Proprietary government

“ When the corporation is said, at the bar, to be public, it is not merely meant, that the whole community may be the proper objects of the bounty, but that the government have the sole right, as trustees of the public interests, to regulate, control and direct the corporation, and its funds and its franchises, at its own good will and pleasure. ”

“ This consideration alone ought to put an end to the abstract inquiry, whether the national government has power to erect a corporation, that is, to give a legal or artificial capacity to one or more persons, distinct from the natural capacity. [10] For, if it be an incident to sovereignty, and it is not prohibited, it must belong to the national government in relation to the objects entrusted to it. ”

“ If the national, state, or municipal government can in either of the above methods compel him to aid in building up and supporting private corporations, then private corporations are clothed with attributes of sovereignty, and all private citizens own and possess their property subject to the will of these corporations. ”

“ The Commonwealth has no more authority to construe the charter than the corporation. By becoming a party to a contract with its citizens the government divests itself of its sovereignty in respect to the terms and conditions of the contract and its construction and interpretation, and stands in the same position as a private individual. ”

“ They are owned by private companies—are built and controlled by them; they are of public benefit, but not owned or controlled by the public or by the state, or local authority, as in the case of public highways. Their private owners can sell them, with all their franchises, rights, and privileges. The rules for their operation, rates of charges, and all other matters affecting their government, are exclusively under the control of the parties owning them. ”

“ It is never the end for which other powers are exercised, but a means by which other objects are accomplished.' Congress, therefore, may create corporations as appropriate means of executing the powers of government, as, for instance, a bank for the purpose of carrying on the fiscal operations of the United States, or a railroad corporation for the purpose of promoting commerce among the states. ”

“ According to my understanding of its scope and reach, the United States have only to make a contract with a State corporation, and a loan to it, to oust the jurisdiction of the State, and place the corporation under their direction. It would seem plain that if legislation, taking institutions of the State from its control, can be sustained by this court, the government will drift from the limited and well-guarded system established by our fathers into a centralized and consolidated government. ”

“ So, with respect to the present bank, suits brought by or against it are not understood to be brought by or against the United States. The government, by becoming a corporator, lays down its sovereignty, so far as respects the transactions of the corporation; and exercises no power or privilege, which is not derived from the charter. [189] The reasoning admits of further illustration. A corporation is itself, in legal contemplation, an artificial person, having a distinct and independent existence from that of the persons composing it. ”

“ It may also be admitted, that corporations for mere public government, such as towns, cities and counties, may in many respects be subject to legislative control. But it will hardly be contended, that even in respect to such corporations, the legislative power is so transcendent, that it may at its will take away the private property of the corporation, or change the uses of its private funds, acquired under the public faith. ”

“ The reference to "indirect commercial advantage" has raised questions as to the status of photocopying done by or for libraries or archival collections within industrial, profit-making, or proprietary institutions (such as the research and development departments of chemical, pharmaceutical, automobile, and oil corporations, the library of a proprietary hospital, the collections owned by a law or medical partnership, etc.) ”

“ In that case the contract is the means employed for carrying into execution the powers of the government, and the contract alone, and not the contractor, is exempt from taxation or other interference by the State government.
But where the General government creates a corporation as a means of carrying out a national object, that corporation and its powers, property, and faculties, employed in accomplishing the service, are the instrumentalities by which the government effects its objects. ”

“ Is not the grant of corporate existence and privileges to such a corporation one of the means or instrumentalities employed by the state for carrying out its legitimate functions, and is not a tax by the Federal Government upon the exercise by such a corporation of its corporate powers an interference with such means or instrumentalities? ”

“ In every case where combination or consolidation restricts competition in an industry, one effect produced is [249] an increase in the power over the public which the industry possesses. But this increased power over the public, thus voluntarily assumed, must inevitably carry with it increased responsibility to the public. It is the duty of the government to see that this responsibility is legally enforced. ”

“ It is equally certain that unless the state, in its sovereign capacity, possesses this power, it cannot delegate it to either counties or cities, and that when the constitution of a state forbids the exercise of a power, it includes the legislature, all the departments of the state government, all counties, cities, and towns, and all the people. All these corporations are agencies in the administration of the affairs of the public. Being political in their nature, they are entirely distinct from private corporations organized for the purpose of pecuniary profit. ”

“ The legislature has power to create such corporation, in opposition to the will of the corporators, because such corporation is a portion of the government of the State itself, and every man yields up to the State just so many of his inherent rights, as are necessary to carry on the government which protects him. As said before, every citizen of a State yields up to the State all those rights which are necessary to carry on the government. ”

“ A public corporation, instituted for purposes connected with the administration of the government, may be controlled by the legislature, because such a corporation is not a contract, within the purview of the constitution of the United States. ”

“ So the National corporation problem is largely one of the railways, and it involves the best way for the Federal Government to regulate these, and all the corporations, in the interest of trade, commerce and the people, and to do this without imposing unnecessary restrictions upon their legitimate operations and development. ”

