Over the span of its history, now covering more than two centuries, the U.S. Supreme Court has had to rule on a series of issues relating to economic matters. In delivering its decrees, the nation’s highest judicial tribunal has relied on a set of powers explicitly and implicitly drawn from the U.S. Constitution. Section 8 of Article 1 outlines many of those powers, authorizing Congress “to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States.” The Constitution mandates that all such “duties, imposts and excises shall be uniform throughout the United States.” Additionally, it allows Congress “to borrow money on the credit of the United States” and “to regulate commerce with foreign nations, and among the several States, and with the Indian tribes.” Furthermore, according to the Constitution, Congress possesses the authority “to establish … uniform laws on the subject of bankruptcies throughout the United States,”"to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures,” and “to provide for the punishment of counterfeiting the securities and current coin of the United States.” Finally, Section 8 concludes with an arguably sweeping grant of power—stating that Congress possesses the authority “to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.”
The founding fathers articulated other significant powers pertaining to commercial transactions in Sections 9 and 10 of Article 1. Section 9 mandates that “no capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken” and that “no tax or duty shall be laid on articles exported from any State.” Similarly, “no preference shall be given by any regulation of commerce or revenue to the ports of one State over those of another; nor shall vessels bound to, or from, one State, be obliged to enter, clear, or pay duties to another.” Moreover, “no money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of the receipts and expenditures of all public money shall be published from time to time.” Article 10 denies all states the authority to “coin money; emit bills of credit; make anything but gold and silver a tender in payment of debts; pass any bill … or law impairing the obligation of contracts.” The states, absent congressional approval, are similarly not allowed “to lay any imposts or duties on imposts or exports, except what may be absolutely necessary for executing [their] inspection laws; and the net produce of all duties and imposts . . . shall be for the use of the treasury of the United States.” Article 7 states that “all debts contracted and engagements entered into, before the adoption of this Constitution, shall be valid against the United States under this Constitution, as under the Confederation.”
Justices, attorneys appearing before the Supreme Court, and legal scholars have argued about the specific nature of such clauses, with some contending that the language in the Constitution is exact and others declaring that it is ambiguous at best. Interpretations pertaining to economic policies and practices of the federal government, states, municipalities, corporations, and private individuals have varied with the passage of time. This essay will explore some of the most significant of those arguments, drawing on a series of seminal Supreme Court rulings.
Concerns about the new nation’s chaotic economic makeup, along with fears that the experiment in republican government might not succeed, led to calls for a revision of the Articles of Confederation. The gathering that ensued, the 1787 Constitutional Convention in Philadelphia, resulted in the crafting of a new, national document that gave the central government broad powers, including powers in the economic realm. In fact, little debate occurred in Congress over the commerce clause, which later spawned more legislation than any other component of the U.S. Constitution. Moreover, the commerce clause long provided the chief means for strengthening federal power. However, the contracts clause, not the clause regarding commerce, occupied most of the U.S. Supreme Court’s limited docket during its first years of operation. And that clause had been controversial from its
inception, with concerns expressed that the provision would unnecessarily hamper the states. The due process clause and the takings clause of the Fifth Amendment (which declares that “no person shall be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation”) also proved instrumental.
The Marshall Court, 1801 to 1835
Chief Justice John Marshall turned to both clauses to ensure the early primacy of judicial nationalism. In Fletcher v. Peck (1810), Marshall employed the contracts clause to prevent states from encroaching on property rights. To safeguard investors who had acquired land through state grants, he had to disregard past notorious financial dealings involving highly placed officials in Georgia, in the U.S. Senate, and on the federal bench. Avoiding the issue of those unsavory practices, Marshall asserted that the purchaser of land possessed “a title good at law, he is innocent, whatever may be the guilt of others, and equity will not subject him to the penalties attached to that guilt.” Otherwise,”all titles would be insecure, and the intercourse between man and man would be very seriously obstructed, if this principle be overturned.”
In Dartmouth College v. Woodward (1819), Marshall broadened the reach of the contracts clause to include corporate charters. The New Hampshire state legislature sought to revise a 1769 charter that had established Dartmouth College. Daniel Webster argued that the legislature’s effort amounted to “impairing the Obligation of Contracts.” Effectively accepting Webster’s contention that the contracts clause precluded states from interfering with such charters, the chief justice thereby shielded private economic interests from government regulation. Marshall’s subsequent effort to overturn a New York insolvency law that purportedly violated the contracts clause, delivered in the case of Ogden v. Saunders (1827), proved unavailing.
