Constitutional Primer #6
The Commerce Clause And Other Power-Expanding Mechanisms

by Timothy B. Lewis of the Constitutional Freedom Foundation

Inherent in the notion of government is the power to regulate human conduct.  Under the compact theory of government, the people themselves determine the limits and extents of their government’s authority to so regulate.  In our federal form of government, a key constitutional question is which level of government has the authority to regulate a given sphere of activity – the central government or the states?   Chief Justice John Marshall observed:

In the last article, we discussed how the U. S. Supreme Court assumed greatly-expanded powers to control the states through its “interpretation” of the 14^th Amendment’s due process clause.  It is probably universally conceded that the prime function of the judiciary is to interpret and apply the law to the facts and controversies brought before it.   But at some point it becomes ridiculous to say that they are merely “interpreting” the Constitution when in fact, they are changing or amending it by judicial fiat.  They did that regarding the 14^th Amendment and they also did it concerning the commerce clause of Article 1, Section 8 which is the main focus of this article.

The Court’s interpretations of the powers delegated to the federal government under the commerce clause are a classic example of the “slippery slope” analogy.  Imagine yourself on the crest of a slick and steep sandstone formation at any one of the National Parks in Utah.  If you were to take one step forward, your fate would be sealed because you couldn’t stop until you slid, tumbled, or rolled all the way to the bottom – there could be no intermediate stopping point – either you are at the top or you are at the bottom with no long term options in between.

In my analogy, the starting point at the top of the hill represents our original situation where the states had a lot of authority to determine what went on within their respective state borders.  The ending point at the bottom of the hill represents our current state of affairs where the states have very little authority to determine what goes on within their borders and the federal government controls virtually every aspect of regulatory power. 

Review From Past Articles

In Primer #1 we discussed the various barriers to interstate and international commerce that were created by the various states to secure for themselves special advantages at the expense of the other states.  The national government under the Articles of Confederation was powerless to control these things.  The resulting problems were so extreme that John Marshall observed:

It is very clear – based upon their recent experience with excessive centralized authority in King George and Parliament, the strength of the anti-federalist sentiment, and the refutations of those sentiments in the Federalist Papers –  that people were afraid of making too strong of a central government here in America.  They wanted to give it enough power to perform its legitimate national functions but otherwise, wanted to hem it in very tightly to preserve the local control the people earned through the Revolution and loved very deeply. 

Remember the common theme of the anti-federalists when they argued against adoption?  Their common argument was that we were on the verge of making too powerful a central government that would eventually gobble up states’ rights.  Every part of the proposed constitution that could possibly be used to transform the federal government into an unlimited political authority was strenuously attacked by the anti-federalists.  Hamilton, Madison, and Jay responded to those concerns in the Federalist Papers.  When Madison considered the commerce clause in Federalist #45, he said: “The regulation of Commerce it is true, is a new power, but that seems to be an addition which few oppose and from which no apprehensions are entertained.”  In short, nobody saw that as a potential avenue for rabid federal expansion of power, so Madison ignored it and went on to discuss other matters.  Little did the anti-federalists suspect that the commerce clause would latter serve as the springboard to unlimited federal authority.

Gibbons v. Ogden

In the 1824 case of Gibbons v. Ogden, ^[3] Ogden had been given a monopoly by the State of New York to run steamboats between New York and New Jersey.  Gibbons had been given a license to run steamboats between those two states by the federal Congress.  The question in the case was whether Congress had constitutionally delegated authority to issue such a license under the commerce clause.  The Court held that it did. 

In defining “commerce” the Court said:

So the Court recognized that Congress did not have the authority to regulate all types of commerce – otherwise, the Constitution would have used no modifiers to describe the word “commerce.”

There is no question that Congress had the authority to regulate commerce on the waters between New York and New Jersey, for problems of that sort exactly matched the problems experienced under the Articles of Confederation and were sought to be remedied by the commerce clause.

