The following is an excerpted chapter from the 1988 book From Lighthouses to Laserbeams: A History of the US Department of Commerce, available to read in full online through the Commerce Research Library.
On March 4, 1913, nearly 125 years after the Constitution established promotion of the general welfare as one of the great goals of government, President William Taft signed legislation creating the Department of Commerce.
It was the desire to promote the general welfare through expansion of commerce and industry that had brought the delegates to the fateful meeting in Philadelphia and made the Union possible.
The period between the Declaration of Independence in 1776 and the Constitutional Convention in 1787 had been tumultuous, marked by discord among the newly independent states. Trade had become particularly troublesome. At the time, much of the commerce between states was conducted along the Atlantic seaboard and via the waterways flowing into the Atlantic or the inland rivers. The Articles of Confederation allowed each state the freedom to create regulations, tariffs, and currency and to tax neighboring states using their ports and throughways for interstate or foreign commerce.
In 1785, legislators from Virginia and Maryland recognized the need to work together to ensure mutually profitable commerce on the shared waterways of the Potomac River and agreed to meet. George Washington, interested in plans to finance navigational improvements that would push the Potomac route westward to the Shenandoah and Ohio Valleys, offered the hospitality of Mount Vernon for the conference. A 13-point agreement, covering tidewater navigational rights, toll duties, commerce regulations, fishing rights and debt collections, was drawn.
Mt. Vernon Conference
The success of the Mount Vernon Conference led James Madison to write Washington about a proposal for a meeting with commissioners from other states to discuss matters of interstate commerce. A resolution appointing commissioners was introduced in the Virginia House of Delegates. The Virginia commissioners were to meet with other state delegates "to consider how far a uniform system in their commercial regulations may be necessary to their common interest and their permanent harmony."
In 1786, representatives from five states convened in Annapolis "to take into consideration the trade and commerce of the United States."
At this meeting, Alexander Hamilton, in a proposal cosigned by James Madison and Edmund Randolph, recommended a general meeting of all the states at a future convention. The mandate was to be broader than that of the Annapolis meeting, because, as Hamilton said, the delegates had been "induced to think that the power to regulate trade is of such comprehensive extent and will enter so far into the general system of the federal government, that to give it efficacy, and to obviate questions and doubts concerning its precise nature and limits, may require a correspondent adjustment of other parts of the federal system."
This third meeting, which was held in Philadelphia in May, 1787, and presided over by George Washington, resulted in the replacement of the Articles of Confederation with a new United States Constitution, which was adopted on September 17, 1787.
As Hamilton had foreseen, an "adjustment" was made, a profound adjustment that fundamentally restructured the: government. A national executive was authorized and new powers were given to the Congress. These included the power to "regulate commerce with foreign nations and among the several states."
Among the proposals which were considered at the Constitutional Convention was one by Gouverneur Morris on August 20, 1787, to create a council of state "to assist the President in conducting the public affairs'" Morris recommended that the third member be a "Secretary of Commerce and Finance, whose responsibilities would include recommending " such things as may in his judgment promote the commercial interests of the United States."
The Constitution, however, made no provision for a council of state, although soon after Washington took office, the Department of Foreign Affairs (July 27, 1789), renamed the Department of State (September 15, 1789), the War Department (August 7, 1789) and the Treasury Department (September 2, 1789) were created to help administer the new government. Treasury was given responsibility for business and commerce. The Secretaries of these departments and the Attorney General, who had been appointed under the act of September 24, 1789, became members of the first Cabinet.
With the new government in place, North Carolina and Rhode Island, the only two states yet to ratify the Constitution, found that their commerce and manufactures were to be treated in the same manner as those of any foreign country if they were not part of the United States. North Carolina joined on November 21, 1789; Rhode Island on May 29, 1790.
Commercial and industrial interests thus provided the vital key needed to open the door to the drafting of the Constitution and to its final acceptance by the 13 existing states.
George Washington, in his first address as President, said: "The advance of agriculture, commerce and manufactures by all proper means will not, I trust, need recommendation."
In December 1795, the House of Representatives created a Committee of Commerce and Manufactures as a third standing committee. (The Senate established a Commerce Committee in 1816.)
Before the turn of the 19th century, another executive department was added. The Navy Department was created on April 30, 1798, because of the impending war with France. In 1829, the Postmaster General was officially invited by President Andrew Jackson to join the Cabinet. The Department of the Interior came into being in 1849, and although broader duties had been proposed its focus became land and Indian affairs. In 1870, the Department of Justice was created.
In 1884, Congress established a Bureau of Labor in response to the urgings of labor. It was constituted as a separate department in 1888, but without Cabinet status.
Agriculture was the first industry of the country to be accorded an executive department by the Congress. The Department of Agriculture was authorized by the act of February 9, 1889.
Panic of 1893
By the mid-1890s, depression conditions which followed the "Panic of 1893" had caused the newly formed National Association of Manufacturers to set as a principal goal the formation of a Department of Commerce and Industry, which would include the independent Department of Labor and other agencies. Instead, in 1898, Congress created a U.S. Industrial Commission to investigate a number of economic and social problems, including the growing impact of corporate trusts on the national welfare.
Even when the Twelfth Census in 1900 showed that the aggregate value of manufacturing products of the United States exceeded $13 billion, approximately four times the value of all the products of agriculture, Congress did not respond to the pleas of business for a Cabinet agency for commerce and industry.
