CITES BY TOPIC:  commerce
Black's Law Dictionary, Sixth Edition, p. 269

Commerce.  …Intercourse by way of trade and traffic between different peoples or states and the citizens or inhabitants thereof, including not only the purchase, sale, and exchange of commodities, but also the instrumentalities [governments] and agencies by which it is promoted and the means and appliances by which it is carried on…” 

[Black’s Law Dictionary, Sixth Edition, p. 269]


Defined

"'Commerce' in the sense in which the word is used in the constitution is co-extensive in its meaning with 'intercourse.'" Carson River Lumbering Co. v. Patterson (1867), 33 C. 334.

"Term 'commerce' as employed in U.S. Const. Art. I 8, is not limited to exchange of commodities only, but includes, as well, 'intercourse' with foreign nations, and between states; and term 'intercourse' includes transportation of passengers." People v. Raymond (1868), 34 C. 492.

"Commerce includes intercourse, navigation, and not traffic alone." Lord v. Goodall, Nelson & Perkins S. S. Co. (1881), 102 U.S. 541, 26 L.Ed. 224.

Regulation

"Whole doctrine of Brown v. State of Maryland, has been doubted, and the right of states to regulate their own internal commerce, and to tax every species of property within their own jurisdiction -- nay more, concurrent power of states over subject of commerce, is now firmly established by opinion of majority of judges of Supreme Court of United States." People v. Coleman (1854), 4 C. 46, 60 Am.D. 581, overruled on another point by People v. McCreery (1868), 34 C. 432.

"By well-settled rules of construction, right of state to regulate commerce is concurrent with that of Congress, with understanding always, that all state regulations, inconsistent with those of the federal government on this subject, must give way. -- " People v. Coleman (1854), 4 C. 46, 60 Am.D. 581, overruled on another point by People v. McCreery (1868), 34 C. 432.

"Federal Constitution has vested in general government power to regulate commerce in all its branches; and this power extends to every species of commercial intercourse, and may be exercised upon persons as well as property." Lin Sing v. Washburn (1862), 20 C. 534.

"When Congress, in exercise of its constitutional right, has by its legislation established regulations of commerce with foreign nations, and among several states, its authority is paramount and exclusive, and its enactments supersede all state legislation on those subjects. Whether states could constitutionally exercise this power in absence of congressional legislation is not decided." People v. Raymond (1868), 34 C. 492.


Woodruff v. Parham, 75 U.S. (8 Wall.) 123 (1868): [EXCELLENT ruling relating to the meaning of "foreign commerce" within the meaning of the Constitution]

The words impost, imports, and exports are frequently used in the Constitution. They have a necessary correlation, and when we have a clear idea of what either word means in any particular connection in which it may be found, we have one of the most satisfactory tests of its definition in other parts of the same instrument.

In the case of Brown v. Maryland, the word imports, as used in the clause now under consideration, is defined, both on the authority of the lexicons and of usage, to be articles brought into the country; and impost is there said to be a duty, custom, or tax levied on articles brought into the country. In the ordinary use of these terms at this day, no one would, for a moment, think of them as having relation to any other articles than those brought from a country foreign to the United States, and at the time the case of Brown v. Maryland was decided-namely, in 1827-it is reasonable to suppose that the general usage was the same, and that in defining imports as articles brought into the country, [75 U.S. 123, 132]   the Chief Justice used the word country as a synonymous for United States.

But the word is susceptible of being applied to articles introduced from one State into another, and we must inquire if it was so used by the framers of the Constitution.

Leaving, then, for a moment, the clause of the Constitution under consideration, we find the first use of any of these correlative terms in that clause of the eighth section of the first article, which begins the enumeration of the powers confided to Congress.

'The Congress shall have power to levy and collect taxes, duties, imposts, and excises, . . . but all duties, imposts, and excises shall be uniform throughout the United States.'

Is the word impost, here used, intended to confer upon Congress a distinct power to levy a tax upon all goods or merchandise carried from one State into another? Or is the power limited to duties on foreign imports? If the former be intended, then the power conferred is curiously rendered nugatory by the subsequent clause of the ninth section, which declares that no tax shall be laid on articles exported from any State, for no article can be imported from one State into another which is not, at the same time, exported from the former. But if we give to the word imposts, as used in the first-mentioned clause, the definition of Chief Justice Marshall, and to the word export the corresponding idea of something carried out of the United States, we have, in the power to lay duties on imports from abroad, and the prohibition to lay such duties on exports to other countries, the power and its limitations concerning imposts.

