gress has power to regulate branding of articles that have completed interstate shipment.

(At this point, Senator Johnston enters the hearing room.) Senator ERVIN. He said the consignee

Attorney General KENNEDY. The retailer had received it from a wholesaler and was selling it, and the retailer had changed the label on the drugs, and the Court held the Supreme Court held—that that was still part of interstate commerce.

Senator ERVIN. The Sullivan case can be reconciled with the views I entertain in respect to the interstate commerce clause. In enacting laws relating to the labeling of drugs, Congress was exercising its undoubted power to prohibit the use of the channels of interstate commerce for the transportation of drugs which do not meet the standards prescribed by the Congress. The druggist who was tried in the Sullivan case attempted to defeat the purpose Congress had in mind in barring the transportation in interstate commerce of mislabeled drugs by changing the labels of the drugs which he obtained from the wholesaler who had received them in interstate commerce. Manifestly, the druggist would have defeated the purpose Congress had in mind when it enacted the law if he were permitted to do this. The Sullivan case is supportable under the principle that Congress can regulate an intrastate activity to the extent and only to the extent that regulation of such activity is necessary or appropriate to effective regulation of interstate commerce itself, which is the movement of persons or goods or information from one State to another. I now invite attention to 15 Corpus Juris Secundum, subject commerce, section 26, pages 301 to 302:

Ordinarily the sale of goods in the State at the time of sale is not a transaction of interstate commerce regardless of what prior transportation of the goods may have taken place, and property sold and delivered to a resident of the State, free from any claim of title by the seller, and which is held for sale by retail in the State, is no longer a subject of interstate commerce, but becomes a part of the common mass of property of the State and subject to the laws thereof, although, as shown infrasection 28, this rule is qualified by the so-called original package doctrine.

And this is what I particularly invite your attention to.

So, the local sale of goods after they have been brought into the State from another State and come to rest there is not a transaction in interstate commerce, even though the buyer takes the thing purchased across the State line to another State or country or may intend to do so. * * *

(At this point, Senator Dirksen enters the hearing room.)

Attorney General KENNEDY. I once again make the point that that is qualified somewhat, Senator.

Senator ERVIN. Yes; it is qualified to this extent. The Court has held in some cases that the shipment of goods in interstate commerce is not completed as long as they are kept in the original packages. That is what is referred to in the qualification there. There is no qualification to this statement:

So. the local sale of goods after they have been brought into the State from another State and come to rest there is not a transaction in interstate

commerce.

I will now call attention to a very few cases very briefly. Here is a case relating, incidentally, to a wholesaler.

Attorney General KENNEDY. Could I have the last book that you read?

Senator ERVIN. Yes. I want to call your attention to another passage in it in just a minute.

Attorney General KENNEDY. I call your attention, Senator, to the language which reads: "Ordinarily the sale of goods in the State at the time of sale is not a transaction of interstate commerce regardless of what prior transportation of the goods may have taken." The authority given for that statement is the Schechter case, and that Schechter case has been overruled.

Senator ERVIN. The Schechter case may have been modified to some extent in subsequent decisions, but not on the point I am attempting to make. As appears from footnote 3 on page 301 of 15 CJS Commerce, section 26, and the 1963 cumulative annual pocket part supplementing such footnote, the statement I read concerning the local sale of goods is sustained by a multitude of other decisions, both Federal and State, which have not been modified by subsequent decisions.

Attorney General KENNEDY. The Darby case, the Jones-Laughlin Steel case, and the Sullivan case all are inconsistent with the Schechter

case.

Senator ERVIN. I am very familiar with all of those cases except I do not recall the Sullivan case. I think, however, that the Sullivan case can be distinguished on the ground that the druggist had mislabeled the drugs to thwart the purpose Congress had in mind when it enacted the law barring the channels of interstate commerce to drugs not properly labeled.

Attorney General KENNEDY. It is a fact that that case has been overruled, Senator.

Senator ERVIN. That one case?

Attorney General KENNEDY. The Schechter case.

Senator ERVIN. But a multitude of other cases are cited in support of the text.

Attorney General KENNEDY. These other cases give the authority. Senator ERVIN. Moreover, many other authorities are cited in the 1963 pocket part in the back of the book.

Here is a case from the Federal Reporter, General Tobacco & Grocery Company v. Fleming. This is the decision of the Court of Appeals for the 6th Circuit, reported in 125 Fed. 2d, page 596, and in 140 ALR 783.

