and not a tax on the sale as such. Can Congress thus impose a penalty tax of 99 percent of the tax levied upon that class of producers who do not assent to Federal regulation?

To state the question is to answer it. A tax thus imposed for the alleged benefit of a special class of producers cannot be held within the limitation that Congress can only levy and collect taxes to pay debts and to provide for the common defense and general welfare. The proposition has been succinctly put by Mr. Justice Story, in his work on the Constitution (sec. 908), speaking with reference to the taxing power.

"In this sense, Congress has not an unlimited power of taxation; but it is limited to specific objects-the payment of the public debts, and the providing for the common defense and general welfare. A tax, therefore, laid by Congress for neither of these objects, would be unconstitutional as an excess of its legislative authority."

No authority for the proposed tax can be found in cases dealing with the tariff laws of the United States (e. g., Hampton v. United States, 276 U. S. 394) since Congress is expressly given exclusive power to impose tariffs on imports by the Constitution itself (see The Federalist Papers, No. XXXII), or in cases where some motive other than taxation may have motivated Congress but was not apparent on the face of the legislation (e. g., McCray v. United States, 195 U. S. 27).

2. THE POWER TO REGULATE INTERSTATE COMMERCE

Ar.icle I, sec.ion 8, clause 3, of the Constitution, provides that Congress shall have power "to regulate commerce with foreign nations, and among the several States, and with the Indian tribes."

Proponents of the Guffey-Snyder bill have sought to build their case for its constitutionality largely on this power, with the assistance of recitals in section 1 by which an effort is made to settle the question by legislative declaration. Thus, the bill recites:

"It is hereby recognized and declared that the mining of bituminous coal and its distribution by the producers thereof in and throughout the United States are affected with a national public interest * * 2nd, "it is further recognized and declared that all production of bituminous coal and its distribution by the producers thereof bear upon and affect its interstate commerce

* * * "

By these averments the control of the Federal Government is to be extended over the entire field of production and distribution of coal regardless of whether these activities, or any parts thereof, are purely local or are interstate. Such averments were before the Supreme Court in the Schechter case, for the National Industrial Recovery Act was prefaced by similar declarations.

In the first place it should be observed that these averments are but conclusions of law, and are therefore not binding upon the courts, which are invested with the judicial power. The weight to be accorded such declarations was discussed by the Supreme Court in the case of Chastleton Corporation v. Sinclair (264 U. S. 543):

* a

* ** To the respect due to a declaration of the legislature court is not at liberty to shut its eyes to an obvious mistake, when the validity of the law depends upon the truth of what is declared * * * And still more obviously, so far as this declaration looks to the future, it can be no more than prophecy, and is liable to be controlled by events. * * These cases show that the court may ascertain as it sees fit any fact that is merely a ground for laying down a rule of law * *

*

The mining and distribution of coal are the activities of innumerable individual units. These units function in a multitude of ways, depending upon the type, character and location of the mines, and the ingenuity of the persons owning and operating them.

There are approximately 6,000 mines producing 1,000 tons or more annually in the United States, together with an unknown number that produce smaller quantities. The quality of the coal produced together with the requirements and tastes of the consuming public determine the areas of activity in the disposition of the product, and create conditions of consumption that have made possible and encouraged the development of all these different units. The coal from some of these mines eventually finds its way into channels of interstate commerce, but the balance is consumed in the State where it is produced. The operation of the mines, however, is in the great majority of instances purely a local activity and is so recognized.

In the bill, however, no distinction is made between that coal which is produced and consumed in a single State and that which eventually enters into the channels of interstate commerce. In this respect it goes much further than did the first Child Labor Act. No limitation is made by this bill in the authority conferred, with respect to coal which is wholly produced and consumed in a single State, or the intrastate portion of production and distribution of other producers The bill is intended to cover all production and in this attempt it comes clearly within the constitutional prohibition of the First Employers' Liability Cases (207. U. S. 463). This was a case in which an act of Congress, making "every common carrier engaged in trade or commerce" liable for the death or injury of “any of its employees", was declared unconstitutional because it was not expressly. restricted to the interstate commerce business of the carriers. The court in its decision stated:

"The act, then, being addressed to all common carriers, engaged in interstate commerce, and imposing a liability upon them in favor of any of their employees, without qualification or restriction as to the business in which the carriers or their employees may be engaged at the time of the injury, of necessity includes subjects wholly outside of the power of Congress to regulate commerce.