It is also to be remembered that the Convention was here giving the right to lay taxes by National authority in connection with paying the debts and providing for the common defence and the general welfare, and it is a reasonable inference that they had in view, in the use of the word imports, those articles which, being introduced from other nations and diffused generally over the country for consumption, would contribute, in a common and general way, to the support [75 U.S. 123, 133]   of the National government. If internal taxation should become necessary, it was provided for by the terms taxes and excises.

There are two provisions of the clause under which exemption from State taxation is claimed in this case, which are not without influence on that prohibition, namely: that any State may, with the assent of Congress, lay a tax on imports, and that the net produce of such tax shall be for the benefit of the Treasury of the United States. The framers of the Constitution, claiming for the General Government, as they did, all the duties on foreign goods imported into the country, might well permit a State that wished to tax more heavily than Congress did, foreign liquors, tobacco, or other articles injurious to the community, or which interfered with their domestic policy, to do so, provided such tax met the approbation of Congress, and was paid into the Federal treasury. But that it was intended to permit such a tax to be imposed by such authority on the products of neighboring States for the use of the Federal government, and that Congress, under this temptation, was to arbitrate between the State which proposed to levy the tax and those which opposed it, seems altogether improbable.

Yet this must be the construction of the clause in question if it has any reference to goods imported from one State into another.

If we turn for a moment from the consideration of the language of the Constitution to the history of its formation and adoption, we shall find additional reason to conclude that the words imports and imposts were used with exclusive reference to articles imported from foreign countries.

Section three, article six, of the Confederation provided that no State should lay imposts or duties which might interfere with any stipulation in treaties entered into by the United States; and section one, article nine, that no treaty of commerce should be made whereby the legislative power of the respective States should be restrained from imposing such imposts and duties on foreigners as their own people were subjected to, or from prohibiting the exportation or [75 U.S. 123, 134]   importation of any species of goods or commodities whatsoever. In these two articles of the Confederation, the words imports, exports, and imposts are used with exclusive reference to foreign trade, because they have regard only to the treaty-making power of the federation.

As soon as peace was restored by the success of the Revolution, and commerce began to revive, it became obvious that the most eligible mode of raising revenue for the support of the General Government and the payment of its debts was by duties on foreign merchandise imported into the country. The Congress accordingly recommended the States to levy a duty of five per cent. on all such imports, for the use of the Confederation. To this, Rhode Island, which, at that time, was one of the largest importing States, objected, and we have a full report of the remonstrance addressed by a committee of Congress to that State on that subject. 11 And the discussions of the Congress of that day, as imperfectly as they have been preserved, are full of the subject of the injustice done by the States who had good seaports, by duties levied in those ports on foreign goods designed for States who had no such ports.

In this state of public feeling in this matter, the Constitutional Convention assembled.

Its very first grant of power to the new government about to be established, was to lay and collect imposts or duties on foreign goods imported into the country, and among its restraints upon the States was the corresponding one that they should lay no duties on imports or exports. It seems, however, from Mr. Madison's account of the debates, that while the necessity of vesting in Congress the power to levy duties on foreign goods was generally conceded, the right of the States to do so likewise was not given up without discussion, and was finally yielded with the qualification to which we have already referred, that the States might lay such duties with the assent of Congress. Mr. Madison moved that the words 'nor lay imposts or duties on imports' be placed in [75 U.S. 123, 135]   that class of prohibitions which were absolute, instead of those which were dependent on the consent of Congress. His reason was that the States interested in this power, (meaning those who had good seaports), by which they could tax the imports of their neighbors passing through their markets, were a majority, and could gain the consent of Congress to the injury of New Jersey, North Carolina, and other non-importing States. But his motion failed. 12 In the Convention of Virginia, called to adopt the Constitution, that distinguished expounder and defender of the instrument, so largely the work of his own hand, argued, in support of the authority to lay direct taxes, that without this power, a disproportion of burden would be imposed on the Southern States, because, having fewer manufactures, they would consume more imports and pay more of the imposts. 13 So, in defending the clause of the Constitution now under our consideration, he says: 'Some States export the produce of other States. Virginia exports the produce of North Carolina; Pennsylvania those of New Jersey and Delaware; and Rhode Island, those of Connecticut and Massachusetts. The exporting States wished to retain the power of laying duties on exports to enable them to pay expenses incurred. The States whose produce was exported by other States, were extremely jealous lest a contribution should be raised of them by the exporting States, by laying heavy duties on their own commodities. If this clause be fully considered it will be found to be more consistent with justice and equity than any other practicable mode; for, if the States had the exclusive imposition of duties on exports, they might raise a heavy contribution of the other States for their own exclusive emoluments.' 14 Similar observation, from the same source, are found in the 42d number of the Federalist, but with more direct reference to the power to regulate commerce.

