Federal Ownership of Railroads.—In an address at Indianapolis on May 30, 1907, President Roosevelt discussing the necessity for further congressional regulation of railway companies, declared that, “in so far as the common carriers also transport the mails, it is, in my opinion, probable that whether their business is or is not interstate, it is to the same extent subject to federal control, under that clause of the Constitution granting to the national government power to establish postroads, and therefore by necessary implication power to take all action necessary in order to keep them at the highest point of efficiency.”403
The placing of such a construction upon the postroads clause aroused a storm of criticism, but, in the main, President Roosevelt was correct in his assertion of congressional authority. Municipal streets used by mail carriers or wagons are postroads and federal control exists to the extent of insuring safe passage of the mail and prohibiting private competition; by the rural free delivery system, moreover, state wagon roads are under federal authority to the same extent. That much has been made evident by the preceding discussion.
As to common carriers between the states, congressional regulation has been very largely based upon the commerce clause of the Federal Constitution, and the transportation of the mails has been a secondary, not primary, ground to justify the authority exerted. This commercial power does not extend to intrastate undertakings, but if these were concerned with furnishing postal facilities they could be brought under federal control. This doctrine, however, should be carefully qualified so as not to assert a right in Congress to assume general supervision, for example, of municipal traction companies, an incidental function of which is to carry the mails. The control could be exerted only so far as was reasonably necessary to insure the safe, speedy, and unobstructed transportation of government property.
This control, as the Debs404 case made clear, is, in the case of interstate carriers at least, and by parity of reasoning in the case of intrastate undertakings also, not confined to mere legislative rules, enforceable in the courts, but the executive power may remove obstructions to the carriage of the mails. The national government is charged “with the duty of keeping those highways of interstate commerce free from obstruction, for it has always been recognized as one of the powers and duties of a government to remove obstructions from the highways under its control.” On this power rests, in large part, at least, the act of October 1, 1888,405 providing for arbitration between railroad companies and their employees and subsequent acts for the same purpose. The full power has not yet been exerted; it extends to the compulsory settlement of such disputes (subject to the limitations of the Thirteenth Amendment),406 and to the enforcement by federal authority of such regulations as may be necessary to remove obstructions and insure the carriage of the mails without delay, even in the case of streets within a town and with reference to municipal traction companies.
It is no longer open to doubt that the federal government, under its right of eminent domain, upon the payment of adequate compensation judicially determined, may compel service from railroads by which existing terms for the carriage of the mails may have been deemed unsatisfactory. This may be done either by assuming the temporary management of the roads for such a purpose, or by enforcing criminal provisions against obstructing or delaying the mails. While such a power has not been exercised, it certainly exists.407
But the Senate Committee which in 1874 declared that the government could thus compel the transportation of the mails, went still further and maintained that Congress could “take absolutely, on paying just compensation therefor, without the consent either of the owner or of the state within which such road may be, any railroad, its rolling stock and equipments, within the United States for the public use and transportation over the same of the United States mails,”—an advanced position for this period when Congress had as yet attempted slight regulation of the railroads.
It should require but little argument, I think, to show that if Congress decides to nationalize the railways of the country it may constitutionally do so under its power to establish postroads. Federal charters to railroads and bridge companies have been pitched upon the postal, commercial, and war powers; they have granted rights of way through the states, immunity from taxation, powers of eminent domain, and the right of resort to the federal courts on the ground of federal citizenship. Congress has, moreover, the right of eminent domain even for patriotic purposes,—to preserve the Gettysburg battlefield,—a much more remote public purpose than that of establishing postal facilities under the specific authorization in the Constitution.408
In Osborn v. The Bank of the United States,409 it was urged upon the Supreme Court that the bank was not an instrument of the government and a distinction was drawn between it and an agency for which provision was made in the Constitution. “The postoffice is established by the general government,” said counsel. “It is a public institution. The persons who perform its duties are public officers. No individual has or can acquire any property in it. For all services performed a compensation is paid out of the national treasury; and all money received upon account of its operations is public property.” The business “is of a public character and the charge of it expressly conferred upon Congress by the Constitution.”410 This distinction between the public nature of postal facilities and the private character of much of the business done by the bank was urged to show that the latter was subject to taxation by the state.
To this argument Chief Justice Marshall replied that if the premises were true, the conclusion would be inevitable. But there was a political connection between the bank and the government and “Congress was of the opinion that these faculties [of doing private business] were necessary to enable the bank to perform the services which are exacted from it, and for which it was created.... That the exercise of these faculties greatly facilitates the fiscal operations of the government is too obvious for controversy: and who will venture to affirm that the suppression of them would not materially affect these operations, and essentially impair, if not totally destroy, the utility of the machine to the government?” If the private business engaged in has the result of making the corporation “a more fit instrument for the purposes of the government than it otherwise would be,” then “the capacity to carry on this trade is a faculty indispensable to the character and objects of the institution.”