In commenting on the state inspection powers, the Court explained why those were not powers held by the federal government.  It said:

“No direct general power over these objects is granted to Congress; and, consequently, they remain subject to State legislation. If the legislative power of the Union can reach them, it must be for national purposes; it must be where the power is expressly given for a special purpose, or is clearly incidental to some power which is expressly given.” ^[5]

In the last article we introduced the idea of “police powers” – the reserved, open-ended power of the states to regulate public “safety, health, morals, and general welfare.” ^[6]   The federal government was not given such open-ended police powers.  Rather it was confined to its limited delegated powers and the Court here was recognizing that fact.  But whatever happened to that “immense mass of legislation, which embraces every thing within the territory of a State, [which was] not surrendered to the general government?”  As we will soon see, the Supreme Court will later acquiesce to Congress’ usurpation of those open-ended powers “interpreting” the commerce clause contrary to what the framers and adopters originally intended.

Notice too my emphasis of the word “before” in the foregoing quotation.  The Court recognized that just because something was ultimately destined to be transported across state lines was not enough, in and of itself, to bring it within Congress’ regulatory authority under the commerce clause.  This concept naturally led later Courts to make a distinction between production/manufacturing processes (which were deemed to be local in nature and thus outside the scope of Congress’ regulatory authority under the commerce clause), and the interstate transportation/commerce of the resulting products (which is within Congress’ authority.) ^[7]  

Hammer v. Dagenhart

In Hammer v. Dagenhart, the Court said:

That case had to do with the Federal Child Labor Act of 1916 which totally barred from shipment in interstate commerce, products from factories which employed child labor.  It is very interesting what Congress was trying to do there.  Consistent with the idea that the federal government was only delegated limited authority, apparently Congress anticipated the Supreme Court would not allow it to pass a direct law in the nature of general police powers.  So it tried to accomplish the same thing indirectly by stopping all interstate commerce of goods produced under circumstances they deemed to be unjust.  Consistent with what courts do so often today, the Court exalted substance over mere form and held the Act to be unconstitutional.  Said the court:

This, however, was a very close case – just a five to four majority opinion.  Justice Oliver Wendell Holmes wrote the four-person dissenting opinion.  While he admitted that Congress could not directly regulate child labor, he thought it could do so indirectly in the way Congress tried.  In other words, he would exalt form over substance in favor of expanding federal authority in the nature of general police powers so long as Congress performed just the right fancy footwork.  Said he:

But what would be the logical extension of that proposition?  What if Congress passed a law banning all interstate and international commerce with a particular state until it passed a state constitutional amendment disbanding the entire state government and transferring all of its prior powers over to the national Congress?  Is there any question how the framers would have viewed that proposed application of the commerce clause?

The majority opinion best comports with the original intents of the framers.  But the Court was not consistent in its application.  For example, in the case just mentioned, the Court held it to be unconstitutional for Congress to indirectly regulate child labor by prohibiting all interstate transportation of goods made with such labor, but in a prior case it said it was constitutional for Congress to use the same technique to indirectly regulate lotteries. ^[11]

Despite the strong dissenting opinion in Hammer v Dagenhart, the majority rule held for almost twenty more years.  The Court continued making distinctions between direct and indirect effects on interstate commerce and between production (considered local in nature and outside the federal commerce authority) and interstate commerce (considered national in nature thus falling within federal authority.)   What changed things radically was the advent of the Great Depression.

The Great Depression, Franklin Delano Roosevelt and the New Deal

Hamilton observed:

The Great Depression was such a time.  There was massive unemployment, an economy stuck in reverse, bank closings, foreclosures, etc.  There was great suffering among the people.  They cried out to be saved and Franklin D. Roosevelt said that he could deliver through the power of the federal government.  Once elected President, he recommended a lot of federal legislation to respond to the crisis and Congress, by and large, complied.  The only problem, from his perspective, was that the Supreme Court found constitutional problems with that legislation.