(At this point, Senator Bayh enters the hearing room.)

Senator ERVIN. It has been held that a wholesaler is not engaged in interstate commerce even as to goods shipped to him from outside the State where such goods are shipped directly to his wareouse, come to rest there, and are commingled with other goods before being resold to customers within the State.

Attorney General KENNEDY. May I have the citation in that case? Senator ERVIN. The Federal citation is 125 Fed. 2d, page 596, and ALR citation is 140 ALR 783.

Attorney General KENNEDY. What is the date of that case?

Senator ERVIN. I don't know the date of the case but what I have just read is printed as a correct statement of the law in the 1963 Cumulative Supplement to Volume 11, 43 of Subject Commerce, Section 43, page 43.

What I read was an additional statement to the text based on that citation. I now invite your attention to the decision of the Supreme Court of the United States in J. Bacon & Sons v. Martin, 305 U.S., at page 380.

This case presented the question whether interstate commerce was involved. It arose out of a tax laid by the State of Kentucky upon the "receipt of cosmetics." It is not a long decision, so I will read it. In doing so, I will omit the citations, which refer to decisions of the Supreme Court holding that interstate commerce ceases when articles come to rest in the hands of a dealer within the borders of a State.

Plaintiff sought judgment declaring invalid a statute imposing a tax on "the receipt of cosmetics in the State by any Kentucky retailer" as applied to articles purchased from manufacturers and dealers in other States and transported to plaintiff at his place of business in Kentucky. Plaintiff contended that the tax was on "the act of receiving" and, hence, was a direct burden upon interstate commerce. The Court of Appeals of Kentucky thus construed the statute:

The word "receipt" is not used in a limited sense, but in the sense that it has already been received by the retailer and is now in his use. That word "receipt" presupposes that the cosmetics were now in use and after the sale had been consummated. "It, therefore, follows that the imposition of the tax against the retailer is not on the act of receiving the cosmetics but on the sale and use thereof, after the retailer had received them, that constitutes the excise tax. When we apply the intended and correct meaning of the word 'receipt' as used in the act, it is conclusive to our minds that the tax of the retailer referred to, is paid when the articles are in his possession and when the merchant has unlimited control and dominion over the cosmetics." Adhering to that construction, the State court affirmed the present judgment sustaining the tax. The plaintiff appeals. The construction of the statute by the State court is binding upon us, and in the light of its construction the State court applied the principles declared in our decisions.

The appeal is dismissed for want of a substantial Federal question.

I also invite attention to the case of Monamotor Oil Company v. Johnson, a Supreme Court decision reported in 292 U.S. Supreme Court Reports beginning at page 86. The question involved was whether certain motor vehicle fuel oil was still in interstate commerce and, subject, therefore, to the limitation that a State cannot burden goods in interstate commerce with a tax. I read from page 93:

There is no substance in the claim that the statutes impose a burden upon interstate commerce contrary to the prohibition of article I, section 8, of the Federal Constitution. The appellant insists that the tax is a direct tax on motor vehicle fuel imported. The Court below concluded that the law laid an excise upon the use of fuel for the propulsion of vehicles on the highways of the State. The State officials have administered the tax on this theory. We think this the correct view. The levy is not on property but on the specified use of property.

Here is what I invite specific attention to:

It is not laid upon the importer for the privilege of importing but falls on the local use after interstate commerce has ended.

Attorney General KENNEDY. What year was that, Senator? Senator ERVIN. That is Monamotor Oil Company v. Johnson, reported in 292 United States, at page 86. The portion I read is from page 93.

of

Attorney General KENNEDY. Do you know what year it was? Senator ERVIN. It was in 1933. I now call attention to the case Gregg Dyeing Company v. Query, 286 U.S. 472. This

is a 1931 decision. The decision in the case is correctly stated in the headnote, which says

A state may tax gasoline bought and imported from another State which has come to rest within the taxing State and is stored there by the purchasers for future use in their local business.

I invite your attention to another passage in Corpus Juris Secundum. I read from 15 Corpus Juris Secundum; subject, commerce, section 10, page 266:

A State has an inherent and reserved right to regulate its local, domestic, and internal commerce. The only limitations on this right are that it must be exercised in a manner not interferring with or placing a burden on interstate commerce, and that it is subject to such regulation of intrastate commerce as Congress properly may and does make in order to regulate and protect interstate commerce.

