Monopolies and the People Part 5

What are the powers delegated to the general government by the const.i.tution in questions of this character? Article I. Section 8, contains, among others, the following, as some of the powers conferred upon congress: "To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;" "To establish post offices and post roads;" "To make all laws which shall be necessary and proper for carrying into execution the foregoing powers and all other powers vested by this const.i.tution in the government of the United States, or in any department or office thereof." The same section gives congress power to provide for organizing the army, &c.; and, in time of war, extraordinary powers, controlled only by the necessities of the case, are vested in congress. If congress have power under the const.i.tution to charter private corporations, it must be derived from, or contained in, the provisions above quoted. Article IX. of the const.i.tution reads as follows: "The enumeration in the const.i.tution of certain rights shall not be construed to deny or disparage others retained by the people."

And Section 10 reads as follows: "The powers not delegated to the United States by the const.i.tution, nor prohibited by it to the states, are reserved to the states respectively, or to the people." And the framers of the const.i.tution it would seem, for the purpose of making the line of demarcation between the powers of the states and the general government still more plain and definite, provided as follows: Article IV., Section 2: "The citizens of each state shall be ent.i.tled to all privileges and immunities of citizens in the several states."

We think that the above quotations from the const.i.tution (and we have quoted all having any relation to the question we are discussing) prove conclusively that the powers conferred upon congress by the const.i.tution are limited; that while within the scope of the delegated powers its action is supreme, there is inherent in it no general power to legislate upon subjects not named in the const.i.tution, or not included by necessary implication. On the contrary, all the powers not expressly given are reserved to the states or to the people.

Is the authority to charter private corporations necessarily included in the delegated power to regulate commerce among the several states, or to establish post roads? We think not. What do we understand by the word "Commerce?" Webster defines it as follows: "1st. _In a general sense_, an interchange or mutual change of goods, wares, productions, or property of any kind between nations or individuals, either by barter, or by purchase and sale; trade; traffic. Commerce is _foreign, or inland_. Foreign commerce is the trade which one nation carries on with another; inland commerce, or inland trade, is the trade in the exchange of commodities between citizens of the same nation or state. 2d.

Intercourse between individuals; interchange of work, business, civilities, or amus.e.m.e.nts; mutual dealings in life." And again: "To traffic; to carry on trade." In the absence of any definition given to it in the const.i.tution, we must accept the above general definition of its meaning as being the sense in which it is used in the const.i.tution.

Respecting trade with foreign nations or the Indian tribes, it can only relate to the interchange of commodities, or purchase or sale of articles of traffic. As incidental to this power, congress can prescribe rules for the regulation of navigation upon the high seas, including police regulations on board of vessels, because the oceans are the common or public highways of all nations, and each nation navigating the same is bound to protect not only its commerce, but its citizens or subjects. Nations hold commerce with nations across and upon the high seas, the citizens and subjects of each being protected by their own government. This commerce with foreign nations is not regulated by grants of private charters, but by acts of congress is open to all alike, save where, for the encouragement of certain branches of trade, certain bounties or privileges have been granted to particular parties for a specified time. But all such grants have been to parties navigating the high seas. The control of navigable streams within the United States does not depend alone upon the powers given to congress to regulate the commerce of the country, but depends also upon the further power vesting in the general government exclusive maritime jurisdiction.

If we concede that the power to regulate commerce among the several states gives congress the exclusive right to regulate the commerce carried on upon our rivers, it would not follow that the power to charter railway companies is conferred. Navigable streams are _public highways_, open to the travel of all. No man, set of men, or corporations, can claim the exclusive right to navigate these rivers, nor could congress grant such exclusive right. The duty of protecting the rights of the citizen, and of making river transportation safe, and of protecting the rights of property, demand that the national, and not the state legislature, should be supreme in this particular jurisdiction, and hence this branch of commerce is placed in the custody of the nation. But keeping in mind the definition of the word, "Commerce," let us see what is meant by the term as applied to dealings between the states. We insist that it has no reference to the construction of roads, railroads, ca.n.a.ls, or any other ways upon which commerce might be carried, or over which articles of trade or traffic might pa.s.s, but that it refers only to the dealing of the people of one state with another; that while the people of each state are under the supreme control of their state authority, all the privileges enjoyed by the citizens of any one of the states as to residence or traffic with the citizens of another state, are to be the same. No distinction can be made, and for the purpose of carrying out this provision of the const.i.tution, and preventing the levy of tariffs or taxes by one state upon the citizens of another state, and for the purpose of guaranteeing to all citizens of the United States immunity from these unjust discriminations, the power to regulate commerce among the states was delegated to congress. Nor does it follow, that, for the purpose of regulating commerce among the states, congress can grant exclusive privileges and monopolies in any business not confided to one state.

When the const.i.tution was adopted, each state was independent; each had all the powers and prerogatives of a nation; each was supreme within its geographical limits; each might prescribe its own rules in relation to immigrants, and to trade and traffic with other states; it might discriminate in favor of its own citizens; it might impose tariffs on foreign imports, and deal with its sister states as with foreign nations. To prevent this, and to secure to all citizens of the United States equal privileges and immunities in all parts of the United States, the provisions of the const.i.tution we have quoted were adopted.

While the independence of the states was recognized and preserved, the power to regulate commerce, among them, was delegated to congress; not the power to withdraw from the state its right to legislate upon the subject of commerce among its own citizens, or the right to protect its own citizens in their dealings with the citizens of other states; but simply providing that no discriminations should be made on account of residence, and establishing equal rights and privileges of all citizens of the United States in all the states, free from discriminations sought to be enforced under local or state statutes and regulations. Should any one state attempt to deny to the people of another state the privileges guaranteed by the const.i.tution, then it would be the plain duty of congress to interfere and "_regulate commerce_" between these states.