Governor Ellsworth, in opening the debate of the Connecticut Convention on the adoption of the Constitution, says: 'Our being tributary to our sister States, is in consequence of [75 U.S. 123, 136]   the want of a Federal system. The State of New York raises 60,000 or 80, 000 in a year by impost. Connecticut consumes about one-third of the goods upon which this impost is laid, and consequently pays one-third of this sum to New York. If we import by the medium of Massachusetts, she has an impost, and to her we pay tribute.' 15 A few days later, he says: 'I find, on calculation, that a general impost of five per cent. would raise a sum of 245,000,' and adds: 'it is a strong argument in favor of an impost, that the collection of it will interfere less with the internal police of the States than any other species of taxation. It does not fill the country with revenue officers, but is confined to the seacoast, and is chiefly a water operation. . . . If we do not give it to Congress, the individual States will have it.' 16  

It is not too much to say that, so far as our research has extended, neither the word export, import, or impost is to be found in the discussions on this subject, as they have come down to us from that time, in reference to any other than foreign commerce, without some special form of words to show that foreign commerce is not meant. The only allusion to imposts in the Articles of Confederation is clearly limited to duties on goods imported from foreign States. Wherever we find the grievance to be remedied by this provision of the Constitution alluded to, the duty levied by the States on foreign importations is alone mentioned, and the advantages to accrue to Congress from the power confided to it, and withheld from the States, is always mentioned with exclusive reference to foreign trade.

Whether we look, then, to the terms of the clause of the Constitution in question, or to its relation to the other parts of that instrument, or to the history of its formation and adoption, or to the comments of the eminent men who took part in those transactions, we are forced to the conclusion that no intention existed to prohibit, by this clause, the right of one State to tax articles brought into it from another. If we examine for a moment the results of an opposite doctrine, [75 U.S. 123, 137]   we shall be well satisfied with the wisdom of the Constitution as thus construed.

[Woodruff v. Parham, 75 U.S. (8 Wall.) 123 (1868)]


Adair v. U.S., 208 U.S. 161 (1908)

"We need scarcely repeat what this court has more than once said, that the power to regulate interstate commerce, great and paramount as that power is, cannot be exerted in violation of any fundamental right secured by other provisions of the Constitution.  Gibbons v. Ogden, 9 Wheat. 1, 196, 6 L. ed. 23, 70; Lottery Case (Champion v. Ames) 188 U.S. 321, 353 , 47 S. L. ed. 492, 500, 23 Sup. Ct. Rep. 321."

"...the statute...arbitrarily sanctions an illegal invasion of the personal liberty as well as the right of property of the defendant, Adair. . ."

[Adair v. U.S., 208 U.S. 161 (1908)]


Carter v. Carter Coal Co., 298 U.S. 238 (1936)

Since the validity of the act depends upon whether it is a regulation of interstate commerce, the nature and extent of the power conferred upon Congress by the commerce clause becomes the determinative question in this branch of the case. The commerce clause (art. 1, 8, cl. 3) vests in Congress the power 'To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.' The function to be exercised is that of regulation. The thing to be regulated is the commerce described. In exercising the authority conferred by this clause of the Constitution, Congress is powerless to regulate anything which is not commerce, as it is powerless to do anything about commerce which is not regulation. We first inquire, then-What is commerce? The term, as this court many times has said, is [298 U.S. 238, 298]   one of extensive import. No all embracing definition has ever been formulated. The question is to be approached both affirmatively and negatively-that is to say, from the points of view as to what it includes and what it excludes.

In Gibbons v. Ogden, 9 Wheat. 1, 189, 190, Chief Justice Marshall said:

'Commerce, undoubtedly, is traffic, but it is something more-it is intercourse. It describes the commercial intercourse between nations, and parts of nations, in all its branches, and is regulated by prescribing rules for carrying on that intercourse.'

