standard laws of California, Arizona, and Colorado, defining specific standards for specified fruits and vegetables). Similar grading and labeling laws have been passed since 1929 by Ohio, Indiana, Oregon, Washington, Maine, and New York (now repealed). The lack of uniformity between the requirements enforced in the various States amounts to a trade barrier. Also, there are some instances where the grading or labeling requirements give an unfair advantage to home state products.

Egg legislation has also been of long standing, but in recent years many amendments or new enactments have been made, for example, 1931-California, Iowa, Oregon, Nebraska. 1933-California, Arizona, Colorado, Florida.

1933-39-Idaho.

1934-New Jersey.

1935-Florida, Georgia, Maryland, Massachusetts, New Hampshire.

1939-Missouri.

While the lack of uniformity is in itself onerous, the provisions designed to protect home industry are particularly burdensome upon trade.

STATE POWERS AND TRADE BARRIER LAWS

The various classes of trade barrier laws are enacted and administered under one of three paramount State powers.28 First is the power of taxation, which includes:

a. Taxes levied to exclude certain products or services in favor of products or services of a home enterprise.

b. Taxes levied to eliminate a competitve type of merchandising. c. Taxes which because of their multiplicity have a cumulative barrier effect.

Second is the police power, for the protection of the public health, morals, and welfare-that is, the power to inspect, quarantine, etc.

Third are the powers inherent to the State through its proprietary interest in its own natural resources 29 and public property. This power is now employed in 47 States to grant preferences for State products or State labor when spending public funds. The one exception is the State of Alabama,

No criticism of the States in the proper exercise of any or all of the foregoing powers is intended. Aside from the economic damages of trade restriction, the real danger in the trade barrier movement lies in the trend toward the improper use, or abuse, of these powers by local groups for commercial gain. As Attorney General Jackson has indicated, the courts and the Federal Government are naturally disinclined to impute improper purposes to the State, if the statute is apparently nondiscriminatory. This is especially true when the State avows its intention to protect an important local need; however, the recent trend toward economic sectionalism and local protectionism has made imperative the examination of the practical effects of these statutes on interstate commerce.

28 Ibid., p. 15782.

29 Idem.

30 See Robert H. Jackson, Trade Barriers a Threat to National Unity, Proceedings, National Conference on Interstate Trade Barriers, Chicago, 1939; "The Supreme Court and Interstate Barriers," Annals of the American Academy of Political and Social Science, January 1940, vol. 207, p. 70.

While Congress has plenary power over interstate commerce, full control has in one instance been given to the States. Under the twenty-first amendment, each State completely controls the liquor industry within its own borders. Even as early as 1890 the Wilson Act subjected alcoholic beverages to State police regulations immediately upon entry into the State. Court decisions on this act served to decrease its effectiveness; hence, the Webb-Kenyon Act of 1913 was passed, to be superseded in turn by the twenty-first amendment. The constitutionality of these measures seems well established by the leading case of State Board of Equalization of California v. Young's Market Company 32 In this case the court upheld a California statute levying a $500 license fee on importers of out-of-State beer. The statute was repealed in 1937, reputedly because of the enactment of retaliation laws by other States, a particular example being the Missouri law (now also repealed) which bars entry to all alcoholic liquors from any State with discriminatory liquor laws. Other retaliatory laws of varying severity have been adopted by Florida, Pennsylvania, Ohio, and Connecticut.33 The question still persists whether the States in controlling the production, sales, and use of alcoholic beverages should be permitted to enact laws which protect home industry at the expense of out-of-State producers. Such discrimination apparently neither protects the public welfare nor stimulates commerce and trade.

In the second instance the Federal Government has, through the Hawes-Cooper Act, passed in 1929 and effective 5 years later, and the Sumners-Ashurst Act, passed and effective in 1935, again loaned to the States a part of its power over interstate commerce. These acts were designed to control the production and sale of prison-made goods, a program which had been urged for more than 25 years by manufacturers, labor, and other interested groups. Prior to these acts the States had attempted to control the marketing of prisonmade goods within their boundaries through labeling acts, high license fee laws, and other regulatory measures. The New York statute was invalidated because it was held to be in conflict with the commerce clause of the Constitution.34 A State apparently could protect local industry against competitive goods from its own prisons, but it could not protect them against prison-made goods entering into interstate commerce without congressional approval. It was urged upon Congress that no State should have the legal right to nullify the will of a sister State; hence the removal of the interstate commerce impediment to the operation of State laws was necessary to the solution of the problem. The Supreme Court unanimously upheld the Hawes-Cooper Act on March 2, 1936, and the Sumners-Ashurst Act on January 4, 1937.35

In all other commercial areas there exists an "intergovernmental zone" in which Congress has the power to regulate interstate com

31 United States Constitution, art. I, sec. 8. provision 3; for meaning of commerce, see B. C. Gavit, The Commerce Clause in the United States Constitution, Principia Press, Bloomington, 1932. 32 299 U. S. 59.