But while a general national law might const.i.tutionally be enacted upon this subject, it certainly cannot be claimed, that upon the pretext of regulating commerce among the states, congress can charter railroad companies, or any other companies organized for pecuniary profit. Nor can this power be claimed under the const.i.tutional provision for the establishment of post offices and post roads. We admit that the grant of this power carries with it all such as are incidental; that by implication it includes within its terms the carrying and distribution of the mails, and all other matter necessarily connected therewith; and that congress might build, own, and control post roads, so far as the same might be found necessary for the transportation of the mails over the territory belonging to the United States, and to provide for the use of public roads for government purposes. Public highways are free to all. Over these highways, whether on land or water, congress can provide for the transportation of the mails, troops, army stores, munitions of war, and other public property. These highways are at all times open to the public. But while this is true, it does not follow that the government of the United States can take the absolute control of these public highways, and, by act of congress, deny the states a control over those within their borders respectively. The location and establishment of public roads within a state is a part of the local or police regulation, and while these roads are free to the pa.s.sage of all, they are, by the provisions of the const.i.tution and the universally accepted custom of the country, recognized as being under the exclusive control of the states within which they are situated. The fact that congress never has taken the control of the public roads of the country is a full recognition of the exclusive right of the states to control them. Then how can it be claimed that congress, under the const.i.tution, possesses the power to charter railroad companies? Until within the last few years, no attempt was made to grant charters to railroad companies by the general government, nor indeed were charters granted for any purpose save in relation to the financial departments, as in the case of United States banks, fiscal agencies, &c., which were chartered for the public benefit, and not as private inst.i.tutions. We are not positive that the const.i.tutionality of these railroad charters has been determined by the courts of the United States, but we are aware of the fact that congress has deemed it necessary, in almost every instance where charters have been granted and aid voted, to declare, and place upon the record as a part of the charter, the reasons for granting it.

The following are the reasons a.s.signed in some of the charters, to-wit: In the charter of the Union Pacific railroad company--"For the purpose of aiding in the construction of said railroad and telegraph line, and to secure _the safe and speedy transportation of the mails, troops, munitions of war, and public stores thereon_."

In the charter of the Northern Pacific railroad company: "For the purpose of aiding in the construction of said railroad and telegraph line to the Pacific coast, and to secure _the safe and speedy transportation of the mails, troops, munitions of war, and public stores_." In all other cases the above quoted statement of cause is inserted in the charters, as though the right or authority to make these grants was so doubtful that it became necessary in every case to state the reason for the grant. If the present necessities of the government demand such special legislation, then the same reasons existed from the organization of our government; and if congress possesses the power under the const.i.tution to make these grants, and to a.s.sume the absolute control of public or private roads through the states, then from the adoption of that const.i.tution congress could have taken the absolute control of all the public roads in all the states of the Union. Before railroads were constructed, all overland transportation of mails, troops, munitions of war, &c., was over the public highways--highways that were and still are under the exclusive control of the states in which they lie. Over these public roads and such private ways as maybe selected, government has a right to transport the mails, troops, and public property, and no state has the right to prohibit or restrict this right. Still, no power is given by the const.i.tution, nor is there any implied, under which congress can, under the plea of rendering more safe and speedy the transportation of mails, troops, &c., grant exclusive charters and privileges to private corporations. In the nature of things, as our government is organized, the right to charter and control all corporations organized for pecuniary profit remains with the states.

This power has never been delegated to the general government, nor prohibited to the states, or people. There can be no doubt upon this point, when we remember that the general government is limited to the delegated powers; and that it is supreme only in those matters which are delegated to and vested in it by the const.i.tution. This position is fully sustained by the adjudication of the supreme court of the United States. In Marshall, on the federal const.i.tution, page 164, we find the following: "This government is acknowledged by all to be one of enumerated powers. The principle that it can exercise only the powers granted to it, would seem too apparent to have required to be enforced by all those arguments which its enlightened friends, while it was depending before the people, found it necessary to urge. That princ.i.p.al is now universally admitted." Again, on page 301, the author says: "In our complex system presenting the rare and difficult scheme of one general government whose action extends over the whole, but which possesses only certain enumerated powers and of numerous state governments, which retain and exercise all powers not delegated to the union, contests respecting power must arise. Were it otherwise, the measures taken by the respective governments to execute their acknowledged powers would often be of the same description, and might sometimes interfere. This, however, does not prove that the one is exercising, or has the right to exercise, the power of the other."

As to the power of congress to create corporations, an argument has been drawn in its favor from the provision of the const.i.tution, which declares that congress shall have the power of making "all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this const.i.tution in the government of the United States, or in any department thereof." The question before the court arose out of the attempt of the state of Maryland to tax the United States bank, a corporation chartered by congress. In this case the power was upheld on the ground that the bank was necessary in the administration of the finances of the government, that being one of the matters vested in or delegated to the general government, the power to charter the bank was incidental to the granted power. But on the question of the power of congress to create corporations, Mr. Marshall says, page 167: "The creation of a corporation, it is said, appertains to sovereignty. This is admitted.