As used in the Constitution, the word 'commerce' is the equivalent of the phrase 'intercourse for the purposes of trade,' and includes transportation, purchase, sale, and exchange of commodities between the citizens of the different states. And the power to regulate commerce embraces the instruments by which commerce is carried on. Welton v. State of Missouri, 91 U.S. 275 , 280; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 241 , 20 S.Ct. 96; Hopkins v. United States, 171 U.S. 578, 597 , 19 S.Ct. 40. In Adair v. United States, 208 U.S. 161, 177 , 28 S.Ct. 277, 281, 13 Ann. Cas. 764, the phrase 'Commerce among the several states' was defined as comprehending 'traffic, intercourse, trade, navigation, communication, the transit of persons, and the transmission of messages by telegraph,-indeed, every species on commercial intercourse among the several states.' In Veazie et al. v. Moor, 14 How. 568, 573, 574, this court, after saying that the phrase could never be applied to transactions wholly internal, significantly added: 'Nor can it be properly concluded, that, because the products of domestic enterprise in agriculture or manufactures, or in the arts, may ultimately become the subjects of foreign commerce, that the control of the means or the encouragements by which enterprise is fostered and protected, is legitimately within the import of the phrase foreign commerce, or fairly im- [298 U.S. 238, 299]   plied in any investiture of the power to regulate such commerce. A pretension as far reaching as this, would extend to contracts between citizen and citizen of the same State, would control the pursuits of the planter, the grazier, the manufacturer, the mechanic, the immense operations of the collieries and mines and furnaces of the country; for there is not one of these avocations, the results of which may not become the subjects of foreign commerce, and be borne either by turnpikes, canals, or railroads, from point to point within the several States, towards an ultimate destination, like the one above mentioned.'

The distinct on between manufacture and commerce was discussed in Kidd v. Pearson, 128 U.S. 1, 20 , 21 S., 22, 9 S.Ct. 6, 10, and it was said:

'No distinction is more popular to the common mind, or more clearly expressed in economic and political literature, than that between manufactures and commerce. Manufacture is transformation-the fashioning of raw materials into a change of form for use. The functions of commerce are different. ... If it be held that the term includes the regulation of all such manufactures as are intended to be the subject of commercial transactions in the future, it is impossible to deny that it would also include all productive industries that contemplate the same thing. The result would be that congress would be invested, to the exclusion of the states, with the power to regulate, not only manufacture, but also agriculture, horticulture, stock-raising, domestic fisheries, mining,-in short, every branch of human industry. For is there one of them that does not contemplate, more or less clearly, an interstate or foreign market? Does not the wheat-grower of the northwest, and the cotton-planter of the south, plant, cultivate, and harvest his crop with an eye on the prices at Liverpool, New York, and Chicago? The power being vested in congress and [298 U.S. 238, 300]   denied to the states, it would follow as an inevitable result that the duty would devolve on congress to regulate all of these delicate, multiform, and vital interests,-interests which in their nature are, and must be, local in all the details of their successful management.'

And then, as though foreseeing the present controversy, the opinion proceeds:

'Any movement towards the establishment of rules of production in this vast country, with its many different climates and opportunities, could only be at the sacrifice of the peculiar advantages of a large part of the localities in it, if not of every one of them. On the other hand, any movement towards the local, detailed, and incongruous legislation required by such an interpretation would be about the widest possible departure from the declared object of the clause in question. Nor this alone. Even in the exercise of the power contended for, congress would be confined to the regulation, not of certain branches of industry, however numerous, but to those instances in each and every branch where the producer contemplated an interstate market. ... A situation more paralyzing to the state governments, and more provocative of conflicts between the general government and the states, and less likely to have been what the framers of the constitution intended, it would be difficult to imagine.'

Chief Justice Fuller, speaking for this court in United States v. E. C. Knight Co., 156 U.S. 1, 12 , 13 S., 15 S.Ct. 249, 253, said:

'Doubtless the power to control the manufacture of a given thing involves, in a certain sense, the control of its disposition, but this is a secondary, and not the primary, sense; and, although the exercise of that power may result in bringing the operation of commerce into play, it does not control it, and affects it only incidentally and indirectly. Commerce succeeds to manufacture, and is not a part of it. ... [298 U.S. 238, 301]   'It is vital that the independence of the commercial power and of the police power, and the delimitation between them, however sometimes perplexing, should always be recognized and observed, for, while the one furnishes the strongest bond of union, the other is essential to the preservation of the autonomy of the states as required by our dual form of government; and acknowledged evils, however grave and urgent they may appear to be, had better be borne, than the risk be run, in the effort to suppress them, of more serious consequences by resort to expedients of even doubtful constitutionality. ...