Marshall had been more successful three years earlier, when he employed the commerce clause for the first time to help nurture an expansive national economy. The case of Gibbons v. Ogden (1824) regarded a state-granted monopoly for steam navigation along the Hudson River. With sweeping prose, Marshall indicated that state law “must yield to the law of Congress” when a conflict arises. “Completely internal commerce of a state” was “reserved for the state itself.” However, “the power to regulate; that is, to prescribe the rule by which commerce is to be governed . . . like all others vested in Congress, is complete in itself.” Thus, he held, it “may be exercised to its utmost extent, and acknowledges not limitations, other than are prescribed in the constitution.” Marshall overturned the state court’s decree that had sustained the monopoly for steamboats and in the process encouraged the blossoming transportation revolution.
In McCulloch v. Maryland (1819), Marshall also employed the necessary and proper clause to further the principle of judicial nationalism. The case involved the establishment of state branches by the Second Bank of the United States. A Maryland statute leveled a tax on banks that operated in the state without legislative approval. In a unanimous ruling,
Marshall declared that “the government of the United States . . . though limited in its powers, is supreme; and its laws, when made in pursuance of the Constitution, form the supreme law of the land.” The Constitution implicitly authorized the establishment of the national bank, Marshall continued, as indicated in the necessary and proper clause. He wrote, “This provision is made in a constitution intended to endure for ages to come, and, consequently, to be adapted to the various crises of human affairs.”
The Taney Court, 1836 to 1864
Roger Taney, a former attorney general and Jacksonian Democrat with a very different conception of judicial power, succeeded John Marshall as chief justice. The difference between the two men became starkly apparent in the case of Charles River Bridge v. Warren Bridge (1837), which involved a state charter for a toll bridge. A second corporation, the Warren Bridge Company, subsequently received a charter to construct another bridge close to the first one. That bridge would remain a toll bridge for six years only. Contending that its contractual rights had been violated, the Charles River Company sought injunctive relief. In a forcefully argued 4-3 decision, Chief Justice Taney insisted that “the object and end of all government is to promote the happiness and prosperity of the community.” Thus, it could not be assumed “that the government intended to diminish its power of accomplishing the end for which it was created.” The defendant’s claim that a monopoly could be granted over “a line of traveling,” Taney declared, would terminate technological innovations that “are now adding to the wealth and prosperity, and the convenience and comfort of every part of the civilized world.” Justice Joseph Story, in his dissent, complained that the majority ruling “destroys the sanctity of contracts.”
Another 1837 decision, Briscoe v. Bank of the Commonwealth of Kentucky, placed Story in dissent against a transformed Supreme Court. A state-owned public banking corporation in Kentucky had issued paper money, an act that Marshall, in Craig v. Missouri (1830), had deemed unconstitutional. Now, the Court declared states’ banknotes constitutional, while narrowly defining what constituted a “bill of credit” under Article 1, Section 10 of the Constitution.
A happier ruling in John Swift’s estimation involved the unanimous decision handed down by the Supreme Court in Swift v. Tyson (1842). Written by Swift himself, this judicial determination involved the question of whether the Court would adhere to general commercial legal principles if they ran counter to state court decrees. Swift answered in the affirmative, thus allowing the federal judiciary to uphold “a general commercial law” related to judicial precedents. Thereby, interstate commerce could avoid local impediments that might otherwise have been established.
Another important case decided by the Taney court, Coo-ley v. Board of Wardens of the Port of Philadelphia (1852), provided a somewhat definitive ruling on the commerce clause’s applicability regarding various state-federal issues. A Pennsylvania statute required boats using the port of Philadelphia to pay half of the pilotage fees if the captains did not use local pilots. The Supreme Court affirmed that “the grant of commercial power to Congress does not contain any terms which expressly exclude the States from exercising an authority over its subject matter.” The Court then stated, “If they are excluded it must be because the nature of the power, thus granted to Congress, requires that a similar authority should not exist in the States.”