But to what portion of sovereignty does it appertain? Does it belong to one more than another? In America the powers of sovereignty are divided between the government of the Union, and those of the states. They are each sovereign with respect to the objects committed to it, and neither sovereign with respect to the objects committed to the other. We cannot comprehend that train of reasoning which would maintain that the extent of power granted by the people is to be ascertained, not by the nature and terms of the grant, but by its date. Some state const.i.tutions were formed before, some since that of the United States. We cannot believe that their relation to each other is in any degree dependent upon this circ.u.mstance. Their respective powers must, we think, be precisely the same as if they had been formed at the same time. Had they been formed at the same time, and had the people conferred on the general government the power contained in the const.i.tution and on the states the whole residium of power, would it have been a.s.serted that the government of the union was not sovereign with respect to those objects which were entrusted to it, in relation to which its laws were declared to be supreme? If this could have been a.s.serted, we cannot well comprehend the process of reasoning which maintains that a power appertaining to sovereignty cannot be connected with that vast portion of it which is granted to the general government, so far as it is calculated to subserve the legitimate objects of that government. The power of creating a corporation, though appertaining to sovereignty, is not like the power of making war, or levying taxes, or of regulating commerce, a great substantive and independent power which cannot be implied as incidental to other powers, or used as a means of executing them. It is never the end for which other powers are exercised, but the means by which these objects are accomplished. No contributions are made to charity for the sake of an incorporation, but a corporation is created to administer the charity. No seminary of learning is inst.i.tuted in order to be incorporated, but the corporate character is conferred to subserve the purposes of education. No city was ever built with the sole object of being incorporated, but it is incorporated as the best means of being well governed. The power of creating a corporation is never used for its own sake, but for the purpose of effecting something else.

No sufficient reason is therefore perceived why it may not pa.s.s as incidental to those powers which are expressly given, if it be the direct mode of executing them."

Taking the above definition of corporations, and their use, in the administration of the government, we can have no difficulty in distinguishing the cases in which congress can grant charters to any company or a.s.sociation. It is only when some of the delegated powers require the aid of corporate acts in their administration, that the right exists in congress to grant charters, as incidental to the grants.

The grants of charters to railroad companies cannot be claimed as incidental to any express delegation of power to the general government.

If railroads are private property, they cannot be chartered or controlled by congress. If they are to be taken and treated as public highways, then they are as exclusively under and subject to the control of the respective state governments, as common highways. The state legislatures have exclusive control of them in either case. If they are treated as private corporations, then under the rights reserved to the states, as well as by long usage, their exclusive control is retained by the states. If they are public roads, the same local or state laws apply to them as to all other public roads. Admit that congress has the right to grant charters for railroads, then it follows that it can control them. Admit that they are public roads, and that they are to be taken and treated as common highways, and congress at once a.s.sumes the local and police regulations of all the public roads in all of the United States.

To this doctrine we cannot subscribe, but insist that the exclusive power to charter and control railroad corporations remains with the people to be exercised by and under the exclusive control of the state governments. Nor can congress, rightfully, under the const.i.tution, charter railroad corporations in the territories. The power vested in congress "to dispose of and make all needful rules respecting the territory or other property belonging to the United States," does not authorize the creation of private monopolies. When territorial governments are formed, they are clothed with many of the attributes of sovereignty. These governments are at liberty to legislate and to provide for the well-being of the people, and subject to the provisions of their "organic law," have the complete control of local and police regulations. They can construct highways, erect public buildings, impose taxes, grant charters, including charters to railroad companies. That territorial governments can charter railroad companies, and that general government has so acknowledged is proven by the acts of congress in donating lands and bonds to companies chartered by territorial legislation. This was done in the case of the Leavenworth, p.a.w.nee, & Western railroad company, chartered by the territorial legislature of Kansas; and other instances are common. The power to grant charters cannot vest in the states, and territorial governments, and at the same time exist in the general government, for the reason that the supreme power must exist in one or the other. If this were not so, one government could destroy what the other had created. The privileges acquired by a corporation under the one could be entirely annulled by the other. Private rights would be subject to the adjudication of two separate and distinct tribunals, created and sustained by distinct governments, the one claiming to be supreme, because the right to exercise the power had been granted to it, and the other denying such grant, and because of this denial claiming the power as still remaining with the state government. This course would be destructive of the rights of the people, as well as of our system of government. Concede to congress the right to charter railroad companies, and there is no limit to the monopolies that can be forced upon the people of the whole country. Land companies, loan, and interest companies, manufacturing companies, and in short all conceivable projects of speculation can obtain charters from congress, and our government becomes entirely personal in character, without restraint or const.i.tutional limit. The a.s.sumption by congress of the power to create private corporations is a fatal stab at our system of government, destructive of state rights, and a wanton violation of the const.i.tution.

CHAPTER IX.

STATE RIGHTS AT THE BAR OF A CORRUPT CONGRESS.

None of the subjects of legislation have tended to destroy const.i.tutional safeguards and debase public morals so much as congressional legislation, with its grants of land and bonds, and other special benefits in favor of railroad corporations. This species of legislation has well nigh destroyed republican inst.i.tutions. While our government is republican in name it is in fact controlled by an oligarchy. The whole government has become a prey to the cla.s.s of corporations above named, and is administered in their interest. Their influence controls the legislative department, the courts of the country, and its finances. This is a sweeping a.s.sertion, but who will deny it. Further, the very men who by their votes in congress have created these monopolies, have themselves in many instances received pecuniary consideration for their votes, either in corporate stock, or direct payment. This last a.s.sertion is now (January 9, 1873) being supported by results arrived at by committees appointed to investigate charges of corruption made against members of both branches of congress.

