mission to require through connections has been recognized in

court.

Rate orders of various commissions have been temporarily enjoined and are now in court for final decision,-as in Kansas, Missouri, Virginia, Alabama and South Dakota, and a western. railway has prepared to test the validity of the Nebraska commission, but there is as yet no indication that the courts will reverse the decisions which they made at the time of the Granger commissions.

It is in the field of direct statutory regulation that there are numerous provisions unable to weather a constitutional test. On March 23, 1908, the United States Supreme Court, in a double case, declared unconstitutional the freight rate act of Minnesota and the passenger fare act of North Carolina because the penalty was so severe as to prevent a carrier from testing their validity, and because the court regarded their enforcement as confiscatory. The two great principles that the enjoining of a state officer is not suing the state, and that a federal court may test the validity of a state rate act were established.

In Pennsylania the State Supreme Court declared the twocent fare act unconstitutional on grounds of confiscation; and in Alabama the Federal Circuit Court59 on the same grounds enjoined the two and a quarter cent fare law and the freight rate act fixing maximum rates on 110 commodities. Preparation has been made to attack the two-cent fare laws of Missouri, Illinois and Nebraska and the freight rate act of Missouri, upon the ground that the penalties they impose come within the federal ruling made against the Minnesota and North Carolina rate acts.

Various statutes other than those fixing rates and fares have, likewise, been declared unconstitutional. The Alabama, Arkansas and Missouri statutes which prohibited foreign carriers from appealing cases to a federal court upon penalty of forfeiting their right to operate within the state were overthrown as infringing upon the rights of persons to sue in federal courts, guaranteed both by the state and federal constitution, and upon the grounds that the jurisdiction of federal courts is fixed by the federal constitution and may not be limited by legislatures. The Supreme Court of Missouri

60

Seaboard Air Line Railway Co. et al. vs R. R. Com. of Alabama et al., 155 Fed. Rep. 792.

Chi., R. I. & P. Ry. Co. vs. Ludwig, 156 Fed. 132; Seaboard Air Line Ry. Co. vs. R. R. Com. of Alabama, 155 Fed. 792.

has declared unconstitutional the law requiring free transportation for shippers of live stock, as discriminating against other shippers and in violation of the fourteenth amendment. The reciprocal demurrage law of Texas was overthrown and that of Minnesota is now being tested by the Great Northern Railroad. The laws limiting the hours of telegraphers and trainmen have been upheld by the Supreme Court of Montana and a state circuit court in Wisconsin, but have not as yet been finally ruled upon by a federal court.

REGULATION OF FOREIGN COMMERCE BY THE INTER

STATE COMMERCE COMMISSION

BY WARD W. PIERSON,

Instructor in Political Science, University of Pennsylvania, Philadelphia.

It is the purpose of this paper to discuss the relation of the Interstate Commerce Commission to through export and import traffic. To this end, the subject matter is grouped under four headings: the integration of ocean and inland commerce; the present authority of the Interstate Commerce Commission; the consequences of incomplete jurisdiction; and suggested legislation.

The organization of through transportation systems has changed the entire aspect of commerce within the last three decades; consequently an exposition of the integration of ocean and inland commerce may well precede the discussion of needed legislation.

I

Integration of Ocean and Inland Commerce

The most striking feature of the present organization of commerce is the through character of business and interrelation of the trunk line railroads of the United States with the various transoceanic carriers. The world's commerce is no longer carried on by a large number of dissociated, warring companies. Competition has given way to cooperation and merger. The old system of frequent transhipment has been replaced by through routes, through rates and through arrangements which make possible the remarkable celerity of present business transactions. The trunk line railroads and the trans-oceanic steamship companies have so splendidly organized their joint services that the shipper may now send his merchandise from an inland city of one country to a remote point in a foreign land, and have no concern as to its safety; for the contract covering the entire journey is or may be closed the moment it is given over to the initial carrier.

To-day, a miller in Minneapolis exporting flour, can secure his through bill of lading from the place of manufacture to ultimate

destination in Europe, insure the flour under a through certificate of insurance against all risks of transportation, railroad or marine, from mill to the foreign consignee, sell his bill of exchange drawn in the currency of the country to which the flour is destined, and literally do all the business connected with the transaction upon his own doorstep within the short space of time elapsing between the milling and the final shipment of the flour. On the day the flour is shipped from the mill the manufacturer is substantially free from any further responsibility or liability. This system applies not only to export flour but to the export trade in general. As a practical illustration of this, a miller in Minneapolis may buy his wheat on Monday, grind it into flour on Tuesday, sell the flour abroad on Wednesday, very readily ship it on Thursday, and one hour after the flour is loaded into railroad cars at the mill he can obtain his through export bill of lading from the mill door in the United States to the warehouse of the buyers at foreign ports of destination.

Through Conditions.-Simultaneously with the issuing of the through bill of lading, a certificate of insurance is issued by underwriters, which explicitly undertakes to cover the flour throughout the whole course of transportation. The title to the property, as well as to all the rights and responsibilities of the underwriters conveyed by the certificates of insurance, passes from one bank to another by simple successive endorsements on the bill of exchange, and this only because a through bill of lading has been issued therefor, which is the recognized inviolable title to the merchandise. The western banker readily purchases of the miller his exchange on the foreign buyer, for such documents are the most acceptable form in which a remittance can be made to foreign correspondents, but the banker would not purchase this kind of exchange at all unless a through bill of lading was attached thereto. These shipping documents the banker then sends to his correspondent in, say, Copenhagen, where they are retained by the local Danish banker to be surrendered when the flour is ultimately delivered to the consignee. In the meantime, from the day the flour was originally shipped until it is finally delivered to the consignee, the various manipulations of the property are conducted by the respective land and water transportation companies, without the intervention and indeed, substan

the transporters having assumed by the through agreement to relieve the seller, bankers and buyer of all these intermediate factors and conditions.

Eastbound Shipments. Western exporters constantly make through export contracts for the shipment of products on through bills of lading, with the agents of the various railroads located through the West and South. The steamship companies themselves often do not know the names of the shippers or the precise locality from which the merchandise is forwarded, until the tissue copies (duplicates) of the through bills of lading as signed by the railroad company's officers are transmitted to the steamship company's office. Such a bill of lading contains a large number of stipulations many of which are intended to frighten the unsophisticated. Those made by the inland carrier are first set forth. Then follow the conditions submitted by the ocean carrier. The merchandise to be transported is described and note made of the various marks. The inland rate and the ocean rate are shown separately. Where the agent of the railroad receives payment for the through transportation he stamps on the bill "Freight Prepaid to Destination." This is a through contract over a through route at a through rate.

Through Freight Prepaid. It constantly happens that the inland and ocean freight are both prepaid. This presupposes that the miller or provision packer has sold his goods at a price delivered at final destination abroad. The draft drawn and the amount of insurance is correspondingly increased as much as the inland freight and ocean freight together.

Westbound Shipments. A similar statement might be made with respect to westbound traffic originating in Europe and destined to the interior of the United States. Frequently merchandise shipped as above, on through bills of lading, from, say, Hamburg to an inland place of destination in the United States, say Chicago, has the entire ocean and inland freight prepaid. A foreign seller, like an American exporter, makes a price delivered at final destination, including the payment of entire through freight. In other cases, where merchandise is shipped from abroad at a through rate of freight on a through bill of lading, the connecting trunk line railroad collects from the party to whom it is ultimately delivered in the interior of the United States the entire through charge for transportation, and reimburses the steamship company for the ocean car