“ To make such a company a corporation of another state, the language used must imply creation, or adoption in such form as to confer the power usually exercised over corporations by the state, or by the legislature, and such allegiance as a state corporation owes to its creator. ”

“ These corporations, civil and eleemosynary, which differ from each other so especially in their nature and constitution, may very well differ in matters which concern their rights and privileges, and their existence and subjection to public control. The one is the mere creature of public institution, created exclusively for the public advantage, without other endowments than such as the king, or government, may bestow upon it, and having no other founder or visitor than the king or government, the fundator incipiens. ”

“ The control reserved by the Government for protection of a governmental program and the public interest is not incompatible with the retention of the status of a private enterprise. See Federal Compress & Warehouse Co. ”

“ A corporation maintaining a public highway, although it owns the property it employs for accomplishing public objects, must be held to have accepted its rights, privileges, and franchises subject to the condition that the government creating it, or the government within whose limits it conducts its business, may by legislation protect the people against unreasonable charges for the services rendered by it. ”

“ Here is a company building its road exclusively in a single state, under a charter derived from a state having the exclusive control of its own affairs, and not subject to the legislation of congress, or the administration of the general government, like the territories ”

“ If the people had a right to establish a government, they had a right to establish corporations. Suppose they had established a bank in each State, previously to a Federal constitution, with charters specifying the powers and rights of such corporations, and had declared by the confederation, that these powers and rights should be reserved to these existing corporations ”

“ A fundamental base of civilization is the inviolability of property; but this is in no wise inconsistent with the right of society to regulate the exercise of the artificial powers which it confers upon the owners of property, under the name of corporate franchises, in such a way as to prevent the misuse of these powers. Corporations, and especially combinations of corporations, should be managed under public regulation. Experience has shown that under our system of government the necessary supervision can not be obtained by State action. ”

“ In the same way the partial legislative control of nationalized corporations now exercised by the state government, is defended, not on the ground that it has been well exercised, not even plausibly on the ground that it can be well exercised. ”

“ The Government can supply its needs by its own manufacturing or by purchase. And Congress can as it always has, either do the purchasing of the Government's goods and supplies itself, or it can entrust its agents with final power to do so and make these agents responsible only to it. ”

“ The State-and-Federal problem may be called that other difficulty which arises from the clashing jurisdictions of the States among themselves and with the Federal government, their laws and their courts, as to the corporations now created, particularly railroads and corporations "engaged in interstate commerce" which may include all the "trusts," if the mere fact that they do business in many States makes them so. ”

“ They are not by their charters, or the powers derived from legislative grants, made public corporations, and if they are public, they are made so by the decisions of the supreme court, or by some assumed power not visible to the public eye. It is contended by some, that if it is fully established that they are public corporations, the state legislatures and the state courts can regulate and control them. ”

“ The reasoning, by which the general doctrine is maintained, is to the following effect. It is a sound principle, that, when a government becomes a partner in any trading company, it divests itself, so far as concerns the transactions of that company, of its sovereign character, and takes that of a private citizen. Instead of communicating to the company its privileges and prerogatives, it descends to a level with those, with whom it associates itself, and takes the character, which belongs to its associates, and to the business, which is transacted. ”

“ It is my considered opinion and I recommend that where the activi­ties of these government corporations can be taken over by private enterprise, and whenever their pioneering objectives have been basically accomplished, such corporations should be sold and transferred as soon as possible to private enterprise under reasonable terms and conditions, except those performing mainly social or governmental functions many of which can be converted into regular government offices or agencies. ”

“ All the officers of government, and all the appointments for the administration of justice and the collection of the public revenue, which are transferred from the individual to the aggregate sovereignty of the states, will necessarily turn the stream of influence and emolument into a new channel. Every person, therefore, who either enjoys, or expects to enjoy a place of profit under the present establishment, will object to the proposed innovation? ”

“ As said by Chief Justice Marshall: 'The power of creating a corporation, though appertaining to sovereignty, is not, like the power of making war, or levying taxes, or of regulating commerce, a great substantive and independent power, which cannot be implied as incidental to other powers, or used as a means of executing them. ”

“ It is clear that corporations created for quasi public purposes, clothed for that reason with the ultimate power of the state to take private property against the will of the owner, hold their corporate powers as carriers in trust for the fairly impartial service of all the public. ”

“ These corporations, by the many influences they are enabled to exert, if left unrestrained by legislation, will control your government and its vast machinery as effectually and completely as the planets perform their circuits in obedience to the inflexible and unerring laws of the universe.
“It is nonsense to talk about the absence of constitutional power over the subject. Your national legislature has ample warrant, under the constitutional provision conferring authority upon Congress to regulate commerce among the states, and Congress should exercise that authority promptly and fearlessly. ”

“ Congress has not only the power to create a corporation to facilitate the performance of governmental functions, but has the power to protect the operations thus validly authorized. 'A power to create implies a power to preserve'. ”