Having a.s.sumed the right to grant charters and aid to these corporations in violation of the const.i.tution, it was but one step further in the same direction for congress to enact other unconst.i.tutional laws, regulating and combining railroads receiving their charters from state legislatures, laws which enable these roads to so combine their operations as to control the entire interests of the country. These acts are numerous in the published laws of congress. We will refer to some of them, and direct the reader to the following, of a general nature: On the 15th of June, 1866, congress pa.s.sed the following unconst.i.tutional act in the interest and for the benefit of railroad corporations: See Second Brightley's Digest, page 528, "That every railroad company in the United States, whose road is operated by steam, its successors and a.s.signs, be and is hereby authorized to carry upon and over its road, boats, bridges, and ferries, all pa.s.sengers, troops, government supplies, mails, freight, and property, on their way from one state to another state, and to receive compensation therefor, and to connect with roads of other states so as to form continuous lines for the transportation of the same to the place of destination. Provided, that this act shall not affect any stipulations between the government of the United States, and any railroad company for transportation and fares without compensation, nor impair or change the conditions imposed by the terms of the acts granting lands to any such company to aid in the construction of its road, nor shall it be construed to authorize any railroad company to build any new road, or connection with any other road without authority from the state in which said railroad, or connection, may be proposed." Commenting upon this extraordinary statute, the editor says: "In the preamble to this extraordinary a.s.sumption of power, on the part of the federal congress, they prefer to base their authority for it on the power to regulate commerce among the several states, to establish post-roads, and to raise and support armies. But it has been decided that the const.i.tutional power to establish post-roads is confined to such as are regularly laid out under state authority; the government of the United States cannot construct a post-road within a state of the Union without its consent. The post-roads of the United States are the property of the states through which they pa.s.s. The United States have the mere right of transit over them for the purpose of carrying the mails; the government could not have an injunction to prevent the destruction of a mail-road." Citing the case of the Cleveland, Painesville, & Ashtabula railroad company _vs_. The Franklin ca.n.a.l company, in the circuit court of the United States, the editor adds: "Congress certainly can confer no rights on a railroad company incorporated by a state government, which are withheld from it by the charter of its creator."

The above quoted act a.s.sumes that congress has full power to regulate the connection of railroads in the different states, as well as the carrying trade upon the same. It strips the several state governments of all power to interfere, and in case of any controversy takes from the state courts the power to determine the rights of the respective parties; the act of congress could be pleaded, and, as a necessary consequence, the United States courts would have exclusive jurisdiction.

It cannot be claimed that this act can be supported under any express delegation of power to the general government, nor can it be supported as being incidental to any express grant. It is an usurpation not warranted or sustained by any part of the const.i.tution. This one section quoted, destroys the right of any state of the Union, or of two or more of them, to legislate upon the subject of uniting or connecting railroads meeting on the lines dividing them, and also takes from the states the right to regulate the carrying trade within their own respective borders. Congress had no more authority under the const.i.tution to enact this law, than to provide by statute for the construction of public highways when they meet upon the line dividing states, or to provide for the pa.s.sage of teams from one state to another, and the transportation of freights over the common highways within or across a state. The whole power under the const.i.tution is reserved to the states. Prior to the creation of these great railroad monopolies by congress, an attempt at such legislation would have been deemed unconst.i.tutional, but as soon as the whole affairs of government pa.s.sed into the hands of the few, and when the protection of their interests demanded it, the act was pa.s.sed, and has remained upon the statute book as one of the laws of the land. This act is about the only one that openly and broadly covers the whole ground, and a.s.sumes to regulate the internal affairs of the states, but there are numerous acts pa.s.sed in relation to land grants and the companies chartered by congress, which have the same effect. In some cases the absolute control of roads constructed under charters obtained from state legislatures, or under state laws, has been taken from the states by acts of congress, and placed under the jurisdiction of the general government. In most instances where this has been done, members of congress, or their near relatives, were large owners of stock in the companies to be benefited by the act. To speak more plainly, the acts granting special privileges to particular companies, and placing them under the jurisdiction of the federal government, were pa.s.sed for the benefit of congressmen and others in high official position. Let us examine some of these acts.

Among the stockholders and directors of the Union Pacific and its branches, there are found at least eight persons who were members of congress at the date of the act of congress creating the corporation, and also at the date of the material amendments to the charter. Some of these congressmen are still stockholders and directors, and were directors when congress released these companies from payment of interest on the bonds they had received from the government. Another land grant company having congressmen among its stockholders and directors, is the Leavenworth, Lawrence, & Galveston; also, the Iowa Falls & Sioux City; also, the Cedar Rapids & Missouri River; also, the Burlington & Missouri River; also, the Atlantic & Pacific; also, the New Orleans, Mobile, & Texas; also, the Northern Pacific; also, Sioux City & Pacific; also, the Fremont, Elkhorn, & Missouri Valley. The number might be extended, but enough is given to sustain our charge. Most of the above named companies were organized under state laws, or received their charters from state or territorial legislatures. For the purpose of consummating certain speculative ends, congress has treated with contempt state laws and state authority. Where charters have been granted under state authority, and the companies were rightfully under the control of the states within which their roads were located, acts like the following have been pa.s.sed by congress: "That the Leavenworth, p.a.w.nee, & Western railroad company, of Kansas, are hereby authorized to construct a railroad and telegraph line from the Missouri river, at the mouth of the Kansas river, on the south side thereof so as to connect with the Pacific railroad of Missouri;" and then follow the details for constructing and operating the road, and placing it under the control of the general government. In the case of the Central Pacific company, chartered by the state of California, congress pa.s.sed the following act:--

"The Central Pacific railroad company of California, a corporation existing under the laws of the state of California, are hereby authorized to construct a railroad and telegraph line from the Pacific coast, at or near San Francisco, or the navigable waters of the Sacramento river, to the eastern boundary of California."

Substantially the same provision is found for most of the corporations above named, and in all those cases, the authority to construct the road is followed by a provision for aid by the general government.

It might be pertinent to inquire why it became necessary for congress to a.s.sume the control of railroads already chartered under state authority.