33 Hearings before the Temporary National Economic Committee, Part 29, pp. 15786

15788, 16025-16030.

34 H. B. Hawes, Raymond A. Walsh, Bon Geaslin, Power of Congress to Protect State Laws, Two Unanimous Supreme Court Decisions Defining Federal Authority Under In terstate Commerce Clause, The Laws and Briefs.

35 Idem.

merce but has not fully occupied the field. The States, therefore, have enacted a variety of laws which impose a direct, substantial, and cumulative burden on interstate commerce. A Supreme Court decision is clearly the only solution for the conflict arising, and this is a long and expensive process; therefore, little practical relief is provided since the few cases of this type reach final adjudication.

As

For some time, the Court has been pointing out to Congress the necessity for more adequate regulation of interstate commerce. far back as 1879, in Guy v. Baltimore,36 Justice Harlan said:

No State can consistently with the Federal Constitution, impose upon the products of other States, brought therein for sale or use, or upon citizens because engaged in the sale therein, or the transportation thereto, of the products of other States, more onerous public burdens or taxes than it imposes upon the like products of its own territory.

If this were not so, it is easy to perceive how the power of Congress to regulate commerce with foreign nations and among the several States could be practically annulled, and the equality of commercial privileges secured by the Federal Constitution to citizens of the several States be materially abridged and impaired.

A number of Supreme Court decisions from 1880 to 1930 attempted to establish a line of demarkation on interstate trade barriers.37 In certain comparatively recent decisions, the Supreme Court has stated applicable principles and has issued warnings to the States. In Baldwin v. Seelig, Mr. Justice Cardoza stated:

38

What is ultimate is the principle that one State in its dealings with another may not place itself in a position of economic isolation. Formulas and catchwords are subordinate to this over-mastering requirement. Neither the power to tax nor the police power may be issued by the State of destination with aim and effect of establishing an economic barrier against competition with the products of another State or the labor of its residents. Restrictions so contrived are an unreasonable clog upon the mobility of commerce. They set up what is equiva

lent to a rampart of customs duties designed to neutralize advantages belonging to the place of origin. They are hostile in conception as well as burdensome in result.

39

In the recent tax case of McGoldrick v. Berwind-White Coal Mining Co., Justice Stone pointed out that the problem involved a weighing of the right of interstate commerce to protection from unfair State laws, and that of the States to collect a fair share of its taxes from interstate commerce.

No attempt was made in the T. N. E. C. hearings to analyze constitutional issues. The legal staff of the W. P. A. Marketing Laws Survey, after long and careful study, concluded that most of the laws analyzed by the Survey as creating trade barriers are probably constitutional within the decisions of the Supreme Court, although the Court has frequently indicated that court decisions alone cannot solve the trade barrier problem.

Motor Vehicles.* 41

40

The courts have approved small nondiscriminatory flat license and registration fees based on horsepower, or have at least required the State to show that these fees bear a reasonable relation to highway use. In practice, however, the State may meet this requirement by a purely formal showing, and the burden rests on the taxpayer to show that the fee is unreasonable. The difficulty of an attempt by a single litigant

36 100 U. S. 434.

Hearings before the Temporary National Economic Committee, Part 29, pp. 1608716114. See also Tocker, op. cit., and Taylor, Burtis, and Waugh, op. cit.

38 294 U. S. 511 (1935).

9309 U. S. 33.

40 Hearings before the Temporary National Economic Committee, Part 29, p. 15783, Ibid., pp. 15938-57, 16001-24, 16031-81.

to prove payment of an unreasonable sum for use of the highways indicates the need for coordination between, State and Federal law, and a greater degree of uniformity between State laws.

The assessment of mileage taxes would seem a more equitable method of levying just charges for highway usage. The lower courts have uniformly followed the Supreme Court in approving a mileage tax on interstate carriers, in the absence of proof of unfair discrimination, since it was reasonable on its face.