The Chase Court, 1864 to 1873
The last third of the nineteenth century witnessed a series of monumental decisions by the U.S. Supreme Court regarding economic matters. During this period, the American economy underwent remarkable transformations. By the close of the nineteenth century, the United States had become the world’s most productive country, surpassing Great Britain. Along with a soaring population, itself the by-product of a high natural birthrate and massive immigration from abroad, the American landscape possessed great natural abundance. Scientific and commercial ingenuity, technological innovations, a managerial revolution, and the flowering of corporate capitalism also proved significant. In a series of rulings, the Supreme Court provided judicial support for the economic boom that saw the gross national product increase 33-fold from 1859 to 1919. Many of the decisions made by this activist Court determinedly sustained the liberty of contract, due process of the laws, and equal protection in a legal sense.
The closely fought Slaughterhouse Cases (1873) sharply restricted the effectiveness of the privileges and immunities clause of the recently ratified Fourteenth Amendment (1868). The case involved state and local codes passed in Louisiana to safeguard public health. In a 5-4 ruling, the Court declared that the privileges and immunities clause precluded states from restricting only “the privileges or immunities of citizens of the United States,” not those articulated by the states. An impassioned dissent presented by Justice Stephen J. Field declared that the Louisiana regulations placing restraints on butchers violated the Fourteenth Amendment’s admonition regarding due process of law. Field’s dissent planted the seeds for the constitutional theory of substantive due process, while championing the ideal of “inalienable individual liberties.” He wrote, “Clearly among these must be placed the right to pursue a lawful employment in a lawful manner, without other restraint such as equally affects all persons.” However, Field insisted, “grants of exclusive privileges, such as is made by the act in question, are opposed to the whole theory of free government, and it requires no aid from any bill of rights to render them void.”
The Watte Court, 1874 to 1888
The conceptual thrust behind the Slaughterhouse dissent ultimately came to prevail in a series of Supreme Court decisions, with certain exceptions carved out along the way. In Munn v. Illinois (1877), for example, the Court declared valid the Illinois statute establishing rates for grain elevator operations. Once again, Justice Field tendered a strong dissent, stating that “if this is sound law, all property and all business in the state are held at the mercy of the Legislature.” By contrast, Field joined the majority of the justices in the case of Wabash, St. Louis & Pacific Railway Co. v. Illinois (1886), when the
Supreme Court asserted that the states lacked authority to regulate railroad rates involving interstate commerce. “Indirect” restraints—but not “direct” ones—on interstate transportation, the Court ruled, were permissible. In response to the Wabash ruling, the U.S. Congress passed the Interstate Commerce Act of 1887, which authorized the setting of interstate rail rates by the Interstate Commerce Commission. In 1890, the Sherman Anti-Trust Act also became law.
The Fuller Court, 1888 to 1910
In United States v. E. C. Knight (1895) and Pollock v. Farmers’ Loan & Trust Co. (1895), decided within two months of one another, the Supreme Court placed substantial constraints on the ability of the federal government to curb corporate excesses and the power of a small band of individuals who had amassed great wealth during the period of rapid modernization. The case involved an attempt to restrict the growth of the American Sugar Refining Company, which controlled 98 percent of the market share. Chief Justice Melville W. Fuller all but eviscerated the efficacy of the Sherman Anti-Trust Act, drawing a distinction between manufacturing and commerce and declaring the Court should not consider the indirect effects on interstate commerce under that legislation. If the American Sugar Refining Company was a monopoly, Fuller contended, it involved manufacturing only. Justice John Marshall Harlan dissented, declaring that an unlawful restraint on trade impacted an entire state. Harlan wrote, “The general government is not placed by the Constitution in such a condition of helplessness that it must fold its arms and remain inactive while capital combines … to destroy competition… throughout the entire country, in the buying and selling of articles … that go into commerce among the states.” In Pollock, the Court, with Fuller again delivering the majority ruling, invalidated major portions of the federal income tax law of 1894, which placed a 2 percent tax on incomes greater than $4,000. Fuller declared that “what was intended as a tax on capital would remain in substance a tax on occupations and labor.” Justice Harlan dissented, terming the ruling a “judicial revolution that may sow the seeds of hate and distrust among the people of different sections of our common country.” Justice Henry Billings Brown dismissed Fuller’s opinion as “a surrender of the taxing power to the moneyed class.”