It cannot be claimed that the states acted without authority in granting the charter; nor can the authority of the general government to take from the states the control of railroads within their border, be supported by any grant of power contained in the const.i.tution. On the contrary, the power is reserved to the states, and its exercise is denied to the general government. It cannot be urged that the interests of the people are subserved by this a.s.sumption of power; on the contrary, these acts of congress take from the public its rights reserved by the const.i.tution. But one answer can be given, _these acts were pa.s.sed for the promotion of selfish and corrupt ends_. In support of this, we need only state the fact, that in almost every instance where congress has attempted to re-charter companies organized under state authority, and granted them aid, members of congress who were members at the date of the pa.s.sage of the acts, were stockholders, and not unfrequently directors. Some congressmen who have been members for the last ten or twelve years, are stockholders in several of the companies, and at least one member of congress of twelve years standing is now a director in at least three companies that received grants of land, one of them getting large amounts of subsidy bonds, for all of which he voted, and for which, as often as occasion served, he has used his vote and influence in procuring additional privileges. We do not claim that every member of congress is interested in railroads; but we do a.s.sert that there are many senators and representatives who are personally interested, and that the proportion is so great that whenever it is desirable to have legislation it can be obtained without difficulty. To prove that the chartering and endowing of railroad companies is one of the princ.i.p.al occupations of the national legislature, we have only to look through the acts of congress the last two or three sessions. At the first session of the forty-second congress fourteen railroad bills were pa.s.sed, some of them conferring grants to companies yet in embryo, having no being save upon paper, but presenting "great expectations" to our congressmen, who combine the business of granting charters and building railroads, and who find no indelicacy in becoming stockholders and directors in the corporations to which they, as congressmen, have voted lands and money. Some of these roads, under the acts of congress, present great inducements for investments, and in due time will receive proper attention. The effect of this species of legislation has been most baneful. The national congress, once the most pure and patriotic body in the world, has become the headquarters of all the unscrupulous men of the nation. It is under the control of dishonest and reckless men. Elections to seats in that body have become of such value, that to secure them men do not hesitate to pay more than the salary for the entire term. Nor do candidates always pay their own money. It is often furnished by rings and interests which require special legislation. It is now well understood that senators and representatives are in the market like other commodities. The purchase is made either in large donations of $10,000, $20,000, $30,000, or more from single corporations, or by shares, stock or bonds in companies chartered by congress, and afterwards fostered and protected by congressmen. So common has this practice become that it is not now considered disreputable. What in former years would have been deemed bribery and corruption are now nothing but fair business transactions.

We recall a case which ill.u.s.trates the purity of former legislation compared with what we see in our own day. Some thirty years ago, certain parties desired a charter for a denominational college. A Rev. Mr.

Strong was appointed to visit the capital and interest the legislature in behalf of the charter. He was introduced to a Mr. Cushing, to whom he presented his case, and whom he sought to interest in favor of the grant. The grant of the charter was likely to meet with opposition, and to remove certain objections, Mr. Strong was anxious to have Mr. Cushing examine into the matter fully, and as an inducement for making such an examination he was told that the friends of the measure would compensate him liberally for the time he might spend in such examination. This Mr.

Cushing interpreted as an offer to bribe a member of a legislative body, and he felt bound to resist it. Accordingly he laid the matter before the house. That body by unanimous vote, ordered the sergeant-at-arms to arrest Mr. Strong, and bring him to the bar of the house. After an investigation into the truth of the charge, Mr. S. was found guilty and publicly reprimanded by the speaker. This happened before legislators had learned to speculate upon their official position. It was in simple times, when those elected to office supposed their first duty was to serve their country, and when it was an irrecoverable disgrace to receive a bribe. It was at a time when our law-makers had too much self-respect to purchase their election with tens of thousands of dollars, and then reimburse themselves by taking stock in, and dividends from, giant corporations chartered and created by themselves. How is it now? Let the facts answer. Cla.s.s or personal legislation, for special combinations, or in certain interests, is the rule, and legislation for the benefit of the whole people is the exception to that rule.

Congressmen, to secure an election, expend large sums of money, and when elected their first care is to _get even_. To accomplish their purpose, they resort to unconst.i.tutional legislation, such as granting exclusive privileges or jobs to individuals, for which indirect pecuniary consideration is received. But this alone would not suffice to reimburse them for their great outlay. The greatest source of profit to congressmen has been, and unless it is checked, will continue to be, found in railroad legislation.

CHAPTER X.

AN UNSETTLED ACCOUNT--A GUILTY DIRECTORY.

We now invite the attention of the reader to the account as it now stands with the subsidy bonds voted by congressmen to companies in which many who voted were stockholders and directors.

As the law stood prior to April, 1871, all railroad companies that had received government lands were required to pay the interest once in six months as it accrued. This interest had not been paid, and the secretary of the treasury withheld, to apply on the accrued interest, the amount earned by the different companies by the transportation of the mails, troops, &c., for government. Congress, composed in part of stockholders and directors in these same companies, pa.s.sed a law ordering the secretary to pay in money to the different companies one-half of the amount thus earned, and left it optional with the companies to pay, or not to pay the interest on their bonds. This they have not done, and the interest account of these companies with the government stands about as follows:--

Central Pacific, paid $ 527,025 Bal. due $5,841,351 Kansas Pacific, " 973,905 " " 995,448 Union Pacific, " 2,181,989 " " 4,779,763 Central Branch, U. P., " 15,839 " " 477,969 Western Pacific, " 9,350 " " 358,329 Sioux City & Pacific, " 826 " " 388,780