The foregoing is based upon the assumption that the business of mining coali is not interstate commerce. The validity of that assumption will now be demonstrated.

The bill is not in purpose or effect a regulation of interstate commerce in coal. It is statedly a regulation of the business of coal mining. The mining of coal, like all other matters of local production, is not subject to regulation by the Federal Government under the delegation of power contained in the commerce clauseof the Constitution. The production of coal is not interstate commerce. It is not commerce at all and has been so held in a long line of decisions by the Supreme Court.

In the case of Vesey v. Moore, decided in 1842, the Court in referring to matters: of local production stated:

"Why, if we should ever contemplate that Congress could control the internal operations of the production and commerce of a State, becaue of the products of the mine or the forest or the field or the farm was going to move in commerce,. Congress would immediately gain control of the entire commerce of the country, and all constitutional restrictions would be destroyed and abandoned.

*

*

To the same effect is its decision in United States v. E. C. Knight Co., et al.. (156 U. S. 1):

merce

*

"No distinction is more popular to the common mind, or more clearly expressed in economic and political literature, than that between manufacture and com* * 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 manufactures, but also agriculture, horticulture, stock raising, domestic fisheries,. mining-in short, every branch of human industry.'

Likewise in the first child-labor case of Hammer v. Dagenhart (247 U. S. 251),. the court speaking through Mr. Justice Day said:

"The making of goods and the mining of coal are not commerce, nor does thefact that these things are to be afterwards shipped, or used in interstate commerce, make their production a part thereof.

66* * * the production of articles intended for interstate commerce is a matter of local regulations * * * If it were otherwise, all manufacture intended for interstate shipment would be brought under Federal control to the practical exclusion of the authority of the States-a result certainly not contemplated by the framers of the Constitution * *"" (Kidd v. Pearson, 128 U. S. 1.)

*

And again in Oliver Iron Mining Co. v. Lord (262 U. S. 172):

'Mining is not interstate commerce, but like manufacturing, is a local business,, subject to local regulation and taxation."

The bill does not rely alone, however, upon the proposition that the production of coal is interstate commerce, but also on the declaration that all production and distribution of coal is affected with a national public interest and bears upon and affects interstate commerce.

Whether or not there is a direct and substantial effect upon interstate commerce under any given circumstance depends upon the particular facts involved In each case and hence a declaration by Congress that all production and distribu

t.cn of bituminous coal affects interstate commerce is not only contrary to fact but directly contradicts decisions of the Supreme Court. This was clearly pointed out by Chief Justice Hughes in the opinion of the court in the case of Schechter Poultry Corporation v. Ū. S. (79 L. Ed. 888):

"In determining how far the Federal Government may go in controlling intrastate transactions upon the ground that they 'affect' interstate commerce, there is a necessary and well-established distinction between direct and indirect effects. The precise line can be drawn only as individual cases arise, but the distinction is clear in principle.'

In the case of Heisler v. Thomas Colliery Co. (260 U. S. 245) the Supreme Court, in affirming the decree of the Supreme Court of Pennsylvania dismissing a suit to enjoin the collection of a State tax on anthracite coal; the Court rejected the contention that Congress had the power to regulate the production and distribution of coal before it actually entered into the channels of interstate commerce, saying:

"The reach and consequences of the contention repel its acceptance. If the possibility, or, indeed, certainty, of exportation of a product or article from a State determines it to be in interstate commerce before the commencement of its movement from the State, it would seem to follow that it is in such commerce from the instant of its growth or production, and in the case of coals as they lie in the ground. The result would be curious. It 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 or 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."

The proponents of the bill base their claim that the regulation of the production and distribution of coal by the Federal Government under the commerce power because of their effect on interstate commerce, on the decisions in the Second Coronado Case 268, U. S. 294) (; the International Organization, etc. v. Red Jacket C. C. & C. Co. (18 Fed. (2d) 839); and the Pittsburgh Terminal Coal Corporation v. United Mine Workers of America, et al. (22 Fed. (2d) 559). A careful reading of the decisions in those cases will show, however, that the issues raised and decided in those cases are not similar to the issues raised by this bill. The cases do not stand for the proposition that the production and distribution of coal affect interstate commerce or that such production and distribution are affected by a national public interest. Because it has been contended that they do support this proposition, they will be hereinafter discussed.

