Law in the "Lochner Era"

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Background: Case Law on the Commerce Clause

  • Gibbons v. Ogden (1824):
    • commerce involves more than buying and selling itself, but also all commercial intercourse, hence including navigation and transportation
    • commerce among states begins in one state and ends in another; it doesn't end when the activity in question crosses the last state boundary
    • Congress' power to regulate such interstate commerce is plenary, that is, complete except as otherwise explicitly limited by the Constitution.
  • U.S. v. E.C. Knight Co. (the "sugar trust case," 1895):
    • to fall under the commerce power, the regulated activity must have a "direct effect" on interstate commerce.

 

Background: Progressive-Era Legislation and Reforms

  • Pendleton Act, 1883: civil service
  • Interstate Commerce Act, 1887: interstate railroad rate regulation by ICC
  • Sherman Antitrust Act 1890
  • Pure Food and Drug Act of 1906: federal inspection of meat products and regulation by FDA of manufacture, sale, or transportation of poisonous patent medicines.
  • Clayton Antitrust Act, 1914: regulated anticompetitive activities beyond Sherman Act
  • Federal Trade Commission Act, 1914: for consumer protection and regulation of additional anticompetitive practices by FTC
  • Federal Reserve System, 1913
  • Budget and Accounting Act, 1921

plus a series of constitutional amendments

  • 16th Income tax 1913
    • after 1894 tax ruled unconstitutional in Pollock v. Farmers' Loan and Trust Co. (1895)
  • 17th Direct election of Senators 1913
  • 18th and 21st Prohibition 1919 and Repeal 1933
  • 19th Women's suffrage 1920
  • 20th End lame-duck session 1933
    • changed presidential inauguration and end of congressional term to January

 

Important Court Decisions

Corporate persons

Corporations are "persons" guaranteed "equal protection of the laws" under the 14th Amendment -- that is, the actual persons who jointly own a corporation are granted equal protection -- Santa Clara County v. Southern Pacific Railroad, 118 U.S. 394 (1886):

The special grounds of defense by each of the defendants were: ... That the provisions of the constitution and laws of California, in respect to the assessment for taxation of the property of railway corporations operating railroads in more than one county, are in violation of the fourteenth amendment of the constitution, in so far as they require the assessment of their property at its full money value, without making deduction, as in the case of railroads operated in one county, and of other corporations, and of natural persons, for the value of the mortgages covering the property assessed; thus imposing upon the defendant unequal burdens, and to that extent denying to it the equal protection of the laws. ...

 

Liberty of contract

Inherent in the rights to liberty and property is a right to freely make contracts -- Allgeyer v. Louisiana 165 U.S. 578 (1897):

The 'liberty' mentioned in [the 14th] amendment means, not only the right of the citizen to be free from the mere physical restraint of his person, as by incarceration, but the term is deemed to embrace the right of the citizen to be free in the enjoyment of all his faculties; to be free to use them in all lawful ways; to live and work where he will; to earn his livelihood by any lawful calling; to pursue any livelihood or avocation; and for that purpose to enter into all contracts which may be proper, necessary, and essential to his carrying out to a successful conclusion the purposes above mentioned.

 

Limit to state's "police power"

Although states have power to make laws protecting public safety and health, this must be balanced against the liberty of contract, and there's a limit -- Lochner v. New York 198 U.S. 45 (1905) [abridged version] struck down state law limiting work hours in baking industry.

[W]hen the state, by its legislature, in the assumed exercise of its police powers, has passed an act which seriously limits the right to labor or the right of contract..., it becomes of great importance to determine which shall prevail -- the right of the individual to labor for such time as he may choose, or the right of the state to prevent the individual from laboring, or from entering into any contract to labor, beyond a certain time prescribed by the state.
Most often, until at least 1923, the Court upheld state regulations while saying that the contract right was a right protected by the due process clause of the 5th and 14th Amendments. From 1923 until 1934 the Court more frequently invalidated regulations based on the liberty to contract.

 

Child labor

The Keating-Owen Act (1916) prohibited from interstate commerce goods manufactured by children; the Court ruled it unconstitutional under the commerce clause in Hammer v. Dagenhart, 247 U.S. 251 (1918):

In our view the necessary effect of this act is, by means of a prohibition against the movement in interstate commerce of ordinary commercial commodities, to regulate the hours of labor of children in factories and mines within the States, a purely state authority. Thus the act in a twofold sense is repugnant to the Constitution. 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. ... [I]f Congress can thus regulate matters entrusted to local authority by prohibition of the movement of commodities in interstate commerce, 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 1924, Congress proposed a Child Labor Amendment to the Constitution:
  • Section 1. The Congress shall have power to limit, regulate, and prohibit the labor of persons under eighteen years of age.
  • Section 2. The power of the several States is unimpaired by this article except that the operation of State laws shall be suspended to the extent necessary to give effect to legislation enacted by the Congress.
28 states ratified, but 36 needed; by early 1925, 13 states had already declined to ratify.

 

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