Making the total amount of payments the sum of $3,708,935, and the amount that these companies owe government, as the accrued interest on subsidy bonds, $12,861,640. This is the amount due in July, 1872. Add the interest accruing since that date and these companies owe the government not less than $16,000,000 interest on their bonds. This amount, as well as future interest, and the princ.i.p.al of the bonds was at one time secured to the government; but when congressmen and their friends get a controlling interest in the companies, they procured the pa.s.sage of an act, supported by their own votes, which destroyed the security held by the government, and relieved the companies of the payment of this large amount of interest, thereby compelling the people to pay it, while the stockholders, including some of the same congressmen who had voted in favor of the act, received dividends on their stock and on their _Credit Mobilier_ stock to the amount of two and three hundred per cent; thus, by the abuse of the power vested in themselves as members of congress, compelling the people to pay the interest the companies should have paid, and pocketing in the shape of dividends the money so dishonestly obtained. If we needed any further proof to establish the fact that these Pacific railroads were in fact congressional jobs, that members of congress were looking to their own interests rather than to the interests of the people, we need but glance at the interest account of the Sioux City & Pacific company. The excuse pleaded of the "necessities of government," will not avail in this instance. While the interest account of this company is about $400,000, the account for the transportation of troops, mails, &c., over its road, amounts to the sum of $1,642, one-half of which has been applied on the interest account of the company, and the other half, under the act of congress, has been paid by the secretary of the treasury to the company.

The conclusion is irresistible, that the personal interest of congressmen, rather than the wants of the public, has controlled their action.

Connect with the incorporation of railroad companies, and special legislation in their favor, the legislation in favor of "Indian rings,"

"whisky rings," "patent right combinations," and the numerous other kinds of special legislation, with the advantages presented to legislators to make personal gain from all these sources, and we can well understand why men are willing to spend such large sums to secure an election to the United States senate, or house of representatives.

The baneful effects of the modern code of political morality are not seen in the legislative department of the government only. The same disregard of the rights of the people, and a determination to protect and aid combinations in their efforts toward self-aggrandizement, made at a sacrifice of those principles which are supposed to govern all persons holding places of trust, honor, or confidence, seem to influence to a great degree those holding high position in other departments of the government. The acts of congress chartering the Pacific railroad companies make it the duty of the president of the United States to appoint five government directors for these roads. Under the statutes these directors cannot own stock in the companies, nor have in them any personal interest whatever. They are supposed to be free from any bias for or against the companies: but they are appointed to represent the government, and to guard against and report to the secretary of the interior all abuses on the part of the companies, and at such times as they are required to so report, to also make such suggestions as in their opinion shall best subserve the interests of the public. It is made their duty to personally inspect the roads, during their building and after their completion. At least two of these government directors must have a place on all important committees appointed by the companies for the management and prosecution of their business. Any dishonesty on the part of the companies in letting contracts for the construction of their roads, or any misapplication of the grants made by congress, must have been known to these five government directors, or some of them, if they had properly discharged the duties imposed upon them by law. The formation of an inside ring, under the t.i.tle of "The Credit Mobilier of America," composed entirely of the directors and stockholders of the Union Pacific company, the letting of the contract for the construction of the road to one of the directors of the railroad company, who was also a director in the Credit Mobilier (and a member of congress), at more than double its actual cost, the transfer of this contract to certain trustees who were directors in both companies, in the manner stated in a preceding chapter of this work, and the declaration of large dividends on the stock of the companies at a time when the work on the road was barely begun, and before any dividends could possibly have been earned,--all these facts must have been known to the government directors, and concealed by them from the government. When it is remembered that some of these government directors were members of congress at the date of the pa.s.sage of the acts chartering the roads, there is but little question that the same influences controlling them in voting these large subsidies to the companies also controlled them as government directors in their supervision of the roads. This conclusion is strengthened on seeing that some of them became owners of stock in the Credit Mobilier.

The same corrupting influences have been felt in other departments of the government. The abuses practiced in the collection of customs by the officers at the different ports of entry, as shown at the recent investigations made by authority of congress, are but the natural sequence of the questionable course of the legislative department. The great frauds practiced by parties having contracts for furnishing supplies to the Indian tribes are traceable to the same source. This a.s.sumption by congress of the power to grant charters to private monopolies, its unconst.i.tutional interference in matters reserved to state control, its determination to foster these gigantic corporations by princely grants, with the corruption incident to these selfish and greedy combinations, are the direct cause of the dishonesty prevailing everywhere among our public officers, and besides other rank growth have led to the imposition of burdens upon the people, oppressive to the last degree. The controlling purpose of a large portion of those elected or appointed to government offices seems to be to acc.u.mulate wealth without regard to the propriety or honesty of the means employed. In their eagerness to benefit themselves, all consideration for the public good, or respect for their obligations as sworn servants of the people, are of secondary importance. They accept office from purely selfish motives, and enter upon their duties with the same object in view animating those who embark in trade, manufactures, or commerce, viz: private gain.

Seemingly viewing the offices they hold as being their own private property, they use them as the banker uses his money--for purposes of speculation. Not unfrequently they permit themselves to be bought and sold, like any other articles of merchandise. While we do not claim that all public officers were pure prior to the legislative creation of the monopolies we have been examining, we do claim that previous to that sad departure, honesty was the rule, and not the exception. It was when congress entered upon the business of chartering railroad companies, donating public lands to them, and voting them money from the public treasury, that the rule changed; and when, in addition, congressmen became princ.i.p.al owners and directors in these companies, while still retaining their seats in congress, they placed themselves upon the record as unfaithful to their trust, and struck a blow at public morality which will be fatal to our popular government, unless resisted by the whole moral power of the nation.