In order to obtain a proper understanding of the decision in the Second Coronado Case, it is necessary to consider first the case of the United Leather Workers v. Herkert Meisel Trunk Co. (265, U. S. 457). In this case four Missouri companies engaged in manufacturing trunks and leather goods in that State, of which 90 percent were shipped for sale and distribution in other States, sought to enjoin the United Leather Workers Union from using illegally methods of picketing and intimidation against their businesses. The summary of facts was stated as a question of law by Taft, C. J., as follows:

"The sole question here is whether a strike against manufacturers by their employees, intended by the strikers to prevent, through illegal picketing and intimidation, continued manufacture, and having such effect, was a conspiracy to restrain interstate commerce under the antitrust act because such products, when made, were, to the knowledge of the strikers, to be shipped in interstate state commerce to fill orders given and accepted by would-be purchasers in other States, in the absence of evidence that the strikers interferred or attempted to interfere with the free transport and delivery of the products, when manufactured, from the factories to their destination in other States, or with their sale in those States."

After a careful review of all relative cases on the jurisdiction of the Federal Government over matters affecting interstate commerce, the Supreme Court reversed the circuit court of appeals in this case and held:

"This review of the cases makes it clear that the mere reduction in the supply of an article to be shipped in interstate commerce by the illegal or tortious prevention of its manufacture is ordinarily an indirect and remote obstruction to that commerce. It is only when the intent or necessary effect upon such commerce in the article is to enable those preventing the manufacture to monopolize

the supply, control its price, or discriminate as between its would-be purchasers, that the unlawful interference with its manufacture can be said directly to burden interstate commerce.

"The record is entirely without evidence or circumstances to show that the defendants, in their conspiracy to deprive the complainants of their workers, were thus directing their scheme against interstate commerce. It is true that they were, in this labor controversy, hoping that the loss of business in selling goods would furnish a motive to the complainants to yield to demands in respect to the terms of employment; but they did nothing which in any way directly interfered with the interstate transportation or sales of the complainants' product."

The Second Coronado case involved a suit for damages for the effect of an alleged conspiracy of the defendants unlawfully to restrain and prevent plaintiff's interstate trade in coal in violation of the first and second sections of the Federal antitrust act. The defendants were charged with destroying valuable mining properties for the purpose of consummating the conspiracy. Upon a finding of fact that the union intended to obstruct the production and shipment of nonunion mined coal to other States the court held that such action was a restraint on interstate commerce. In its decision in this case the court reiterated and affirmed the decision in the United Leather Workers' case in the following language:

"The mere reduction in the supply of an article 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 antitrust act."

The pivotal point in these cases is the presence or absence of an affirmative intention to obstruct or interfere directly and substantially with interstate commerce. The decision of the circuit court of appeals in the Second Coronado Case (300 Fed. 972-980), which was affirmed in part by the Supreme Court, states clearly the distinction between holding that mining affects interstate commerce and an act to restrain the interstate commerce in coal. The Court said:

"The Federal courts again and again have held that the making of goods and the mining of coal are not commerce, and that obstruction to coal mining is not a direct obstruction to interstate commerce. They have repeatedly said that, to bring a case under the inhibition of the Sherman Antitrust Act there must be a direct intent to restrain or monopolize interstate commerce."

The principle above quoted was affirmed on appeal by the Supreme Court notwithstanding a partial reversal of the circuit court on matters of evidence.

The Second Coronado Case did not in any respect overrule the Supreme Court's decision in the First Coronado Case. The distinction between the two cases is that in the second case the court found substantial evidence of an intention on the part of the union to interfere with interstate commerce in coal. The court did not hold or in any way intimate that all coal mining union activities affect interstate commerce. To impute such a holding to the court's decision is obviously absurd; but the present bill, to be valid, would require a holding with the claim that all coal mining business affects interstate commerce.

Insofar as interstate commerce is concerned, the decision in the Red Jacket Case is the same as the decision in the Second Coronado Case. The Red Jacket Case involved 12 suits by various owners and operators of coal mines in West Virginia to restrain the unions from interfering with the interstate movement of coal on the ground that such interference was the result of a conspiracy to restrain interstate trade and commerce in violation of the Sherman Act.