Justice Field’s determined belief in both freedom of contract and liberty of enterprise came to carry enormous weight with the Supreme Court during the latter stages of the nineteenth century. In 1890 the Court declared that due process required the judicial review of state regulations of railroad rates, but later in the decade, the Court determined that railroads were entitled to a fair profit. In the case of All-geyer v. Louisiana (1897), the Court, relying on the doctrine of substantive due process, overturned a statute mandating that all companies conducting business in Louisiana pay state fees. Justice Rufus Peckham relied on the ideal of “liberty of contract,” propounded by the British philosopher Herbert Spencer and other champions of laissez-faire, to invalidate the Louisiana law.
Peckham offered a still more striking justification of liberty of contract in Lochner v. New York (1905). In that case, he delivered a 5-4 ruling that overturned a New York law limiting bakers from toiling more than 10 hours a day or 60 hours a week. Peckham bluntly wrote, “There is not reasonable ground for interfering with the liberty of person or the right of free contract” in such a manner. The law in question, he continued, “involves neither the safety, the morals, nor the welfare, of the public, and … the interest of the public is not in the slightest degree affected by such an act.” The intended design of the statute, Peckham declared, was “simply to regulate the hours of labor between the master and his employees …in a private business.” Thus, in such a situation, the ability of the employer and the employee to contract freely with each other “cannot be prohibited or interfered with, without violating the Federal Constitution.” In his dissent, Justice Oliver Wendell Holmes Jr. argued that state directives could interfere with the liberty of contract. Moreover, “the 14th Amendment does not enact Mr. Herbert Spencer’s Social Statics … a Constitution is not intended to embody a particular economic theory, whether of paternalism and the organic relation of the citizen to the state or of laissez faire.” In a companion dissent, Justice Harlan stated that “the liberty of contact may, within certain limits, be subjected to regulations designed and calculated to promote the general welfare, or to guard the public health, the public morals, or the public safety.” Additionally, Harlan noted, “a legislative enactment, Federal or state, is never to be disregarded or held invalid unless it be, beyond question, plainly and palpably in excess of legislative power.”
Despite such rulings as E. C. Knight, Pollock, Allgeyer, and Lockner, the U.S. Supreme Court sustained government regulations in certain instances. In Champion v. Ames (1903), Justice Holmes issued the 5-4 majority opinion upholding the lottery act of 1895. Holmes affirmed that “lottery tickets are subjects of traffic, and therefore are subjects of commerce, and the regulation of such tickets from state to state, at least by independent carriers, is a regulation of commerce among the several states.” He went on to say “that the power of Congress to regulate commerce among the states is plenary, is complete in itself, and is subject to no limitations except such as may be found in the Constitution.” In McCray v. United States (1904), Justice Edward E. White upheld an act of Congress that allowed for the regulation of the production of oleomargarine. Such an excise tax, White determined, remained constitutional, notwithstanding the rationale sustaining it. Justice Harlan, in Northern Securities v. United States (1904), backed the use of the Sherman Anti-Trust Act against a giant railroad company. The case of Swift v. United States (1905) saw Holmes deliver the Court’s unanimous decision defending a sweeping interpretation of the commerce clause. In upholding antitrust action against the beef trust in that case, Holmes articulated the “current of commerce” doctrine. Commerce, he wrote, involved a practical legal matter, not a technical one. In another unanimous ruling, Muller v. Oregon (1908), the Court upheld an Oregon statute capping a workday at ten hours for women who worked in factories or laundries. Influenced by the brief filed by labor lawyer Louis D. Brandeis, Justice David J. Brewer delivered the majority opinion. Brewer declared that a “woman’s physical structure and the performance of maternal functions place her at a disadvantage in the struggle for subsistence.”
The White Court, 1910 to 1921
Under Chief Justice White and his successor, William Howard Taft, the U.S. Supreme Court continued to cut a generally conservative swath, with some exceptions. White presented the unanimous ruling in Standard Oil Co. v. United States (1911), which declared that a court must resort to a “rule of reason” in determining whether it should apply the Sherman Anti-Trust Act in a particular instance. In that case and in United States v. American Tobacco Co. (1911), the Court did sustain government efforts to apply the Sherman Act. Despite his concurrence in the Standard Oil ruling, Justice Harlan derided the “rule of reason” as amounting to judicial legislation. The Court also upheld federal legislation regarding the grain, meatpacking, and radio broadcasting industries.