And here we might well pause, and ask, what security have the people for the continuance of republican government? These gigantic corporations are in their nature anti-republican; they tend to a centralization of power; they compel the people to submit to their demands; they are under the protection of congress, under whose special legislation they are permitted to disregard state laws; their ramifications extend throughout the country; their artifices and money control the votes of the people; they elect their friends to both the senate and house; they organize and send strong bodies of men to the lobby of congress and state legislatures, well supplied with money to obtain the pa.s.sage of laws in their interest, and to prevent such legislation as would be detrimental to them, and in favor of the people; they have their friends and emissaries in every department of the government, and throughout the country, and they exercise a controlling influence not only at Washington, but at almost all the seats of state government. The offices filled by appointment of the executive and confirmation of the senate, are too often the agencies of this same influence. We would not be understood as saying that the president acts corruptly in these appointments; we mean that the influences that secure many of the presidential nominations are the same as used by these corporations in the election of _their_ senators and representatives. The appointment of judges of the supreme court of the United States has, in at least two instances, within the last few years, been made through the influence and in the interest of these monopolies. These corporations are also represented in the cabinet. It is well understood that the removal of Attorney General Ackerman, and the appointment of his successor, was done by these corporate influences. The fact that the secretary of the interior, to whom reports should have been regularly made of the progress and condition of the Pacific railroad, was silent, while private fortunes were being fraudulently taken from the public treasury, proves that he also was under the same influence. It can be accepted as an established fact, that all the departments of the government are to a great extent controlled by corporations and combinations of speculators whose interests are adverse to those of the people, and the result is, that statutes are enacted, executive offices appointed, and decisions of court rendered in the favor of these powerful cla.s.ses, while the rights guaranteed to the people by the const.i.tution are disregarded.

The influence of corporations is also powerful in the administration of state governments. While no such gigantic monopolies as the Pacific railroad have been organized in any state yet, either by special charters granted by state legislatures, or under general incorporation laws, railroad corporations in large numbers have been organized, and by combining their influence, have obtained control of most of the state governments; they have been granted special and exclusive privileges, and by the use of money and patronage have been able to control state conventions, state legislatures, and state courts. As a logical result, the people are taxed, while railroad companies are practically free from taxation; subsidies to corporations are authorized and declared to be const.i.tutional, and the people are obliged to submit to rates of charges for transportation of freight that amount to a confiscation of the farm products of the country. We need not enter into a history of state grants to railroad companies, for it is familiar to all; the same corrupt practices incident to national, attend state, legislation. In many instances, corporations have organized under state statutes, or obtained special charters from state legislatures, located their roads, procured local aid, and then obtained from congress land grants for their roads, and have thus become powerful in the states where they are located, while other companies have built their roads exclusively with the means afforded by local aid voted under state laws, and loans of money or sale of bonds; but in every instance so planning and contriving that the entire road shall pa.s.s into the exclusive control of a select few, leaving to those who furnished the local aid no rights or privileges in connection with the company, or the road, save that of paying extortionate freights and burdensome taxes.

CHAPTER XI.

THE SOLE PURPOSES OF TAXATION.

Taxes can only be levied, and collected, for public purposes; but all the property of the country can be taxed to its entire value, when the public good requires it. The exigency demanding high rates of taxation is left to the determination of the legislatures of the states, and of the general government. No taxes can be legally levied or collected save for the support of the government, state and national, and subject to the restrictions incorporated in the const.i.tution. All other taxes imposed upon the people are unconst.i.tutional, illegal, and oppressive, and should be declared absolutely void. Direct taxation, for the support of the general government, has never been practiced in time of peace.

The usual method for raising a sufficient revenue for its support has been by duties, or tariff imposed by acts of congress upon imports. This has always been deemed the best method for raising the revenue necessary for the support of the government. The powers and duties of the general government are limited and restricted by the const.i.tution of the United States; and as its legislative, executive, and judicial powers are thus limited, it follows that its power to impose taxes upon the people is limited in the same manner, and that it can tax for no purpose save for defraying the expenses of its different departments in the exercise of the powers delegated by the federal const.i.tution. This conceded, all that can be claimed by those who administer the affairs of the nation, unless they transcend the const.i.tutional limit, is conceded. The power to appropriate the lands or money of the public to private parties or corporations not being found in the const.i.tution, nor implied in any of the granted powers, all such appropriations are usurpations; they are donations of the people's money and property to private corporations and individuals in violation of the const.i.tutional restrictions; and no authority is vested in congress to tax the people, either directly or indirectly, for the purpose of making return of the money and property thus wrongfully taken from them. A private corporation is not a public necessity; its franchises are private property, and even if the United States owned the whole of its stock, and took the entire control of its business, it could not become a public corporation, for the reason that congress does not possess the power, under the const.i.tution, to create private corporations. The fact that the United States owned the stock and controlled the corporation would not impart to it any of the attributes of sovereignty, but in so far as the general government was interested in the corporation, it would be treated as any other private party, and would be amenable to the same law and subject to the same jurisdiction as private parties or individuals. If the action of the general government can confer none of the attributes of sovereignty upon a private corporation--if it has no const.i.tutional authority to donate lands or money to railroad companies--how can it lawfully collect taxes from the people, either by direct levies, or in duties upon articles of commerce, for the purpose of re-imbursing the government for the lands donated to corporations, or to pay either the princ.i.p.al or interest on the bonds given to these corporations? As well might congress levy a direct tax upon the property of the people for the purpose of donating to a private party sufficient means to build a residence; there is not found in the const.i.tution any warrant for either of such levies. Both alike are unwarranted usurpations of power, not to be justified under any grant of power from the people to the federal government. To admit that the congress of the United States possesses the power to tax the people for any purpose save for the support of the general government, is to admit that the const.i.tution is elastic, subject to any congressional construction, and liable to be used as an instrument for promoting personal and private ends. Congress had no power to vote subsidy bonds to railroad corporations, as we have already shown; nor could it release these corporations from the payment of these bonds, and the interest as it accrues, and collect the amount from the people in duties on imports, or in any other kind of taxes. No such power was ever delegated to the general government by the people. This power cannot be found in any part of the const.i.tution. While this is true, the people are now taxed annually to the amount of many millions of dollars to pay the interest on the bonds issued to the Pacific railroads. Taxes are also collected to the amount of $18,000,000 or $20,000,000 to pay the interest on the banking capital of the country, the stock of a gigantic corporation, chartered by congress, but in the hands and under the control of private parties and companies. While the general government, under the const.i.tution, has the control of the money of the country, and its coinage, value, etc., and can provide such means as shall be deemed best for the administration of the national or public finances, it has no power to enter into private banking; and because it has not this power, it cannot create private banking inst.i.tutions and tax the people for their support. Any tax levied upon the citizen by the general government for any purpose whatsoever, save for the necessary expenses in the administration of the same, in all of its departments, in accordance with the letter and spirit of the const.i.tution, is without authority, and violates the fundamental law. The levy of taxes in aid of private corporations subserves none of the purposes of the government, and is the exercise of a power not possessed by congress. Our position is fully sustained by legal adjudications, and by the writings of eminent jurists. Chief Justice Marshall, in his writings upon the const.i.tution, has considered this point. He says, on page 345 of his work: "It is, we think, a sound principle, that when a government becomes a partner in a trading company, it divests itself, so far as concerns the transactions of the company, of its sovereign character, and takes that of a private citizen. Instead of communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it a.s.sociates itself, and takes the character which belongs to its a.s.sociates, and to the business which it transacts. * * * As a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator, and exercises no other powers in the management of the affairs of the corporation than are expressly given by the incorporation act. The government of the Union held shares in the old Bank of the United States; but the privileges of the government were not imparted by that circ.u.mstance to the bank."