By this time, the enormous growth of business, industry, commerce and banking between 1850 and 1900 had resulted in an increase of the national wealth from under $5 billion to $88 billion, 20 percent of which was in the hands of fewer than 4,000 men.
Some of these were among Theodore Roosevelt's "malefactors of great wealth," who had benefited from the nation's rapid change from an agrarian society to an industrial one powered by steam engines, gasoline automobiles, electricity, telegraphs, and other inventions ranging from crude washing machines to zippers. Problems with transportation of increased volumes of materials and goods had already led to the establishment of an Interstate Commerce Commission in 1887 to regulate railroad rates and access.
At the end of the 1890s, with the assistance of President William McKinley's "Open Door" policy of actively promoting exports, the value of American manufactured goods sold abroad had almost tripled, and total foreign commerce had passed the $1 billion mark as exports exceeded imports for the first time. What was to be called the great commercial invasion of Europe had begun.
Still, Congress did not act on proposals for a Cabinet department for commerce until Roosevelt succeeded to the Presidency and recommended creation of a combined Department of Commerce and Labor in his first State of the Union message in 1901. Roosevelt wanted the new department to have the power to investigate corporate earnings and to guard the rights of the workingman.
Spurred by the President, once again Congress considered a proposal for a Department of Commerce. When the debate in Congress concluded, the advocates of a Department of Commerce agreed to a compromise with those seeking a Cabinet voice for labor. For the first time in the Nation's history, a vote was scheduled on the creation of a new executive department with a dual title, the Department of Commerce and Labor.
On February 14, 1903, Congress approved legislation (S.359) creating a Department of Commerce and Labor and President Theodore Roosevelt signed the the bill (32 Statute 825) that same day. Two days later, Roosevelt nominated his personal secretary, George B. Cortelyou, to be the first Secretary. He was sworn in on February 18, 1903.
The new Department of Commerce and Labor was one of the largest and most complicated in Government. It included a Bureau of Corporations, Bureau of Immigration, Bureau of Navigation, Light House Board, Steamboat Inspection Service, Bureau of Statistics, Coast and Geodetic Survey, Bureau of Standards, Bureau of Census, Bureau of Fisheries, and the still to be organized Bureau of Manufactures. The Department of Labor became once more a Bureau of Labor and accounted for only one percent of all personnel.
Charged with fostering, promoting and developing foreign and domestic commerce, the mining, manufacturing, shipping and fishery industries, the labor interests, and the transportation facilities of the United States, the Department's work was to include:
- investigating management of corporations (except railroads) engaged in interstate commerce;
- administering the Lighthouse Service, including the establishment and maintenance of aids to navigation;
- taking the census;
- making coast and geodetic surveys;
- collecting and publishing statistics on foreign and domestic commerce;
- investigating markets for American products;
- inspecting steamboats and enforcing laws pertaining thereto for the protection of life and property;
- supervising Alaskan fur-seal and salmon fisheries;
- monitoring merchant vessels, including their registry, measurement, licensing, entry, and clearance;
- applying immigration law; and
- collecting information on hours of labor, earnings, and means of promoting material, social, intellectual and moral prosperity.
The Secretary also was required to make special investigations as requested and to report annually to the President on Department activities.
The youngest department had responsibility for some of the oldest programs in government: The maintenance of lighthouses was authorized by Congress in 1789. The first census was conducted in 1790. Thomas Jefferson signed legislation creating a "Survey of the Coast" in 1807. The Treasury Department started keeping statistics on waterborne foreign commerce in 1820 and organized an Office of Weights and Measures in 1836.
Within five months, when all transfers were complete, the Department of Commerce and Labor grew from one official, the Secretary, to a total of 10,125 people in Washington and the country at large.
Cortelyou served only a year before being called to manage Roosevelt's presidential campaign in June, 1904. But his successor, California congressman Victor H. Metcalf, found that the work of organizing the Department had been "as thorough and complete" as was possible.
During Metcalf's tenure, the Bureau of Manufactures, which would be most directly related to the primary function of the Department—the promotion of industry and commerce—was established in 1905 with an $11,020 appropriation and provision for seven employees, including a bureau chief and assistant messenger.
There were two more Secretaries of Commerce and Labor over the combined Department's limited lifespan, Oscar S. Straus, a businessman and former U.S. Minister to Turkey (1906-1909), and Charles Nagel, a politician and Missouri supreme court justice (1909-1913).
The Department became the increasing focus of requests for information of every kind—scientific, sociological, statistical, and commercial.
By 1912, manufactures accounted for 47 percent of exports, up from 32 percent in 1902 and 18 percent in 1892, with a total value exceeding $1 billion for the first time.
In a report to Roosevelt, Straus summarized the climate in these words: "Our age has been very properly called an era of commercial development and expansion, and the United States, by reason of its many exceptional advantages, its boundless natural resources, and possessing a growing, intelligent, energetic, enterprising, and self-reliant population, is reaping a greater share of industrial and commercial prosperity than any of the other nations of the world."
As the need for ever-expanding markets for manufactures intensified and workers moved from farm to factory in greater numbers, labor brought increasing pressure for separation of the Department's functions and independent Cabinet status. President William Taft signed legislation on March 4, 1913, his last day in office, splitting the combined department. Labor was given Cabinet status and the designation of the Department of Commerce and Labor was changed to the Department of Commerce.
It had taken more than a century for the Congress to establish an executive department exclusively devoted to the commercial and manufacturing interests of the Nation.