'The regulation of commerce applies to the subjects of commerce, and not to matters of internal police. Contracts to buy, sell, or exchange goods to be transported among the several states, the transportation and its instrumentalities, and articles bought, sold, or exchanged for the purposes of such transit among the states, or put in the way of transit, may be regulated; but this is because they form part of interstate trade or commerce. The fact that an article is manufactured for export to another state does not of itself make it an article of interstate commerce, and the intent of the manufacturer does not determine the time when the article or product passes from the control of the state and belongs to commerce.'

That commodities produced or manufactured within a state are intended to be sold or transported outside the state does not render their production or manufacture subject to federal regulation under the commerce clause. As this court said in Coe v. Errol, 116 U.S. 517, 526 , 6 S.Ct. 475, 478, 'Though intended for exportation, they may never be exported,-the owner has a perfect right to change his mind,-and until actually put in motion, for some place out of the state, or committed to the custody of a carrier for transportation to such place, why may they not be regarded as still remaining a part of the general mass of [298 U.S. 238, 302]   property in the state?' It is true that this was said in respect of a challenged power of the state to impose a tax; but the query is equally pertinent where the question, as here, is with regard to the power of regulation. The case was relied upon in Kidd v. Pearson, supra, 128 U.S. 1 , at page 26, 9 S.Ct. 6, 12. 'The application of the principles above announced,' it was there said, 'to the case under consideration leads to a conclusion against the contention of the plaintiff in error. The police power of a state is as broad and plenary as its taxing power, and property within the state is subject to the operations of the former so long as it is within the regulating restrictions of the latter.'

In Heisler v. Thomas Colliery Co., 260 U.S. 245, 259 , 260 S., 43 S.Ct. 83, 86, we held that the possibility, or even certainty of exportation of a product or article from a state did not determine it to be in interstate commerce before the commencement of its movement from the state. To hold otherwise 'would nationalize all industries, it would nationalize and withdraw from state jurisdiction and deliver to federal commercial control the fruits of California and the South, the wheat of the West and its meats, the cotton of the South, the shoes of Massachusetts and the woolen industries of other states at the very inception of their production or growth, that is, the fruits unpicked, the cotton and wheat ungathered, hides and flesh of cattle yet 'on the hoof,' wool yet unshorn, and coal yet unmined because they are in varying percentages destined for and surely to be exported to states other than those of their production.'

In Oliver Iron Co. v. Lord, 262 U.S. 172, 178 , 43 S.Ct. 526, 529, we said on the authority of numerous cited cases: 'Mining is not interstate commerce, but like manufacturing, is a local business, subject to local regulation and taxation. ... Its character in this regard is intrinsic, is not affected by the intended use or disposal of the product, is not controlled by contractual engagements, and persists even [298 U.S. 238, 303]   though the business be conducted in close connection with interstate commerce.'

The same rule applies to the production of oil. 'Such production is essentially a mining operation, and therefore is not a part of interstate commerce, even though the product obtained is intended to be and in fact is immediately shipped in such commerce.' Champlin Refining Co. v. Corporation Commission, 286 U.S. 210, 235 , 52 S.Ct. 559, 565, 86 A.L.R. 403. One who produces or manufactures a commodity, subsequently sold and shipped by him in interstate commerce, whether such sale and shipment were originally intended or not, has engaged in two distinct and separate activities. So far as he produces or manufactures a commodity, his business is purely local. So far as he sells and ships, or contracts to sell and ship, the commodity to customers in another state, he engages in interstate commerce. In respect of the former, he is subject only to regulation by the state; in respect of the latter, to regulation only by the federal government. Utah Power & L. Co. v. Pfost, 286 U.S. 165, 182 , 52 S.Ct. 548. Production is not commerce; but a step in preparation for commerce. Chassaniol v. Greenwood, 291 U.S. 584, 587 , 54 S.Ct. 541.

We have seen that the word 'commerce' is the equivalent of the phrase 'intercourse for the purposes of trade.' Plainly, the incidents leading up to and culminating in the mining of coal do not constitute such intercourse. The employment of men, the fixing of their wages, hours of labor, and working conditions, the bargaining in respect of these things- whether carried on separately or collectively-each and all constitute intercourse for the purposes of production, not of trade. The latter is a thing apart from the relation of employer and employee, which in all producing occupations is purely local in character. Extraction of coal from the mine is the aim and the completed result of local activities. Commerce in the coal mined is not brought into being by [298 U.S. 238, 304]   force of these activities, but by negotiations, agreements and circumstances entirely apart from production. Mining brings the subject- matter of commerce into existence. Commerce disposes of it.