The Supreme Court looked less favorably on social legislation. In Hammer v. Dagenhart (1918), Justice William R. Day delivered the 5-4 ruling that the 1916 Keating-Owen Child Labor Act was unconstitutional. Day stated, “Over interstate transportation, or its incidents, the regulatory power of Congress is ample, but the production of articles, intended for interstate commerce, is a matter of local regulation.” Deeming the act in question “repugnant to the Constitution,” Day declared that “it not only transcends the authority delegated to Congress over commerce but also exerts a power as to a purely local matter to which the federal authority does not extend.” If Congress could effect such regulation, he insisted, “all freedom of commerce will be at an end, and the power of the states over local matters may be eliminated, and thus our system of government be practically destroyed.” In his dissent, Justice Holmes noted that “it would be not be argued today that the power to regulate does not include the power to prohibit.” In his estimation, “the power to regulate commerce and other constitutional powers could not be cut down or qualified by the fact that it might interfere with the carrying out of the domestic policy of any State.”
The Taft Court, 1921 to 1930
The Taft court demonstrated its antilabor basis in a series of rulings, including Truax v. Corrigan (1921). Chief Justice Taft delivered the 5-4 majority opinion, which invalidated an Arizona statute that restricted courts from issuing injunctions against striking workers. The measure, Taft determined, abridged the due process and equal protection clauses of the Fourteenth Amendment. In Bailey v. Drexel Furniture Co. (1922), the Court deemed the Child Labor Tax Law unconstitutional. The act, Taft declared, established a penalty with a “prohibitory and regulatory effect” that would “break down all constitutional limitation of the powers of Congress and completely wipe out the sovereignty of the States.” Justice George Sutherland, in Adkins v. Children’s Hospital (1923), invalidated another federal law, this one setting a minimum-wage standard for women workers in the District of Columbia. Such a measure, from Sutherland’s perspective, violated the liberty of contract that was guaranteed under the Fifth Amendment’s due process clause. To Sutherland,”freedom of contract [was] the general rule and restraint the exception.” Chief Justice Taft dissented, arguing that legislators, wielding the police power, could limit freedom of contract to afford protection to women laborers. Justice Holmes condemned the liberty of contract doctrine, stating that “pretty much all law consists in forbidding men to do some things that they want to do.”
The Hughes Court, 1930 to 1941
The liberal-conservative divide on the Court appeared perhaps starker still as the Great Depression unfolded, when unemployment mushroomed to unprecedented levels, soup kitchens and breadlines appeared across the land, and desperation and anger mounted. In a number of closely argued cases, the Supreme Court ruled on the constitutionality of a series of measures by the federal government designed to improve the nation’s economy. Initially, the Court appeared close to adopting a different approach regarding substantive due process. In Nebbia v. New York, Justice Owen Roberts offered the Court’s 5-4 majority opinion sustaining a New York law that regulated the dairy industry. Roberts asserted, “In the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose.” Moreover, “if the laws passed are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied.” In his dissent, Justice James McReynolds insisted otherwise: “We must inquire concerning its purpose and decide whether the means proposed have reasonable relation to something within legislative power—whether the end is legitimate and the means appropriate.” In Home Building & Loan Association v. Blaisdell (1934), another 5-4 ruling, delivered by Chief Justice Charles Evans Hughes, the 1933 Minnesota Mortgage Moratorium Law was upheld. Hughes wrote, “While emergency does not create power, emergency may furnish the occasion for the exercise of power.” Affirming that the commerce clause was not absolute, Hughes declared that states possessed the authority to protect the well-being of their residents. The dissenters decried the impairment of the obligation of contracts.
Increasingly, the arguments posed by the dissenters would become part of majority opinions that overturned legislation sponsored by the administration of Franklin Delano Roosevelt. In May 1935 alone, the Supreme Court declared four New Deal enactments unconstitutional. The most important of those cases, Schechter Poultry v. United States (1935), resulted in a unanimous ruling delivered by Chief Justice Hughes that effectively invalidated the National Industrial Recovery Act of 1933. That measure, intended to stimulate economic recovery, called for industry groups to establish codes of fair competition. In a crushing blow to the Roosevelt administration, Hughes declared that “extraordinary conditions do not create or enlarge constitutional power.” Most tellingly, he argued that the act had unconstitutionally ceded legislative powers to the executive branch. In a 6-3 ruling in United States v. Butler (1936), Justice Owen Roberts tossed out various provisions of the Agricultural Adjustment Act of 1933, another centerpiece of the First New Deal. Roberts contested the notion that Article 1, Section 8, of the U.S. Constitution “grants power to provide for the general welfare, independently of the taxing power.” In a sharply drawn dissent, Justice Harlan F. Stone termed Robert’s decision “a tortured construction of the Constitution.” Stone also warned that “courts are not the only agency of government that must be assumed to have capacity to govern. Congress and the courts both unhappily may falter or be mistaken in the performance of their constitutional duty…. The only check upon our own exercise of power is our own sense of self-restraint.” Yet another 5-4 ruling, Carter v. Carter Coal Co. (1936), had Justice George Sutherland invalidate the Bituminous Coal Conservation Act of 1935. “Production,” he exclaimed, “is not commerce but a step in preparation for commerce.”