Consistent with the Hammer v. Dagenhart rationale, the Court held as unconstitutional the National Industrial Recovery Act seeking to establish codes of fair competition covering wages, hours, employment practices, working conditions, and methods of competition; ^[13] likewise struck down was the Bitumenous Coal Conservation Act which sought to stabilize the coal industry through regulations on prices, methods of competition, and labor relations; ^[14] etc.

In the latter case, the court said:

The Taxing And Spending Powers

Having hit nothing but dead ends with the Court, Congress tried another approach.  It tried to regulate the economy indirectly through taxation.  In the Agricultural Adjustment Act of 1933, it sought to shore up the price of farm produce by encouraging farmers not to grow as much as they used to.  To do this it provided cash subsidies to farmers to take land out of cultivation.  To provide the resources necessary to pay those subsidies, Congress taxed the processors of farm commodities.  Congress sought to justify its actions under both the Commerce clause and the taxing and spending power under the general welfare clause.  The test case was U. S. v. Butler. ^[16]

The commerce clause argument was rejected for the reasons stated above (i.e. Congress was trying to indirectly regulate local activities.)  However, the court did something strange regarding the second argument.  It said that the taxing and spending power was not limited to the exercise of the specific delegated powers listed in Article 1, Section 8 of the Constitution.  It held that the taxing and spending powers could be used to promote some notion of general welfare.  With that conclusion, one would expect that the law would be held to be constitutional but it wasn’t.  Why?  Because the Court said:

Perhaps the court took its cue from John Marshall who said in Gibbons v. Ogden:

Recall from the prior articles that Jefferson and Madison said that the “general welfare clause” was not intended to be an open-ended delegation of authority to the federal government, but rather, was limited to the specific powers listed in Article 1, Section 8.   Recall too that Madison argued the taxing and spending powers were likewise limited to those same specified powers in Federalist #41.  Well, all of these notions of limitation were repudiated by the Supreme Court before most of us were even born so we have no innate sense of impropriety about those repudiations.

Consistent with prior discussions about the Federalist Papers, once it is determined that the federal government has the delegated authority to act in a certain sphere, then the Congress is the branch that is supposed to exercise will regarding how best to use that authority.  The judiciary is not supposed to second-guess them and trump that legislative will.  Only when the legislature tries to exercise its will outside of its delegated authority, is the judiciary supposed to step in and declare legislative actions unconstitutional. 

The Court knew that federal powers were supposed to be limited, but was not quite sure how to accomplish that task after interpreting the general welfare clause and taxing and spending powers so liberally in favor of federal government power.  To use a common expression, once they let the genie out of the bottle, they couldn’t quite figure out how to stuff him back inside.

Once it ruled contrary to both of the original philosophies concerning the general welfare clause and the taxing and spending powers, then it should have been Congress’ call as to how to use those powers with the judiciary having no say in the matter.  In this regard, the Supreme Court in Gibbons v. Ogden said:

Regarding the Court’s interpretation of the commerce clause in Butler, I would not characterize what it did as judicial activism since it seems consistent with how the framers and adopters viewed the Constitution.  But what it did regarding the general welfare clause and the taxing and spending power, I would characterize as judicial activism.

Another means whereby the Supreme Court sought to limit legislative acts at both the state and federal levels was the creation of what later became known as “substantive due process.”  Originally, the notion of due process simply focused on the inherent fairness of judicial proceedings.  Starting in the 1890's with the Chicago, Burlignton & Quincy R.R. v. Chicago, ^[20] the Supreme Court started interpreting the due process clause of the 14^th Amendment as allowing it to pass on the inherent fairness of legislative processes.  This was discussed in the prior article.  This too, I would characterize as judicial activism, for the Supreme Court reserving to itself the power to inject its own will into the legislative processes, contradicts the intents of the framers.