A consideration of the foregoing, and of many cases which might be added to those already cited, renders inescapable the conclusion that the effect of the labor provisions of the act, including those in respect of minimum wages, wage agreements, collective bargaining, and the Labor Board and its powers, primarily falls upon production and not upon commerce; and confirms the further resulting conclusion that production is a purely local activity. It follows that none of these essential antecedents of production constitutes a transaction in or forms any part of interstate commerce. Schechter Poultry Corp. v. United States, supra, 295 U.S. 495 , at page 542 et seq., 55 S.Ct. 837, 97 A.L.R. 947. Everything which moves in interstate commerce has had a local origin. Without local production somewhere, interstate commerce, as now carried on, would practically disappear. Nevertheless, the local character of mining, of manufacturing, and of crop growing is a fact, and remains a fact, whatever may be done with the products.

Certain decisions of this court, superficially considered, seem to lend support to the defense of the act now under review. But upon examination, they will be seen to be inapposite. Thus, Coronado Co. v. United Mine Workers, 268 U.S. 295, 310 , 45 S.Ct. 551, and kindred cases, involved conspiracies to restrain interstate commerce in violation of the Anti-Trust Laws. The acts of the persons involved were local in character; but the intent was to restrain interstate commerce, and the means employed were calculated to carry that intent into effect. Interstate commerce was the direct object of attack; and the restraint of such commerce was the necessary consequence of the acts and the immediate end in view. Bedford Cut Stone Co. [298 U.S. 238, 305]   v. Journeyman Stone Cutters' Ass'n, 274 U.S. 37, 46 , 47 S.Ct. 522, 54 A.L.R. 791. The applicable law was concerned not with the character of the acts or of the means employed, which might be in and of themselves purely local, but with the intent and direct operation of those acts and means upon interstate commerce. 'The mere reduction in the supply of an article,' this court said in the Coronado Co. Case, supra, 268 U.S. 295 , at page 310, 45 S.Ct. 551, 556, 'to be shipped in interstate commerce by the illegal or tortious prevention of its manufacture or production is ordinarily an indirect and remote obstruction to that commerce. But when the intent of those unlawfully preventing the manufacture or production is shown to be to restrain or control the supply entering and moving in interstate commerce, or the price of it in interstate markets, their action is a direct violation of the Anti-Trust Act (15 U.S.C.A. 1 et seq.).'

Another group of cases, of which Swift & Company v. United States, 196 U.S. 375 , 25 S.Ct. 276, is an example, rest upon the circumstance that the acts in question constituted direct interferences with the 'flow' of commerce among the states. In the Swift Case, live stock was consigned and delivered to stockyards-not as a place of final destination, but, as the court said in Stafford v. Wallace, 258 U.S. 495, 516 , 42 S.Ct. 397, 402, 23 A.L.R. 229, 'a throat through which the current flows.' The sales which ensued merely changed the private interest in the subject of the current without interfering with its continuity. Industrial Ass'n of San Francisco v. United States, 268 U.S. 64, 79 , 45 S.Ct. 403. It was nowhere suggested in these cases that the interstate commerce power extended to the growth or production of the things which, after production, entered the flow. If the court had held that the raising of the cattle, which were involved in the Swift Case, including the wages paid to and working conditions of the herders and others employed in the business, could be regulated by Congress, that decision and decisions holding similarly would be in [298 U.S. 238, 306]   point; for it is that situation, and not the one with which the court actually dealt, which here concerns us.

The distinction suggested is illustrated by the decision in Arkadelphia Co. v. St. Louis S.W.R. Co., 249 U.S. 134 , 150-152, 39 S.Ct. 237. That case dealt with orders of a state commission fixing railroad rates. One of the questions considered was whether certain shipments of rough material from the forest to mills in the same state for manufacture, followed by the forwarding of the finished product to points outside the state, was a continuous movement in interstate commerce. It appeared that when the rough material reached the mills it was manufactured into various articles which were stacked or placed in kilns to dry, the processes occupying several months. Markets for the manufactured articles were almost entirely in other states or in foreign countries. About 95 per cent. of the finished articles was made for outbound shipment. When the rough material was shipped to the mills, it was expected by the mills that this percentage of the finished articles would be so sold and shipped outside the state. And all of them knew and intended that this 95 per cent. of the finished product would be so sold and shipped. This court held that the state order did not interfere with interstate commerce, and that the Swift Case was not in point; as it is not in point here.