As the makeup of the Court began to change and Chief Justice Hughes became more consistently amenable to a liberal perspective, rulings more favorable to later New Deal legislation followed. Consequently, the Court upheld the progressive state laws and the cornerstones of the Second New Deal—the Social Security Act and the National Labor Relations Act (NLRA), both passed in 1935. Indeed, from 1937 through the duration of the Roosevelt administration, the Supreme Court did not overturn any major federal legislation. The case of West Coast Hotel Co. v. Parrish (1937) saw a 5-4 decision delivered by the chief justice, who upheld a statute setting a minimum-wage standard for women workers in Washington State. In overruling Adkins, Hughes asked, “What is this freedom? The Constitution does not speak of freedom of contract.” In his dissent, Justice Sutherland contended that treating men and women differently under the law amounted to arbitrary discrimination. In NLRB v. Jones & Laughlin Steel Corp. (1937), yet another hard-fought 5-4 case, Chief Justice Hughes sustained the NLRA, which guaranteed the right of workers to bargain collectively. Hughes wrote: “The congressional authority to protect interstate commerce from burdens and obstructions is not limited to transactions which can be deemed to be an essential part of a ‘flow’ of interstate or foreign commerce…. Although activities may be intrastate in character when separately considered, if they have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions, Congress cannot be denied the power to exercise that control.”
In Steward Machine Co. v. Davis and in Helvering v. Davis (1937), the Court prevented the Social Security Act from being discarded. In still one more 5-4 ruling, Justice Benjamin Cardozo denied in Steward Machine Co. that the Constitution precluded the government “from assenting to conditions that will assure a fair and just requital for benefits received.” In Helvering, Cardozo affirmed that “Congress may spend money in aid of the ‘general welfare.’” Acknowledging that a distinction had to be made between particular and general welfare, Cardozo declared that “the discretion . . . is not confided to the courts. The discretion belongs to Congress, unless the choice is clearly wrong, a display of arbitrary power, not an exercise of judgment.” Additionally, he said, “when money is spent to promote the general welfare, the concept of welfare or the opposite is shaped by Congress, not the states. So the concept be not arbitrary, the locality must yield.”
The Stone Court, 1941 to 1946
In the 1941 ruling of United States v. Darby Lumber Co., Chief Justice Harlan Stone overruled the Dagenhart decision in upholding the 1938 Fair Labor Standards Act, which established a 40-hour maximum workweek while mandating a minimum wage of $.40 an hour for workers “engaged in commerce or in the production of goods for commerce.” Stone declared that “the shipment of manufactured goods interstate is such commerce and the prohibition of such shipment by Congress is indubitably a regulation of the commerce.” Congress’s power “over interstate commerce is not confined to the regulation of commerce among the states. It extends to those activities intrastate which so affect interstate commerce or the exercise of the power of Congress over it as to make regulation of them appropriate means to the attainment of a legitimate end, the exercise of the granted power of Congress to regulate interstate commerce.”
The case of Wickard v. Filburn (1942) further extended the federal government’s exercise of power through the commerce clause. In a unanimous ruling, Justice Robert Jackson sustained key provisions of the second Agricultural Adjustment Act, declaring that “the Court’s recognition of the relevance of the economic effects in the application of the Commerce Clause . . . has made the mechanical application of legal formulas no longer feasible.” Thus, he wrote, “even if an appellee’s activity be local and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce and this irrespective of whether such effect is what might at some earlier time have been defined as ‘direct’ or ‘indirect.’”
