlington & Quincy Railroad Co., supra, and the validity
of which was upheld by this Court.
Counsel for appellants cite cases to show that transactions like
those of the commission men or dealers here are not interstate
commerce or within the power of Congress to regulate. The chief of
these are
Hopkins
v.
Page 258 U. S. 524
United States, 171 U. S. 604, and
Anderson v. United States, 171 U.
S. 604. These cases were considered in the
Swift case and disposed of by the Court as follows (p.
196 U. S.
397):
"So, again, the line is distinct between this case and
Hopkins v. United States, 171 U. S.
578. All that was decided there was that the local
business of commission merchants was not commerce among the states,
even if what the brokers were employed to sell was an object of
such commerce. The brokers were not like the defendants before us,
themselves the buyers and sellers. They only furnish certain
facilities for the sales. Therefore, there again, the effects of
the combination of brokers upon the commerce was only indirect, and
not within the act. Whether the case would have been different if
the combination had resulted in exorbitant charges was left open.
In
Anderson v. United States, 171 U. S.
604, the defendants were buyers and sellers at the
stockyards, but their agreement was merely not to employ brokers,
or to recognize yard traders, who were not members of their
association. Any yard trader could become a member of the
association on complying with the conditions, and there was said to
be no feature of monopoly in the case. It was held that the
combination did not directly regulate commerce between the states,
and, being formed with a different intent, was not within the act.
The present case is more like
Montague & Co. v. Lowry,
193 U. S.
38."
It is clear from this that, if the bill in the
Swift
case had averred that control of the stockyards and the commission
men was one of the means used by the packers to make arbitrary
prices in their plan of monopolizing the interstate commerce, the
acts of the stockyards owners and commission men would have been
regarded as directly affecting interstate commerce, and within the
Anti-Trust Act. Congress has found as an evil to be apprehended and
to be prevented by the act here in question in the
Page 258 U. S. 525
use and control of stockyards and the commission men to promote
a packers' monopoly of interstate commerce. The act finds and
imports this injurious direct effect of such agencies upon
interstate commerce, just as the intent of the conspiracy charged
in the indictment in the
Swift case tied together the
parts of the scheme there attacked and imported their direct effect
upon interstate commerce.
Again, if the result of the combination of commission men in the
Hopkins case had been to impose exorbitant charges on the
passage of the livestock through the stockyards from one state to
another, the case would have been different, as the Court suggests.
The effect on interstate commerce in such a case would have been
direct. Similarly, in the
Anderson case, if the
combination of dealers had been directed to collusion with the
commission men to secure sales at unduly low prices to the dealers
and to double commissions, or to practice any other fraud or
oppression calculated to decrease the price received by the shipper
and increase the price to the purchaser in the passage of livestock
through the stockyards in interstate commerce, this would have been
a direct burden on such commerce, and within the Anti-Trust
Act.
The other cases relied on by appellants are less relevant to
this discussion than the
Anderson and
Hopkins
cases. Some of them are tax cases. As to them, it is well to bear
in mind the words of the Court in the
Swift case (p.
196 U. S.
400):
"But we do not mean to imply that the rule which marks the point
at which state taxation or regulation becomes permissible
necessarily is beyond the scope of interference by Congress . . .
where such interference is deemed necessary for the protection of
commerce among the states."
Thus, take the case of
Bacon v. Illinois, 227 U.
S. 504. Bacon had purchased grain in transit from a
western state to the east. He exercised the power under his
contract
Page 258 U. S. 526
to stop the grain in Illinois and put it in a grain elevator
there. He intended to send it on to some other state for sale. He
might have changed his mind. He did, however, after a time, send it
out of the state. The grain was taxed while it was in Illinois. The
question was whether it was immune from taxation because in transit
in interstate commerce. Following the cases of
Woodruff
v. Parham, 8 Wall. 123;
Coe v. Errol,
116 U. S. 517;
Brown v. Houston, 114 U. S. 622;
Pittsburg & Southern Coal Co. v. Bates, 156 U.
S. 577;
Diamond Match Co. v. Ontonagon,
188 U. S. 82,
188 U. S. 93,
188 U. S. 96;
Kelley v. Rhoads, 188 U. S. 1,
188 U. S. 5,
188 U. S. 7;
General Oil Co. v. Crain, 209 U.
S. 211, and
American Steel & Wire Co. v.
Speed, 192 U. S. 500, it
was held that property in a state which its owner intends to
transport to some other state, but which is not in actual transit
and in respect to the disposition of which he may change his mind
is not in interstate commerce just because of the intention of its
owner, and may therefore be taxed by the state where it is. The
Court brought out the distinction between such cases and this in
the remark (p.
227 U. S.
516):
"The question, it should be observed, is not with respect to the
extent of the power of Congress to regulate interstate commerce,
but whether a particular exercise of state power in view of its
nature and operation must be deemed to be in conflict with this
paramount authority."
Moreover, it will be noted that even in tax cases where the tax
is directed against a commodity in an actual flowing and constant
stream out of a state from which the owner may withdraw part of it
for use or sale in the state before it reaches the state border, we
have held that a tax on the flow is a burden on interstate commerce
which the state may not impose because such flow in interstate
commerce is an established course of business.