The restricted field covered by the Swift and kindred cases is illustrated by the Schechter Case, supra, 295 U.S. 495 , at page 543, 55 S. Ct. 837, 97 A.L.R. 947. There the commodity in question, although shipped from another state, had come to rest in the state of its destination, and, as the court pointed out, was no longer in a current or flow of interstate commerce. The Swift doctrine was rejected as inapposite. In the Schechter Case the flow had ceased. Here it had not begun. The difference is not one of substance. The applicable principle is the same. [298 U.S. 238, 307]   But section 1 (the Preamble) of the act now under review declares that all production and distribution of bituminous coal 'bear upon and directly affect its interstate commerce'; and that regulation thereof is imperative for the protection of such commerce. The contention of the government is that the labor provisions of the act may be sustained in that view.

That the production of every commodity intended for interstate sale and transportation has some effect upon interstate commerce may be, if it has not already been, freely granted; and we are brought to the final and decisive inquiry, whether here that effect is direct, as the 'Preamble' recites, or indirect. The distinction is not formal, but substantial in the highest degree, as we pointed out in the Schechter Case, supra, 295 U.S. 495 , at page 546 et seq., 55 S.Ct. 837, 850, 97 A.L.R. 947. 'If the commerce clause were construed,' we there said, 'to reach all enterprises and transactions which could be said to have an indirect effect upon interstate commerce, the federal authority would embrace practically all the activities of the people, and the authority of the state over its domestic concerns would exist only by sufferance of the federal government. Indeed, on such a theory, even the development of the state's commercial facilities would be subject to federal control.' It was also pointed out, 295 U.S. 495 , at page 548, 55 S.Ct. 837, 851, 97 A.L.R. 947, that 'the distinction between direct and indirect effects of intrastate transactions upon interstate commerce must be recognized as a fundamental one, essential to the maintenance of our constitutional system.'

Whether the effect of a given activity or condition is direct or indirect is not always easy to determine. The word 'direct' implies that the activity or condition invoked or blamed shall operate proximately-not mediately, remotely, or collaterally-to produce the effect. It connotes the absence of an efficient intervening agency [298 U.S. 238, 308]   or condition. And the extent of the effect bears no logical relation to its character. The distinction between a direct and an indirect effect turns, not upon the magnitude of either the cause or the effect, but entirely upon the manner in which the effect has been brought about. If the production by one man of a single ton of coal intended for interstate sale and shipment, and actually so sold and shipped, affects interstate commerce indirectly, the effect does not become direct by multiplying the tonnage, or increasing the number of men employed, or adding to the expense or complexities of the business, or by all combined. It is quite true that rules of law are sometimes qualified by considerations of degree, as the government argues. But the matter of degree has no bearing upon the question here, since that question is not-What is the extent of the local activity or condition, or the extent of the effect produced upon interstate commerce? but-What is the relation between the activity or condition and the effect?

Much stress is put upon the evils which come from the struggle between employers and employees over the matter of wages, working conditions, the right of collective bargaining, etc., and the resulting strikes, curtailment, and irregularity of production and effect on prices; and it is insisted that interstate commerce is greatly affected thereby. But, in addition to what has just been said, the conclusive answer is that the evils are all local evils over which the federal government has no legislative control. The relation of employer and employee is a local relation. At common law, it is one of the domestic relations. The wages are paid for the doing of local work. Working conditions are obviously local conditions. The employees are not engaged in or about commerce, but exclusively in producing a commodity. And the controversies and evils, which it is the object of the [298 U.S. 238, 309]   act to regulate and minimize, are local controversies and evils affecting local work undertaken to accomplish that local result. Such effect as they may have upon commerce, however extensive it may be, is secondary and indirect. An increase in the greatness of the effect adds to its importance. It does not alter its character.