Gasoline sales taxes are likely to be a very small burden on interstate commerce since all vehicles, whether in inter- or intrastate commerce, must pay the tax. Taxes on gasoline carried as a reserve, and not used within the taxing State, are not related to the use of the road and burden the free movement of interstate motor carriers; hence they have been held invalid by the Supreme Court.42

Nontax, nonuniform State regulations pertaining to weight, length, load, speed, safety requirements, lighting equipment, permit requirements, etc., constitute a most vexing deterrent to interstate highwayborne commerce. Testimony in the T. N. E. C. hearings, as well as various court decisions, clearly indicates that congressional action is needed to eliminate this difficulty. The Motor Carriers Act of 1935 was passed largely because the States were apparently unable to regulate competition between interstate motor carriers. However, the States were at no time divested of power to discriminate in favor of their own carriers. Generally carriers for hire must, after receiving a Federal certificate of convenience and necessity, apply to State administrative boards for license. The granting or refusing of these State licenses supposedly depends upon safety factors, as, for example, road congestion. As a practical matter, however, these boards often are able to weigh the intra- and interstate competitive situation and thus achieve unfair discrimination in the granting of licenses.

Merchant Transfers and Itinerant Merchants.43

Interstate trade barriers applying to the merchant trucker and the itinerant merchant are many. Some of the fees exacted by the States discriminate against the itinerant because he comes from another State, and are clearly illegal in view of past court decisions. They are as burdensome as they are illegal, however, because of the financial inability of these small enterprises to take their cases through the courts.

Moreover, not all discriminatory taxes upon itinerants have been held illegal. A leading case ** ruled that the only question involved was that of "due process" under the fourteenth amendment and, in that case, the issue was not clearly so unreasonable as to warrant overthrowing the statute. Other cases condemned discrimination against merchants on the ground of nonresidence or on the sale of out-of-State goods. Generally, questions of legality aside, there are serious doubts concerning the ability of nonresident itinerant truckers and merchants to avoid unfair discrimination based on nonresidence. Labeling, Grading, and Standards.*

44a

Trade barriers as a result of State labeling and grading regulations appear when discriminatory measures give domestic products an unjus

42 McCarroll v. Dixie Greyhound Lines, 309 U. S. 176, February 12, 1940.

43 Hearings before the Temporary National Economic Committee,' Part 29, pp. 15783, 15967-86, 16088-89. 16093-96, 16100-01.

44 Singer Sewing Machine Co. v. Buchell, 233 U. S. 304 (1914).

44a Hearings before the Temporary National Emonomic Committee, Part 29, pp. 15818-24, 16088-89, 16093-96, 16100-01.

tified advantage. So long as it does not directly interfere with the commerce power of the Federal Government, a State may legally require producers to mark products with the name of the home State. But beyond this the power is uncertain.

Three classes of cases arise. First, there are those in which the State of destination requires the name and address of the producer to be shown on commodities. This requirement may be a serious barrier to interstate trade, especially if used in conjunction with a home-State marketing campaign. Second, are the cases involving the labeling of foreign but not domestic products. Court decisions on the validity of such legislation are divided. Third, are those boldly discriminatory cases which deny out-of-State products the use of accurate descriptive terms likely to stimulate the sale of the product. Obviously, an adequate Federal labeling and grading statute might aid the States in their efforts to regulate interstate commerce, and might eliminate considerable confusion.

Quarantine.45

Powers of quarantine sometimes completely control the interstate movement of various agricultural products and livestock. When inspections made by duly qualified out-of-State inspectors are not accepted, the prohibitive cost of travel for State inspectors provides a substantial barrier to interstate trade. Furthermore, duplicate inspection serves no useful purpose.

The effects upon the protected market are specific. The flow of entering goods is curtailed or stopped, and local producers enjoy the stimulus of the unsatisfied demand which, they think, must perforce turn to them to supply the goods formerly brought in from outside. But the effects on the rest of the country are often hard to discern, especially when the barricaded market is relatively small, for the sales lost by outsiders may represent but a small proportion of the total supply and demand.

In cases of this kind, published volume and price figures are of little help in determining the effect of a trade barrier. Seasonal changes in supplies, inaccuracies in reporting, technological developments, shifts in demand, variations in supply (of farm products) caused by weather conditions-all these and many other factors are of greater importance, quantitatively, in accounting for market changes than a slight decrease in demand caused by loss of a market which formerly took, for example, 1 percent of the total output. The difficulty of isolating the effects of trade barriers and the scarcity of data on the interstate movement of commodities are the two chief reasons for the lack of statistical measurements of the economic effects of internal trade barriers.

The difficulty of measuring the effects of individual trade barriers accounts in part for the popular notion that trade barriers as a whole are a rather harmless, though deplorable, phenomenon. But one might as well conclude that because a single termite looks insignificant a colony of them must be harmless. For it is not individual trade bar

45 Ibid., pp. 15912-35, 15999-16000, 16088–89, 16093–96, 16100-01.

48 Taylor, Burtis, and Waugh, op. cit.