The Industrial Revolution created theretofore unimaginable wealth, some of which trickled down as wages to workers in the mills and factories of the 19th century. Though substandard by today’s measure, those wages were sufficiently high and working conditions sufficiently appealing to attract people from farms to the growing cities. Waves of immigrants, mostly impoverished Europeans, flooded the labor pool, as well. That labor surplus depressed wages, which, in turn, kept low-skilled workers poor, at least in relation to the growing middle and upper classes. Churches and other private relief societies undertook the increasingly urgent efforts to ameliorate the poverty of the working class.
As the Victorian Age’s noblesse oblige behind those private efforts morphed into the Progressive Era’s reformism through government action, the foundations of the modern regulatory state were laid. In constitutional law, that change became manifest in several doctrines, including the power of Congress to “regulate Commerce…among the several States.” At the time, “to regulate” meant to standardize or to conform to a norm. That meaning is also apparent in other parts of the Constitution, such as the Second Amendment. Modern usage as a synonym for “to control” in a legal context at that time was met by “to police.” The original purpose of the Commerce Clause was to give Congress the tool to standardize the flow of interstate commerce by legislating directly against disruptions by the states. Under the Articles of Confederation, Congress could appoint itself or others as a tribunal to resolve commercial disputes among states on appeal from a state, but had no power to legislate preventively.
“Commerce,” as understood by the Framers, was trade and navigation attendant thereto. In the leading case, Gibbons v. Ogden, Chief Justice John Marshall similarly defined this term as reaching both “traffic” (buying and selling) and “intercourse” (the flow of goods). More ambiguous and controversial was the meaning “among the several states.” In Gibbons, Marshall interpreted this to allow Congress to reach not only commerce that moves from one state to another, but also commerce that, while local, affects other states. Only purely local commerce might be beyond Congress’s reach.
Under the conditions of the time, much commerce was still entirely local, so the potentially far-reaching effect of the last part of Marshall’s opinion was left untested. Congress generally legislated only to authorize state actions that otherwise might interfere with interstate commerce. With the lack of congressional legislation that affirmatively regulated interstate trade, the Supreme Court, in turn, focused its jurisprudence on the question of what limitations the existence of the Commerce Clause itself placed on state laws that had extraterritorial effect.
Towards the end of the 19th century, Congress began to use its commerce power more affirmatively, in the Interstate Commerce Act of 1887 and the Sherman Antitrust Act of 1890. The latter’s constitutionality was challenged in U.S. v. E.C. Knight Co. (the “Sugar Trust” case). The Supreme Court held that the government could not apply the law to an alleged monopoly in manufacturing, because it went beyond Congress’s constitutional power. Manufacturing was a local activity, not interstate. Moreover, commerce followed manufacture (or other “production”), but was not part of it, a distinction well understood by the Constitution’s framers.
E.C. Knight Co. pruned back Marshall’s holding in Gibbons by effectively eliminating Congress’s ability to reach local activities that affected commerce among the states. The decision also curtailed national power to control industrial conglomerates and, more generally, most economic activity. What remained was Congress’s ability to control movement of people or goods across state lines. Congress began to use that tool around the turn of the 20th century.
It long had been argued by those who professed themselves concerned about the poor that much of the latter’s fate was due to moral failing or poor choices in behavior. It was almost an article of faith that alcohol was a major culprit. Consequently, in quite a turn from the traditionally heavy consumption of alcohol by Americans, temperance movements arose. A prolonged period of such efforts began in the latter couple of decades of the 19th century and culminated in the Eighteenth Amendment (“Prohibition”).
But alcohol was not the only destructive vice. Opium consumption and other drug abuse, pornography, prostitution, and gambling–especially through lotteries–were also common at the time and came under increasing attack. The Progressive movement viewed these vices as impairing efforts to raise the poor out of their condition and obstructing human progress more generally. Private reform efforts were not enough; the power of government needed to be harnessed for the task. This coincided with the Progressive mindset that law was not just a set of basic rules to allow society to resolve disputes and maintain peace, but an instrument of policy towards a “just” and “modern” secular paradise on Earth.
Gambling long had been a popular pastime for many, with state-recognized lotteries having the additional benefit of raising money for public projects. Critics objected that, though they were voluntary, lotteries were a regressive form of taxation that disproportionately preyed on the hopes and desperation of the poor. Eventually, states passed laws to prohibit such lotteries within their domains. Though the 1821 case of The Cohens v. Virginia held that a state could prosecute in-state sellers of tickets for out-of-state lotteries, since then the improved postal system and other efficient means of interstate transportation allowed lottery promoters to evade a state’s controls by remaining outside that state’s boundary. Hence, the federal government was pressed into service, which it undertook through the Lottery Act of 1895.
The Act prohibited transportation in interstate commerce of lottery tickets. The Act was challenged by a seller of tickets for a lottery conducted in Asuncion, Paraguay, by the Pan-American Lottery Company. He was indicted in 1899 for shipping such tickets from Dallas, Texas, to Fresno, California. His constitutional argument was that Congress’s commerce power could not be used to prohibit the transportation of these tickets because, 1) to “regulate” does not include to “prohibit”; 2) lottery tickets are not “commerce”; and 3) Congress’s purpose was not to control the flow of commerce, but to enforce morals, a power reserved to the states.
Speaking for a bare majority in Champion v. Ames in 1903, Justice John Marshall Harlan brushed aside these objections. Since the power over interstate commerce was “plenary,” Congress could regulate that commerce even by eliminating it, if prohibition was deemed necessary and proper to control the commerce. The problem with Harlan’s conclusion was that he interpreted “regulate” in the modern sense of “control,” rather than the traditional understanding of “standardize.” Congress was not preventing state obstructions to the flow of interstate trade here. Rather, Congress was creating the obstruction.
