CHAPTER XVIII

THE RELATION OF CONGRESS TO COMMERCE

Commercial Powers of Congress. - Congress is granted authority "to regulate commerce with foreign nations and among the several states, and with the Indian tribes."1 This authority is limited by two clauses of the Constitution, one of which prohibits any taxation upon exports from any state, and the other provides that rates of taxation shall be uniform throughout the United States. Under the authority granted by the Constitution, Congress has aided commerce by the erection and maintenance of lighthouses, life-saving stations, improving rivers and harbors, and in many other similar ways.

Commercial Treaties. - Commercial treaties are made by the senate for the purpose of aiding the foreign commerce of the United States. Such treaties exist between the United States and all the commercial powers, and have been especially prominent of recent years. By the terms of a treaty of reciprocity, the United States permits certain goods to be imported free of duty, or at a low rate, from a country which grants similar privileges to imports from the United States. The failure of the Senate to ratify recent treaties of this kind will doubtless only temporarily hinder the wide application of this principle.

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1 Art. I, Sec. 8, clause 3.

'Art. I, Sec. 9, clause 5.

Art. I, Sec. 9, clause 6.

The Panama Canal. In accordance with the terms of a treaty between the United States and the Republic of Panama, exchanged February 26, 1904, the Republic of Panama granted to the United States the possession and control of a strip of land five miles wide on each side of the proposed canal. The United States paid the old Panama Canal Company of France the sum of $40,000,000 for the work it had done, and paid $10,000,000 to Panama, in addition to which the United States agreed to pay Panama $250,000 yearly, beginning nine years after the date of ratification of the treaty. The War Department, through the Panama Canal Commission, is charged with the supervision and construction of the canal and the government of the canal strip. By terms of the treaty, the United States guarantees the independence of Panama, and guarantees the neutrality of the canal. The canal is now nearly completed and promises to be the greatest aid to international commerce since the completion of the Suez Canal, and only second in importance to the transcontinental railroads in reference to American commerce.

In August, 1912, a law was passed by Congress fixing the tolls to be charged for passage through the canal, granting free passage to American-owned ships engaged in the trade along the coast, prohibiting ships owned by railroads from use of the canal, and providing for the operation of the canal when completed.

American Shipping. In a number of ways Congress has sought to encourage American shipping. By an act of 1793, which is still in force, foreign vessels are prohibited from engaging in the trade of the United States along the coast, and the dependencies of the United States, by a

recent decision of the Supreme Court, are included in this prohibition. American ships are also favored in regard to tonnage duties; foreign vessels are obliged to pay twice as heavy tonnage charges as American ships. In addition to these favors, Congress has passed an act to the effect that no duties need to be paid on shipbuilding material if ships are used in the foreign, or Atlantic and Pacific, trade of the United States.

In order to secure the above advantages, as well as the protection of the United States in any part of the world, vessels must be registered in the United States, and in order to obtain American registry, a vessel must be built within the United States, and must belong wholly to a citizen or citizens of the United States, and the higher officers of the ship must not be subjects of any foreign state.1

The total tonnage of American vessels in 1800 amounted to 971,830 tons, two-thirds of which was engaged in foreign commerce. In 1860 the total tonnage of American shipping amounted to 5,821,642 tons, of which almost one-half was engaged in the foreign trade; but in 1912, though the total tonnage had increased to 7,714,183, the portion engaged in foreign trade was only 923,225

tons.

Less than one-tenth of our imports and exports are now carried in American ships. The chief reason for the decrease of our foreign shipping has been because of the change from wooden ships, which could be built more cheaply in the United States than elsewhere in the world, to ships

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1In 1892 a special act of Congress authorized the American registration of the "New York" and "Paris," two foreign-built steamships.

of iron and steel, which can be built in foreign shipyards cheaper than in American yards. Two remedies are proposed in order to restore American shipping engaged in foreign trade. The first one is to abolish the restriction against foreign-built ships receiving American registration, and to abolish the tariff on shipbuilding materials. The other plan is to grant governmental aid, called subsidies, to American ships engaged in foreign trade.

Interstate Commerce. The states have control over commerce which originates and ends within the boundaries of the respective states, but Congress has control over commerce extending beyond the limits of the state in which it originates.

Congress has control over rivers which serve as highways for commerce between two states or with a foreign country. A river on the boundary between the United States and a foreign country is regarded as belonging to the United States from American soil to the middle of the river.

Until the middle of the nineteenth century the chief aid which Congress gave to interstate commerce was by improving rivers and harbors, and by aiding the construction of wagon roads and canals. From 1850-1870 the United States granted millions of dollars and millions of acres of land in order to aid railroad construction in the West and South.

Railroad Consolidation and Resulting Problems. The earliest railroads were local affairs, but between 1850 and 1860 short lines began to be joined. Their union was not only beneficial on account of the economy in operating