If there exists any authority in the general government to create a corporation for any purpose, it is in relation to the finances of the country. The necessity of a fiscal agent of some kind would seem to warrant the creation of a banking corporation. But, if the power is conceded, it does not follow that the people should be taxed to provide a bounty, payable semi-annually, to the private companies who are engaged in banking, and who alone receive the profits arising from the business. Yet the act of congress creating the banks provides for the payment of semi-annual interest on the capital invested; and this interest is collected from the people. All railroad corporations, created by act of congress, are absolutely private corporations. The insertion in the charter of the words--"to secure the more safe and speedy transportation of the mails, troops, munitions of war, and government supplies"--found in all of these charters, does not change the character of the corporations. The grants are made to private parties; the roads are under their control; they receive aid from the general government, but in their own names own and control the roads, and can, at any time, dispose of the roads and franchises, and the general government has no power to prevent any action the companies may choose to adopt so long as they regard the provisions of their charters.

No statesman or jurist of our country has at any time, until within the last few years, claimed that congress could create corporations for private purposes; on the contrary, in all of the earlier decisions of the federal courts, it was uniformly conceded that congress did not possess the power to create such corporations. Chancellor Kent, Chief Justice Marshall, and other eminent writers, are all agreed that, under the const.i.tution, congress cannot create a private corporation. If congress had no const.i.tutional right to create railroad corporations, how can it possess the power to tax the people to pay their debts? The people are now paying at least $8,000,000 per annum in shape of taxes for the purpose of liquidating the interest due from railroads chartered by congress in violation of the fundamental law of the land. This large amount of taxes is collected and applied by the general government in payment of interest due from railroad companies, because the influence of congressmen and their friends, in these companies, was sufficiently powerful to override const.i.tutional barriers, and to procure the pa.s.sage of an act enabling the parties holding the stock to pocket the earnings of their roads and make good the deficit in their interest account by taxing the people.

The whole history of congressional legislation does not present a case of such entire disregard of the provisions of the const.i.tution, and such dishonest and corrupt legislation as is contained in the acts of congress relating to the Pacific railroads. It is questionable whether another instance can be found in this or any other country, having a const.i.tutional government, where legislators, by direct vote, have taken millions of money from the public treasury and given it to private corporations of which they were members and directors, and to make good the amount thus taken from the treasury have provided _by law_ for its collection from the people in the shape of taxes and duties! When we remember that congress does not possess the power to charter private corporations; that in so doing it violates the letter and spirit of the const.i.tution; upon what principle can it claim the right to tax the people for the benefit of these private corporations? We repeat, no country in the world, governed by a written const.i.tution, offers a parallel case. Not even in France, under the personal government of the late emperor, would such an unwarranted act have been attempted.

We are aware that it is claimed that railroad corporations are public corporations--and this granted, taxes may be rightfully levied and collected for their benefit. But we do _not_ grant this, and shall, in the following pages, essay to demonstrate that all railroad corporations are private, being owned and controlled by private citizens, and not by the state or national government. But admitting they are public and not private corporations, the general government even then cannot legally charter or control them, because the power for that purpose has never been delegated by the states or the people; and it follows that the general government cannot rightfully impose taxes upon the people for the support of corporations over which it can have no control. If congress can levy taxes for the construction and support of railroads, and take the management and control of them, it certainly can take the entire supervision of all the highways in all the states, provide for their construction, and tax the people at will for that purpose. This being admitted, no local or police regulation in any of the states is exclusively under the jurisdiction of the state governments; but the general government may at any time take the absolute control of the governmental affairs of the several states, and thus complete the centralization of power now so rapidly developing in all the departments at Washington. The a.s.sumption of the right to tax the people for any and every purpose that to congress shall seem expedient, irrespective of const.i.tutional prohibition, is at once destructive of the rights that were supposed to be guaranteed and preserved to the whole people by the const.i.tution. If the will of those men who happen to occupy seats in congress (and that will too often controlled by personal interest) is to govern, then all const.i.tutional government is at an end, and the liberty and property of the citizen have no const.i.tutional safeguard. Taxes to the entire value of all the wealth in the country may be levied by the general government, and the citizen of this republic holds his entire estate at the will of the persons who fill the offices of the country.