Within these limits, the power of a State to control and regulate its purely internal commerce is full, complete, plenary, unrestricted by the commerce clause of the Federal Constitution and free of the dominion of Congress.

Do you wish to see this book again?

Attorney General KENNEDY. No. I can't dispute that.

Senator ERVIN. I mentioned that we have a great multitude of decisions on the interstate commerce clause and for that reason, I am not going into more of them. After I learned of the proposal that Congress should undertake to regulate the operation of privately owned places of public accommodations in the manner set out in title II of this bill, I spent about 2 weeks reading the multitude of decisions which the Supreme Court has handed down during recent years relating to the interstate commerce clause. Instead of citing the scores and scores of cases I have read, I am going to read into the record at this point my interpretation of what they hold in respect to the regulatory power of Congress under the interstate commerce clause.

Here is a statement of my interpretation of these decisions as I have reduced it to writing:

Under the interstate commerce clause, which is set out in clause 3 of section 8 of article I of the Constitution, Congress is granted in express terms the power to regulate interstate commerce, which consists of the movement of persons, goods, or information from one State to another. The power of Congress is not restricted, however, to the regulation of interstate commerce. Congress has the power to regulate intrastate activities, that is, activities wholly within a State, to the extent, and only to the extent, that such action on its part is necessary or appropriate to its effective execution of its expressly granted power to regulate interstate commerce.

I interpolate at this point that Congress has no power under the interstate commerce clause to regulate intrastate activities where the regulation of such activities is not necessary or appropriate to the exercising by Congress in an effective manner of its power actually to regulate interstate commerce itself which is the movement of persons or goods or information from one State to another. I now resume the reading of my statement:

The power of Congress to regulate activities of an intrastate character arises only when those activities have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from practices within a state which burden its freedom or obstruct its flow.

This statement is sustained by the text which appears in 15 Corpus Juris Secundum, Subject Commerce, sections 18 and 20, pages 280 and 282, and the text in 11 American Jurisprudence, Subject Commerce, section 15, page 17, and by scores and scores of decisions of the Supreme Court I have read.

I now continue reading my statement of my interpretation of decisions dealing with the commerce clause:

In the very nature of things, the power of Congress to regulate intrastate activities in order to execute in an effective manner its expressly granted power to regulate interestate commerce necessarily runs forward. It cannot possibly run backward. This is true because the power of Congress to regulate commerce interstate ends when interstate commerce ends.

Hence, Congress cannot regulate the use of property or the activities of persons within the border of a State under the interstate commerce clause after interstate commerce has ceased.

I respectfully submit that what I have just said discloses the fatal constitutional defect in title II of this bill. When this bill is stripped of its specious recitations, it undertakes to regulate the use of privately owned property and personal activities within the borders of a State after interstate commerce has ceased merely because the persons using such privately owned property or rendering such personal services may use some goods which at some time in the past have moved in interstate commerce or may serve some travelers who have journeyed in time past from one State to another.

Mr. Attorney General, you cited in your written statement three acts of Congress, which you say sustain the power of Congress to enact the public accommodations of this bill under the interstate commerce clause. I challenge the soundness of your conclusion.

One of the acts cited by you in your written statement is the Fair Labor Standards Act of 1938. The Fair Labor Standards Act undertakes to regulate the activities of two groups. The first group covered by this act consists of those who are actually engaged in carrying on interstate commerce, that is to say, the carrying on of transactions and transportations across State lines.

The other group consists of those who are engaged in the production of goods for shipment in interstate commerce. No one has ever questioned the power of Congress to regulate the activities of those who are actually engaged in carrying on interstate transactions and interstate transportation. In enacting the provisions of the Fair Labor Standards Act applicable to those engaged in the production of goods for shipment in interstate commerce, Congress merely exercises its power to prohibit the shipment of goods in interstate commerce. Congress reaches the second group by prohibiting the shipment in interstate commerce of any goods produced under what the act calls substandard labor conditions, that is to say, goods produced in plants which have violated the provisions of the act establishing minimum wages and maximum hours of labor.

In this connection, I call attention to the decision of the Supreme Court of the United States in the case of Roland Company v. Walling, which is reported in 326 U.S. at page 657, and which was handed down on January 28, 1946. The Court said this at page 669:

The primary purpose of the act is not so much to regulate interstate commerce as such, as it is through the exercise of legislative power to prohibit the shipment of goods in interstate commerce, if they are produced under substandard labor conditions. Such a prohibition is an appropriate exercise of the power of Congress over interstate commerce.