Franklin Delano Roosevelt’s Response

President Roosevelt decided to play hardball.  In one of his famous “fireside chats,” he accused the U.S. Supreme Court of destroying the Constitution.  In the vernacular of his opposition, he proposed a plan to “pack the court.”  The Constitution does not prescribe the number of justices who are to sit on the Supreme Court -- Congress determines that.  The justices who kept voting against his legislation were seventy years old and older.  A law had already been passed to provide retiring federal judges with lifetime pensions.  The President proposed that for each sitting justice who was seventy years old or older and who would not voluntarily retire, the number of justices on the court would increase by one.  There were six justices who fit into this category.  Thus, if such a law was passed and none of those six decided to retire, then the membership of the court would rise from nine to fifteen.  Of course, the President would handpick nominees for those positions who would interpret the Constitution exactly the way he wanted which would effectively nullify the effectiveness of those older judges virtually ensuring that the Supreme Court would allow the President and the Congress to do whatever they pleased. 

Franklin D. Roosevelt’s constitutional philosophy was as follows:

He wanted justices who were equally expansionist in their constitutional philosophy regarding what authority had been delegated to the federal government.  Consider the following excerpts from his March 9, 1937 fireside chat:

When I read that the first time, I sat is stunned amazement.  It reminded me of a scene from Alice in Wonderland: “‘When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean – neither more nor less.”  Many of those statements ring true in the ears of those who believe in judicial restraint but upon closer analysis, were mere subterfuge for his own type of judicial activism.  His accusations of the Court legislating from the bench were true to some extent.  The irony is that the judges he will later install will do the very same thing, the only difference being that they will legislate in his favor rather than against him.

Apparently his proposal was perceived to be too bold of an attack on the Judiciary, for even his own party, which controlled Congress, refused to pass his proposal.  Nevertheless, apparently two justices buckled under the political pressure and changed sides effectively shifting the majority block in favor of the President’s view of constitutional analysis.  What used to be a 6:3 majority block which opposed him, turned into a powerless 4:5 minority block.  Deflated, the old judges started retiring and over his 3-plus terms as President, FDR had eight appointments to the Supreme Court.  It is no wonder that the predominate philosophy of the Supreme Court changed radically in favor of federal authority-expanding judicial activism in the latter part of the 1930's. ^[23]  

This judicial buckling reminds us of what Hamilton observed in Federalist #78:

In response to the change in philosophic outlook of the majority of the court, somebody made a joke out of the old saying “a stitch in time, saves nine.”  They changed it to read “a switch in time saved nine” to explain why the Supreme Court was still comprised of only nine members rather than fifteen.

But lest we be too critical, we must remember that the Great Depression was the darkest of days economically for our country.  Those were desperate times matched by desperate measures.  People were doing the best they knew how, including the President.

What Did FDR’s Reconstituted Court Do With The Commerce clause?

Through a series of cases starting in 1937 ^[25] , the reconstituted Court started chipping away at the former distinctions between direct & indirect and local production & interstate commerce.  In a dying gasp from the remnants of the former majority block (now turned powerless minority block,) they protested:

Finally in the 1942 case of Wickard v. Filburn, ^[27] all attempts by the Court to limit Congress’ authority under the commerce clause, came to a screeching halt.

Farmers were struggling during the depression because their cost of production exceeded the price at which they could sell their crops.  In order to save them, FDR and the Democrats passed another Agricultural Adjustment Act which addressed, from the supply side, the basic economic function of supply and demand.  It boldly regulated directly rather than indirectly through taxation and subsidy as was tried under the first Agricultural Adjustment Act. 

It prohibited farmers from growing more than a certain amount of grain in hopes of raising the overall price of grain around the country.  Filburn grew about eleven acres too much of a restricted grain and was charged with violating the Act.  He defended claiming that Congress had no delegated power to pass such a law.  Despite very recent Supreme Court case precedent to the contrary, this time the Supreme Court disagreed saying that Congress had the power under the commerce clause. 

Filburn next argued that even if the commerce clause potentially applied, there was no sufficient interstate commerce connection since he grew the crop primarily for personal consumption -- i.e. a merely local activity.  The Court responded that even if he consumed it all personally, if he had a need for it and didn’t produce it himself, he would have had to buy it and whatever grain he would have bought might have come from another state.  This, the court said, supplied a sufficient interstate commerce connection. 