The Court found:

11* * * it is perfectly clear that the purpose of defendants in interfering with production was to stop the shipments in interstate commerce. It was only as the coal entered into interstate commerce that it became a factor in the price and affected defendants (the union) in their wage negotiations * *

The case was decided upon the rule laid down in the Second Coronado case and in no place in the decision is it so much as inferred that the production of coal affects interstate commerce. The case stands only for the proposition that a conspiracy to stop coal from moving into interstate commerce is such a restraint as will be enjoined under the Clayton Act.

In the Pittsburgh Terminal case the question presented was the same as in the Red Jacket and Second Coronado cases. The case came up on two motions; (1) plaintiff's motion for a preliminary injunction, and (2) defendant's motion to

dismiss the bill of complaint. The court in granting the preliminary injunction found:

"Because of the averments in the bill of the existence of a general conspiracy and intent on the part of the defendants to interfere with the production of coal in all nonunion mines in the central competitive field, composed of western Pennsylvania, Ohio, Indiana, and Illinois, coupled with the allegation of the intent thereby to keep nonunion coal out of the interstate market, in order that the coal output of unionized mines should have a monopoly of the interstate coal markets, and the allegation of the special and particular conspiracy to keep from the interstate market coal produced at all nonunion mines in the Pittsburgh district, and particularly of the coal mines of the plaintiff in this action, all this with the intent to interfere with and prevent the interstate commerce in coal produced at nonunion mines in the Pittsburgh district, we cannot agree that the facts alleged in the bill show merely an interference with local mining of coal. These allegations are clearly sufficient to set forth the character and nature of the conspiracy and the intent and purpose for which it was entered into", and pursuant to this finding phrased its ruling in the language of Chief Justice Taft in the Coronado cases:

"And so, in the case at bar, coal mining is not interstate commerce and obstruction of coal mining, though it may prevent coal from going into interstate commerce, is not a restraint of that commerce, unless the obstruction to mining is intended to restrain commerce in it or has necessarily such a direct, material and substantial effect to restrain it that the intent reasonably must be inferred. "The mere reduction in the supply of an article 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 Antitrust Act."

The decisions in these cases were commented upon at length by the Chief Justice in the Schechter case. In part he stated:

"The distinction between direct and indirect effects has been clearly recognized in the application of the Antitrust Act. Where a combination or conspiracy is formed, with the intent to restrain interstate commerce or monopolize any part of it, the violation of the statute is clear (Coronado Coal Co. v. United Mine Workers, 268 U. S. 295, 310). But where that intent is absent, and the objectives are limited to intrastate activities, the fact that there may be an indirect effect upon interstate commerce does not subject the parties to the Federal statute, notwithstanding its broad provisions.

"This principle has frequently been applied in litigation growing out of labor disputes (United Mine Workers v. Coronado Coal Co., 259 U. S. 344, 410; United Leather Workers v. Herkert, 265 U. S. 64, 82; Levering & Garrigues Co. v. Morrin, 289 U. S. 103, 107, 108.

"In the case last cited, we quote with approval the rule that had been stated and applied in Industrial Association v. United States, supra, after review of the decisions, as follows: 'The alleged conspiracy and the acts here complained of, spent their intended and direct force upon a local situation, for building is as essentially local as mining, manufacturing, or growing crops, and, if by resulting diminution of the commercial demand, interstate trade was curtailed either generally or in specific instances, that was a fortuitous consequence so remote and indirect as plainly to cause it to fall outside the reach of the Sherman Act.'

"While these decisions related to the application of the Federal statute, and not to its constitutional validity, 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. Otherwise, as we have said, there would be virtually no limit to the Federal power and for all practical purposes we should have a completely centralized government. We must consider the provisions here in question in the light of this distinction."

Nor can the claim of the proponents be based on such cases as Chicago Board of Trade v. Olsen (262 U. S. 1) or Stafford v. Wallace (258 U. S. 495). These cases are sufficiently distinguished by the Supreme Court itself in the Schechter case when it said:

"Hence, decisions which deal with a stream of interstate commerce, where goods come to rest within a State temporarily and are later to go forward in interstate commerce, and with the regulations of transactions involved in that practical continuity of movement, are not applicable here.'