There can be no question of the right of the federal government itself to construct highways for the transportation of the mail and to charge tolls for their use; nor can there be any doubt of its power to own and operate carriers, and incidentally to engage in business of a private nature if this increases the efficiency of the governmental agency. Even the fact that these private undertakings, disassociated from the carriage of the mails, would be by far the most important, would make no difference, according to the rule as announced by Chief Justice Marshall. On this theory, moreover, can be justified the assumption by the federal government of the functions of a bank and common carrier, through the postal savings and money order systems, and the parcel post, even though these activities can also be supported as proper elements of a postal power as it is interpreted in other countries.
If, therefore, the federal government is competent to establish postal facilities and use them for ancillary yet helpful purposes, there is no reason why it may not exercise its power of eminent domain and take possession of any or all agencies now used in the transportation of the mails, upon the payment of just compensation; own and operate these agencies, use them to carry the mails, and to perform all other functions which would “greatly facilitate the fiscal operations of the government.” In this would, of course, be included the smaller power of creating a corporation, perhaps owned in part by the government, to take over and operate the railroads of the country for the same purposes. The connection between such a corporation and the government would be political and public as Marshall pointed out, but it would be created to carry out a power specifically mentioned in the Constitution, and its public nature would therefore be much more apparent. There is thus an error of understatement when it is urged that “no valid distinction can be drawn between the vital necessity of the right to trade in money to a fiscal instrumentality of the government, and the right to trade in transportation to a transportation instrumentality of the government.”411
It is an arguable proposition that such a purpose could be accomplished under the commercial power which is simply that of “regulation.” By many the opinion is held that this of itself is sufficient to give Congress the right to compel industrial corporations doing an interstate business to secure federal charters. The constitutionality of a law to compel interstate railroads to incorporate under the commerce clause is even less doubtful, and the Supreme Court has upheld the exercise of the commercial power in condemning the property of a state corporation organized to improve navigation, just compensation including the value of the franchise which was destroyed.412 Federal incorporation, then, may be required on the ground that it is necessary for the efficient regulation of the carriers. On the other hand, the postal clause gives Congress the right to establish instrumentalities for the transportation of the mails, and the assumption of control or ownership under this grant of power is more surely within the rule as laid down by Marshall in Osborn v. The Bank of the United States.
In 1792 the proposal was made in Congress that the proprietors of mail stages be permitted to carry passengers, but the motion was lost, on the ground that under the postal clause Congress did not provide the necessary authority.413 It is true, also, that the framers of the Constitution did not, because they could not, contemplate the taking over by Congress of the railways of the country. And, as the preceding discussion has attempted to show, during the early days of legislative activity under the postroads clause, the consent of the states was required for construction within their borders, and they acceded in one form or another to several of the acts granting federal charters.414 But, as the Supreme Court of the United States has said in language already quoted, the powers of Congress “are not confined to the instrumentalities of commerce or of the postal service known or in use when the Constitution was adopted, but they keep pace with the progress of the country.” This, coupled with the right of eminent domain, is, it is submitted, sufficient to enable the national government, either directly or through a federally chartered corporation, to take over and operate the railroads of the country for the carriage of the mails, with the power of engaging in the transportation of freight or passengers, to the extent that Congress may desire.415
Postal Telegraphs and Telephones.—The case last cited is ample authority for Congress to take over and operate the telegraph and telephone systems of the country, for the Supreme Court made its pronouncement in upholding the act of July 24, 1866,416 “to aid in the construction of telegraph lines, and to secure to the government the use of the same for postal, military and other purposes.” The act, among other things, gave companies complying with its terms the right to erect their poles and string their wires along any military or post road, and the Supreme Court declared void a state statute which attempted to give exclusive rights to a local company.
By the third section of the congressional act, it was provided that “the United States may, at any time after the expiration of five years from the date of the passage of this act, for postal, military or other purposes, purchase all the telegraph lines, property and effects of any or all of said companies at an appraised value, to be ascertained by five competent, disinterested persons, two of whom shall be selected by the postmaster general of the United States, two by the company interested, and one by the four so previously selected.” The United States therefore reserved to itself the power which it would otherwise have had,—that of eminent domain in respect to telegraph facilities. In his report for 1913, the postmaster general said:
“A study of the constitutional purposes of the postal establishment leads to the conviction that the Post Office Department should have control over all means of the communication of intelligence. The first telegraph line in this country was maintained and operated as a part of the postal service, and it is to be regretted that Congress saw fit to relinquish this facility to private enterprise. The monopolistic nature of the telegraph business makes it of vital importance to the people that it be conducted by unselfish interests, and this can be accomplished only through government ownership.” If Congress decides to take over these facilities, its action will be clearly within the postal power.417