The government's contentions in defense of the labor provisions are really disposed of adversely by our decision in the Schechter Case, supra. The only perceptible difference between that case and this is that in the Schechter Case the federal power was asserted with respect to commodities which had come to rest after their interstate transportation; w ile here, the case deals with commodities at rest before interstate commerce has begun. That difference is without significance. The federal regulatory power ceases when interstate commercial intercourse ends; and, correlatively, the power does not attach until interstate commercial intercourse begins. There is no basis in law or reason for applying different rules to the two situations. No such distinction can be found in anything said in the Schechter Case. On the contrary, the situations were recognized as akin. The opinion, 295 U.S. 495 , at page 546, 55 S.Ct. 837, 850, 97 A.L.R. 947, after calling attention to the fact that if the commerce clause could be construed to reach transactions having an indirect effect upon interstate commerce, the federal authority would embrace practically all the activities of the people, and the authority of the state over its domestic concerns would exist only by sufferance of the federal government, we said: 'Indeed, on such a theory, even the development of the state's commercial facilities would be subject to federal control.' And again, after pointing out that hours and wages have no direct relation to interstate commerce and that if the federal government had power to determine the wages and hours of employees in the internal commerce of a state because of their relation to cost and prices and their [298 U.S. 238, 310]   indirect effect upon interstate commerce, we said, 295 U.S. 495 , at page 549, 55 S.Ct. 837, 851, 97 A.L.R. 947: 'All the processes of production and distribution that enter into cost could likewise be controlled. If the cost of doing an intrastate business is in itself the permitted object of federal control, the extent of the regulation of cost would be a question of discretion and not of power.' A reading of the entire opinion makes clear, what we now declare, that the want of power on the part of the federal government is the same whether the wages, hours of service, and working conditions, and the bargaining about them, are related to production before interstate commerce has begun, or to sale and distribution after it has ended.

Sixth. That the act, whatever it may be in form, in fact is compulsory clearly appears. We have already discussed section 3, which imposes the excise tax as a penalty to compel 'acceptance' of the code. Section 14 (15 U.S.C.A. 818) provides that the United States shall purchase no bituminous coal produced at any mine where the producer has not complied with the provisions of the code; and that each contract made by the United States shall contain a provision that the contractor will buy no bituminous coal to use on, or in the carrying out of, such contract unless the producer be a member of the code, as certified by the coal commission. In the light of these provisions we come to a consideration of subdivision (g) of part 3 of section 4, dealing with 'labor relations.'

That subdivision delegates the power to fix maximum hours of labor to a part of the producers and the miners-namely, 'the producers of more than two-thirds the annual national tonnage production for the preceding calendar year' and 'more than one-half the mine workers employed'; and to producers of more than two-thirds of the district annual tonnage during the preceding calendar year and a majority of the miners, there is delegated the power to fix minimum wages for the district [298 U.S. 238, 311]   or group of districts. The effect, in respect of wages and hours, is to subject the dissentient minority, either of producers or miners or both, to the will of the stated majority, since, by refusing to submit, the minority at once incurs the hazard of enforcement of the drastic compulsory provisions of the act to which we have referred. To 'accept,' in these circumstances, is not to exercise a choice, but to surrender to force.

The power conferred upon the majority is, in effect, the power to regulate the affairs of an unwilling minority. This is legislative delegation in its most obnoxious form; for it not even delegation to an official or an official body, presumptively disinterested, but to private persons whose interests may be and often are adverse to the interests of others in the same business. The record shows that the conditions of competition differ among the various localities. In some, coal dealers compete among themselves. In other localities, they also compete with the mechanical production of electrical energy and of natural gas. Some coal producers favor the code; others oppose it; and the record clearly indicates that this diversity of view arises from their conflicting and even antagonistic interests. The difference between producing coal and regulating its production is, of course, fundamental. The former is a private activity; the latter is necessarily a governmental function, since, in the very nature of things, one person may not be intrusted with the power to regulate the business of another, and especially of a competitor. And a statute which attempts to confer such power undertakes an intolerable and unconstitutional interference with personal liberty and private property. The delegation is so clearly arbitrary, and so clearly a denial of rights safeguarded by the due process clause of the Fifth Amendment, that it is unnecessary to do more than refer to decisions of this court which foreclose the question. Schechter Poultry Corp. v. United States, [298 U.S. 238, 312]   295 U.S. 495 , at page 537, 55 S.Ct. 837, 97 A.L.R. 947; Eubank v. Richmond, 226 U.S. 137, 143 , 33 S.Ct. 76, 42 L.R.A.( N.S.) 1123; Washington ex rel. Seattle Trust Co. v. Roberge, 278 U.S. 116, 121 , 122 S., 49 S.Ct. 50, 86 A.L.R. 654.

[Carter v. Carter Coal Co., 298 U.S. 238 (1936)]