Champion also argued that lottery tickets were not articles of trade, such as manufactured goods might be, because they had no inherent value. They were “intangibles” and, akin to insurance contracts, simply represented promises to pay. The Court had previously decided that insurance contracts were not commerce. Justice Harlan disagreed. He argued that these tickets had value, as shown by the fact that they were bought and sold. He analogized the Act to Congress’s prohibition of shipment of diseased cattle in interstate commerce. That analogy did not sit well with Chief Justice Melville Fuller, whose dissent noted that contaminated livestock poisoned the operation of interstate trade itself by spreading disease, whereas “we do not understand these pieces of paper themselves can communicate bad principles by contact.”
Most significant, Champion argued that Congress had no “police power,” traditionally reserved to the states and defined as the general power to legislate for the health, safety, morals, and welfare of the community. That bedrock principle of federalism was reflected in the enumeration of congressional powers through Article I, Section 8, of the Constitution and in the Tenth Amendment. The Act was based not on concern about free trade, but about morality. Were the Court to uphold the Act, it would empower Congress to act as a general legislature akin to the British Parliament.
Harlan responded with the time-honored judicial excuse for the exercise of expansive and potentially unconstitutional powers: “[T]he possible abuse of power is not an argument against its existence. There is probably no governmental power that may not be exerted to the injury of the public.” If that abuse goes against the Constitution, the Court will so declare. If it is not unconstitutional, but merely injurious, the remedy is through the political process. Moreover, as long as Congress is using its constitutional powers and not violating any restriction thereon, Congress is entitled to act equally with the states. Harlan asked, “If a state…may properly take into view the evils that inhere [in lotteries], why may not Congress…provide that such commerce shall not be polluted by the carrying of lottery tickets from one state to another?”
The problem with Harlan’s rhetorical question is that it assumes a premise, namely, that the states and Congress are entrusted with the same objectives of government. It is this premise that Champion (and most Americans of the Founding Era) denied. Indeed, Chief Justice John Marshall in McCulloch v. Maryland, the most expansive declaration of federal power before the New Deal, recognized that there were objectives that Congress could not pursue even if that body hewed to the technical words of the Constitution. He wrote that laws passed under Congress’s admittedly broad authority still must “consist with the letter and spirit of the Constitution ….” Mere compliance with the form of the power within the letter of the Constitution was not enough. The law must not violate the spirit of the framework. What might such a violation be?
“Should Congress…under the pretext of executing its powers pass laws for the accomplishment of objects not intrusted to the Government, it would become the painful duty of this tribunal…to say that such an act was not the law of the land.”
That significant qualifier to congressional power was cast aside by Harlan in Champion. Henceforth, all that mattered was the technical adherence to the form of the power granted, not whether the substantive objective was of the type reserved instead to the general powers of the states. Congress could legislate under pretext, as long as they incanted the proper formalities.
The impact of Champion was both immediate and long-term. It marked the go-ahead for a national “police power.” Seizing this open invitation for constitutional pretense to legislate, Congress proved Chief Justice Fuller’s dissent prophetic. In quick order, Congress passed the 1906 Pure Food and Drug Act (upheld in 1911 in the “rotten egg” case, Hipolite Egg Co. v. U.S.) and the 1910 Mann Act or White Slave Act to fight interstate prostitution rings (upheld in 1913 in Hoke v. U.S. as to prostitution and in 1917 in Caminetti v. U.S. as to private adultery). Similarly, in line with Champion, the Court broadly upheld the use of Congress’s taxing power as a purely regulatory tool in McCray v. U.S. (1904). Congress followed up that case with the Harrison Narcotics Tax Act of 1914. Few cases of the time showed any alarm on the part of the justices about the Frankenstein monster they created in Champion. One, Hammer v. Dagenhart in 1918, struck down the federal Child Labor Act of 1916, in a holding that was difficult to reconcile with Champion.
Since then, the Court has approved vast expansion of Congress’s regulatory powers and acquiesced in the growth of the constitutionally obscure and politically hidden administrative state. That has occurred in significant part through the Court’s New Deal cases, which upheld a broad power of Congress to regulate entirely local productive activities, as long as they had some tenuous connection to an interstate market. Still, it was Champion v. Ames, along with a handful of other cases in the first decade and a half of the 20th century, which validated the claim of constitutional legitimacy for the Progressive program of national direction of economic and social policy.
One should not blame the Court, though. The Court did not birth the Progressive Era, nor could it have halted Progressivism’s subsequent march that has resulted in our current regulatory welfare state. It serves well to remember the aphorism by Joseph de Maistre, “Every nation gets the government it deserves.” Ultimately, it is the people that control their constitution.
Champion v. Ames (1903) Supreme Court decision: http://caselaw.findlaw.com/us-supreme-court/188/321.html
An expert on constitutional law, and member of the Southwestern Law School faculty, Professor Joerg W. Knipprath has been interviewed by print and broadcast media on a number of related topics ranging from recent U.S. Supreme Court decisions to presidential succession. He has written opinion pieces and articles on business and securities law as well as constitutional issues, and has focused his more recent research on the effect of judicial review on the evolution of constitutional law. He has also spoken on business law and contemporary constitutional issues before professional and community forums, and serves as a Constituting America Fellow. Read more from Professor Knipprath at: http://www.tokenconservative.com/.