The Vinson Court, 1946 to 1953
The U.S. Supreme Court did rule against President Harry S Truman in the case of Youngstown Sheet and Tube Company v. Sawyer (1952). In the midst of the Korean War, Truman had ordered Secretary of Commerce Charles Sawyer to take control of the steel mills during a nationwide strike by the United Steelworkers. In a 6-3 ruling, Justice Hugo Black declared that “the President’s power, if any, to issue the order must stem either from an act of Congress or from the Constitution itself. There is no statute that expressly authorizes the President to take possession of the property as he did here.”
The Warren Court, 1953 to 1969
Throughout the cold war era, the Supreme Court repeatedly affirmed the authority of the federal government to rely on the commerce power. In Heart of Atlanta Motel v. United States (1964), Justice Thomas upheld the constitutionality of Title II of the 1964 Civil Rights Act, which banned racial discrimination in public accommodations; that measure relied on the commerce clause. Quoting from an earlier ruling, affirmed that “if it is interstate commerce that feels the pinch, it does not matter how local the operation which applies the squeeze.” He declared, “Thus the power of Congress to promote interstate commerce also includes the power to regulate the local incidents thereof, including local activities in both the States of origin and destination, which might have a substantial and harmful effect upon the commerce.”
The Burger Court, 1969 to 1986
In 1976 the Supreme Court, for the first time in four decades, declared unconstitutional legislation that relied on the commerce clause. In a 5-4 ruling in the case of National League of Cities v. Usery, Justice William Rehnquist invalidated the 1974 amendments to the Fair Labor Standards Act that sought to extend minimum-wage and maximum-hour protections to most state and local public employees. Rehnquist insisted that “this Court has never doubted that there are limits upon the power of Congress to override state sovereignty, even when exercising its otherwise plenary powers to tax or to regulate commerce which are conferred by Article 1 of the Constitution.” He declared, “We hold that insofar as the challenged amendments operate to directly displace the States’ freedom to structure integral operations in areas of traditional governmental functions, they are not within the authority granted Congress by Art. 1, section 8.” In his dissent, Justice William Brennan asserted that Rehnquist’s decision amounted to a “patent usurpation of the role reserved for the political process.” Brennan went on to say that “today’s holding patently is in derogation of the sovereign power of the Nation to regulate interstate commerce.”
Only nine years later, the Court overruled the decision in the case of Garcia v. San Antonio Metropolitan Transit Authority. Justice Harry Blackmun asserted that “the attempt to draw the boundaries of state regulatory immunity in terms of ‘traditional government function’ is not only unworkable but is inconsistent with established principles of federalism and, indeed, with those very federalism principles on which National League of Cities purported to rest.” Therefore, he declared, “we . . . now reject, as unsound in principle and unworkable in practice, a rule of state immunity from federal regulation that turns on a judicial appraisal or whether a particular governmental function is ‘integral’ or ‘traditional.’” In his dissent, Justice Lewis Powell contended that the decision “substantially alters the federal system embodied in the Constitution.”
The Rehnquist Court, 1986 to the Present
In keeping with the Garcia case, most Supreme Court rulings following the 1937 “judicial revolution” afforded both the federal and state governments wide latitude in regulating the marketplace. During the 1990s, however, the Rehnquist court displayed a greater readiness than any high court since the mid-1930s to view congressional discretion in the economic realm more critically. In the hotly contested case of United States v. Lopez (1995), Chief Justice Rehnquist declared that a statute regulating private individuals exceeded Congress’s authority under the commerce clause. The case focused on a congressional enactment that banned guns within 1,000 feet of schools. The 5-4 majority ruling declared that Congress had failed to demonstrate a “substantial” effect on interstate commerce.
In 2000 the U.S. Supreme Court heard an appeal from the Florida Supreme Court over the disputed election between presidential candidates George W. Bush and Al Gore and decided that the Florida recount was unconstitutional. Since 2000 the Rehnquist court has maintained a conservative position on most issues, including upholding the validity of school vouchers. However, in 2003 the Court issued two decisions that deviated from this conservative position. First, in two cases brought against the University of Michigan, the Court split its decisions: It ruled that minority students applying for admission cannot receive an additional 20 points on the entrance application based on their race (an amount that exceeded the points given for a student’s grade point average) but that the University of Michigan Law School could use race as a factor to achieve diversity within its student body. Second, on June 27, 2003, the Supreme Court struck down a Texas sodomy law that outlawed gay sex. With a Court that is now deciding social issues on a liberal basis, many in Congress awaited the last day of the Supreme Court session in 2003 to see if any of the justices would retire, but none did.