Finally, Filburn argued that he was just a drop in the bucket.  After all, what is a measly eleven acres worth of grain to a huge country like America?   The court threw out this de minimis argument by basically saying, yes, you might be just a drop in the bucket but if every farmer acted like you the bucket would soon be full.

One has to wonder what the federal government cannot choose to regulate under that holding.  Couldn’t the federal government outlaw the growing of backyard gardens if it wanted to?  Forget the distant notion that the federal government has only limited delegated powers – now it basically has them all.  And how again did this all come about? – by the democratic amendment process?  No – by judicial activism making the Constitution into “a living document.”  And what do many people expect the Supreme Court to do shortly through the same illegitimate process? –  Force gay marriage onto all of America.

So to return to my original analogy, interpreting the commerce clause turned into a slippery slope for the Court.  While part of the way, the Court tried to limit federal powers under it, bowing to political pressures it eventually threw up its hands and let the slide continue all the way to the bottom resulting in a very powerful federal government and very weak states. 

In the last article, I discussed a case where four judges argued in a dissenting opinion that the 14^th Amendment incorporates the Bill of Rights and applies those handcuffs against the states in addition to the federal government.  Where did those four judges come from after almost eighty years of judicial experience with the 14^th Amendment and with only two out of thirty-three prior judges making the same argument?  Those four judges were all FDR appointments.  In later years, the Warren Court (Earl Warren) would further accelerate judicial activism in favor of expanding the role of the Supreme Court and Congress.  It has happened so often and over such a long period of time that people naturally assume – incorrectly – that it is all legitimate.

The Need To Retrace Our Steps After The Crisis Passed

Along with Hamilton, Jefferson too foresaw the probability for dangerous changes to our political structure in times of national crisis like the Great Depression.  In his first inaugural address, after summarizing what he called “the creed of our political faith” or “ the essential principles of our government,”  he warned: “and should we wander from them in moments of error or alarm, let us hasten to retrace our steps and to regain the road which alone leads to peace, liberty, and safety.” ^[28]

Unfortunately, once the economic storm passed, we did not return to the basic principle of a federal government with only limited delegated authority – it can do virtually whatever it wants by way of regulation.  Although many would say that the justices were only doing their job by  interpreting the Constitution, this is little more than verbal subterfuge – in reality they were changing it quite radically.   And when we allow that to be done, we are basically admitting that we really have no Constitution in any meaningful sense.  Recalling Jefferson’s words:

Lest you too are inclined to take an “ends justifies the means” approach and conclude that what the Court did in Wickard v. Filburn had to be done in order to save us from the Great Depression, consider the fact that several economists, like Nobel prize-winner Milton Friedman, argue that the interventions into the free market made by the federal government during the Great Depression actually made things worse economically, and artificially deepened and extended both its severity and length.

There have been a few recent cases giving us some hope that the Court may return to some sort of notion of limitation regarding the authority given to Congress under the commerce clause, but whether or not that will develop into a significant legal trend depends upon who retires from the Court and what the judicial philosophies of their replacements will be.  People should realize that one of the most important issues they face as voters in considering who they want for President, is what type of federal judges he or she will nominate to the bench.

Other Ways The Federal Government Has Gotten Stronger At The Expense Of The States

The 16^th Amendment

In order to help finance the cost of WWI, the 16^th Amendment was passed.   The 16th Amendment allows the federal government to tax "incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."  Before this time, when it came to direct taxes on people, Congress was limited to doing so on a per capita or head count basis.  It couldn't distinguish between rich people and poor people.  The tax was based upon the census data of the numbers of people in the respective states.