United Fuel Gas
Co. v. Hallanan, 257 U. S. 277.
Eureka
Page 258 U. S. 527
Pipe Line Co. v. Hallanan, 257 U.
S. 265. In the former, the Court summed up as
follows:
"In short, the great body of the gas starts for points outside
the state and goes to them. That the necessities of business
require a much smaller amount destined to points within the state
to be carried undistinguished in the same pipes does not affect the
character of the major transportation. Neither is the case as to
the gas sold to the three companies changed by the fact that the
plaintiff, as owner of the gas, and the purchasers after they
receive it might change their minds before the gas leaves the
state, and that the precise proportions between local and outside
deliveries may not have been fixed, although they seem to have
been. The typical and actual course of events marks the carriage of
the greater part as commerce among the states, and theoretical
possibilities may be left out of account. There is no break, no
period of deliberation, but a steady flow ending as contemplated
from the beginning beyond the state line.
Ohio R. Co.
Commission v. Worthington, 225 U. S. 101,
225 U. S.
108;
United States v. Reading Co., 226 U. S.
324,
226 U. S. 367;
Western
Union Telegraph Co. v. Foster, 247 U. S.
105,
247 U. S. 113."
The case of
Blumenstock v. Curtis, 252 U.
S. 436, is easily distinguished from the one at the bar.
There, it was merely held that an attempt of a publisher to
monopolize the business of publishing advertising matter in
magazines, resulting in refusal of such publisher to accept
advertisements in his magazines, was too remote in its relation to
the interstate commerce of circulating magazines. The Court
said:
"This case is wholly unlike
International Text-Book v.
Pigg, 217 U. S. 91, wherein there was a
continuous interstate traffic in textbooks and apparatus for a
course of study pursued by means of correspondence, and the
movements in interstate commerce were held to bring the subject
Page 258 U. S. 528
matter within the domain of federal control, and to exempt it
from the burden imposed by state legislation."
Pennsylvania R. Co. v. Knight, 192 U. S.
21, relied on by counsel for appellants and said to be
exactly applicable to the case at bar, was an effort by the
Pennsylvania Railroad Company to secure immunity from city
regulation for a cab system which it ran in New York to and from
its station to points in New York City, on the ground that it was
part of interstate commerce. This Court held that, because it was
independent of the railroad transportation, and not included in the
contract of railroad carriage, it did not come within interstate
commerce. The case was distinguished in the
Swift case (p.
196 U. S. 401)
from cartage for delivery of the goods when part of the
contemplated transit. There is nothing in the case to indicate
that, if such an agency could be and were used in a conspiracy
unduly and constantly to monopolize interstate passenger traffic,
it might not be brought within federal restraint.
As already noted, the word "commerce," when used in the act, is
defined to be interstate and foreign commerce. Its provisions are
carefully drawn to apply only to those practices and obstructions
which, in the judgment of Congress, are likely to affect interstate
commerce prejudicially. Thus construed and applied, we think the
act clearly within Congressional power, and valid.
Other objections are made to the act and its provisions as
violative of other limitations of the Constitution, but the only
one seriously pressed was that based on the commerce clause, and we
do not deem it necessary to discuss the others.
The orders of the district court refusing the interlocutory
injunctions are
Affirmed.
MR. JUSTICE McREYNOLDS dissents.
MR. JUSTICE DAY did not sit in these cases and took no part in
their decision.
[
Footnote 1]
The first title (§ 2, paragraph b) provides that:
"For the purpose of this act, a transaction in respect to any
article shall be considered to be in commerce if such article is
part of that current of commerce usual in the livestock and meat
packing industries whereby livestock and its products are sent from
one state with the expectation that they will end their transit
after purchase in another, including, in addition to cases within
the general description, all cases whose purchase or sale is either
for shipment to another state or for slaughter of the livestock
within the state and the shipment outside of the state of the
products resulting from such slaughter. Articles normally in such
current of commerce shall not be considered out of such current
through resort's being had to any means or device intended to
remove transactions in respect thereto from the provisions of the
act."
[
Footnote 2]
Section 311 is as follows:
"Whenever in any investigation under the provisions of this
title or in any investigation instituted by petition of the
stockyard owner or market agency concerned which petition is hereby
authorized to be filed, the Secretary, after full hearing, finds
that any rate, charge, regulation, or practice of any stockyard
owner or market agency for or in connection with the buying, or
selling on a commission basis or otherwise, receiving, marketing,
feeding, holding, delivery, shipment, weighing or handling, not in
commerce, or livestock, causes any undue or unreasonable advantage,
or preference as between persons or localities in intrastate
commerce in livestock on the one hand, and interstate or foreign
commerce in livestock, on the other hand, or any undue, unjust, or
unreasonable discrimination against interstate or foreign commerce
which is hereby forbidden and declared to be unlawful, the
Secretary shall prescribe the rate, charge, regulation, or practice
thereafter to be observed in such manner as in his judgment will
remove such advantage, preference, or discrimination. Such rates,
charges, regulations, or practices shall be observed while in
effect by the stockyard owners or market agencies parties to such
proceeding affected thereby, the law of any state or the decision
of any state authority to the contrary notwithstanding."