The passage of the 16^th Amendment in 1913 represents an interesting case study about political promises made (and of course, later broken) in order to get a particular law passed.  If the text of the law does not itself contain those promises of limitation, then such promises are inherently unreliable and mean nothing.  Concerning the 16^th Amendment, Charles Adams tells us:

This extremely quick escalation in the federal tax rates also illustrates the slippery slope idea.  Once Congress got a taste for taxing, it developed what seemed to be an almost unquenchable appetite.   From 1944-45, the highest marginal tax rate jumped all the way to 94%!  “Oh, did we say double digits?  We’re sorry--we mis-spoke.  What we really meant to say was ‘triple digits.’  We are so sorry about the misunderstanding.”

Without any effective limitation on the taxing and spending powers as argued by Madison in Federalist #41, and with the rules of tax imposition changed by the 16^th Amendment, Congress could quickly generate a pool of funds that could be dangled in front of the noses of the states in order to get them to do the federal bidding.  This is called "strings money."  If the states want the money –  which they almost always do – they have to jump through the federally mandated hoops and thus, effectively, the federal government calls the shots.  This was the mechanism used by the federal government to force the states to lower their speed limits to 55 mph through the 1980's and most of the 1990's.

By the way, as an interesting side note that I discovered in my research, I always wondered why the Constitution prohibited Congress from imposing export taxes.  This was done to appease the southerners in the Constitutional Convention who worried that Congress might try to indirectly destroy slavery through imposing taxes on the exports of produce and goods produced by slaves.  They worried that they might be taxed out of business. ^[31]    As it turns out, such anticipation was probably very insightful and reasonable on their parts for the Supreme Court later observed:

The foregoing destruction of the state banks through taxation was purposeful and not inadvertent. ^[33]   I had heard many times the phrase about the destructive power of taxation, but I never realized that we actually have some history where it was not just a theoretical possibility, but actually happened.

The 17^th Amendment

The 17th Amendment changed the way Senators were elected.  Professor Erik McKinley Erikson observed:

So originally Senators were elected by the various state legislatures and not by the popular vote of the people.  Thus, their constituencies were the states themselves -- that is who they represented.  If the House of Representatives and the President wanted to do things that would impinge upon states' rights, the Senators in the Senate could stop any such attempt in order to protect their political constituents – the states.

Even though I disagree with this change, I cannot complain that it came about improperly since it occurred through the proper mechanism – a Constitutional Amendment.

Creating Rights Out Of Thin Air

The last article talked about the selective incorporation doctrine applying most of the things in the Bill of Rights against the states.  It is one thing to incorporate things that actually appear in the Bill of Rights, it is completely another to create new “rights” out of thin air and apply them against the states.  The prime example of this was Roe v. Wade ^[35] where the Supreme Court outlawed state laws regulating abortion under a newly created right to privacy which is nowhere to be found in the Bill of Rights.   It did the same thing in establishing a right to homosexual conduct in Lawrence v. Texas ^[36] out of the Court’s secular musings about the “meaning of life” and the “mysteries of the universe.”   One can only wonder how far the Supreme Court can go when it decides to depart from the constitutional text, and from our American history and traditions.

Conclusion

As one can see from this and the prior articles, our Constitution has been changed quite radically under the guise of “interpretation.”  Very few people understand this history and consequently, perceive nothing to be wrong.  The purpose of these articles is to reacquaint Americans with a sense of our own constitutional history in order to help us properly evaluate what plays out before our eyes in the federal courts.

What is so profoundly troubling, is that because of our general ignorance of these things, the vast majority of Americans fail to discern the duplicity of those, who on the one hand, argue that the Constitution is too important to tinker with through democratic amendments, and then in the next breath, praise the Supreme Court for undemocratically changing it at their whim into what is euphemistically called “a living document” through “interpretation.”  That praise would only last as long as the Supreme Court was making changes of which those people approved.  One can bet that as soon as the Court made disagreeable changes, their love affair with judicial activism would quickly come to an end and they would return to the fundamentals discussed in these articles.

Our educators have let us down by letting America lapse into ignorance about our basic constitutional principles and history.  As George Orwell warned us, propaganda is as much a matter of what is left out, as of what is actually said.