Expansive Government in Commerce Clause History

By: Chris Gomez

The Commerce Clause was the product of ingenious foresight by our Founding Fathers to create an ability for the federal government to be the arbiter of interstate and foreign trade. As an enumerated power in Article 1, Congress was granted these powers. As our nation has developed, however, the judiciary has upheld varying interpretations of it. In this piece, we touch on some historical background of the Commerce Clause. In some matters, the judiciary has erred in its interpretations and as a result created an infringement on the rights of citizens.

To begin, we reflect on the seminal case of Gibbons v. Ogden (1824), where the Supreme Court ruled that a New York monopoly over permits for a ferry business between states was unconstitutional. An individual obtained a federal permit to run his ferries between the ports of New Jersey and New York which ran against a New York law granting a monopoly over these routes to a select group of businessmen. The Supreme Court interpreted this as a violation of the powers granted to Congress under the Commerce Clause and ruled New York was not entitled to a monopoly in this area. The power to regulate navigation within interstate commerce was in the domain of Congress as enumerated by the Commerce Clause. This interpretation of the Commerce Clause was harmonious with Constitutional principles. It correctly reflected a proper use of the federal government’s power to regulate in this area.

Moving forward to the 1930s and 1940s we reflect on two major cases during President Franklin D. Roosevelt’s New Deal era. First, is the case of NLRB v. Jones and Laughlin Steel Corp (1937), Roosevelt’s newly established National Labor Relations Board (NLRB) filed suit against the Jones and Laughlin Steel Corporation for its firing of striking workers. The government’s position was inspired by pro-worker sentiment. With the advent of the New Deal, FDR’s administration had supported union workers and sought to return the economy to full employment. The Court decided that the government agency, the National Labor Relations Board, had a valid duty to punish businesses that violated the rights of unions to organize. In the majority opinion, Chief Justice Charles Evans Hughes wrote that the dispute between management and labor would have reverberating effects on the national economy, thus permitting it to be regulated under the power of the Commerce Clause.

Hughes further wrote and did acknowledge, however, that situations that have a limited effect on interstate commerce and are so remote and local in nature may have difficulty being subject to Congressional regulation in this area. This standard, however, without strict boundaries raised the possibility of being abused with the potential ability of the government actor to call the proverbial “balls and strikes” on companies’ policies that it deems has influence on interstate commerce. This decision helped construct the framework of excessive government regulation into the sector of private business.

Let us compare this expansive reading of the Commerce Clause to Gibbons v. Ogden. In Gibbons, a state sought to usurp an enumerated power and this was negated by the Supreme Court within the principles of Constitutionalism. NLRB was a dramatic step away from the Gibbons interpretation, whereas the Court was now ruling on a hypothetical effect on the national economy to expand the powers of the federal government. The outcome of NLRB, appeared to pacify political aims and validate rights of unionization through court order rather than legislative channels.

In 1942, the Supreme Court further assessed the flexibility of the Commerce Clause in the case, Wickard v. Fillburn. In this case, the Court followed its earlier interpretation in NLRB to stop Mr. Fillburn, a local farmer, from producing more wheat than was allowed under government production limits to feed his own family. The government had attempted to raise crop prices by instituting production limits per acre of land through the Agricultural Adjustment Act of 1938 hoping that reduced supply would raise prices and solve the plight of farmers. Fillburn had gathered about 12 extra acres worth of wheat above the limit set by the AAA. His argument was that since the wheat was meant entirely for his own use and never hit market there was no problem relating to interstate commerce.

Per the standard articulated by Hughes in NLRB, this would fall firmly into the category of local matters which have no need to be regulated. The Court, however, expanded from Hughes’s interpretation to a more invasive interpretation arguing that the effect on commerce is substantial because without this extra wheat Fillburn would have purchased on the market and thus effected price. The Court cited a “substantial economic effect” (the proposed movement of wheat prices upon Fillburn’s purchase) as sufficient grounds to rule against this farmer and allow for regulation under the Commerce Clause of all activities “substantive and economic”.

In sum, besides the flawed economic theory that is attributed as a justification for this opinion it is invasive for the government to infringe on the personal rights of its citizens in such a way. It was a soft form of the failed central planning model that has been prevalent in Communist nations. Wickard is often considered a controversial decision and diverged from the Court’s interpretation of the Commerce Clause in Gibbons and NLRB.

The powers of the federal government have been expanded through Supreme Court interpretation of the Constitution since the beginning of the Republic, but the New Deal cases concerning the Commerce Clause were among the most aggressive actions undertaken by the Supreme Court to exceed its regulatory boundaries. Instead of standing as a barrier between excessive state regulation as seen in Gibbons, the New Deal cases relied on government to excessively interfere with the economic affairs of its people. These interpretations were inherently overzealous and did not lend themselves to the ideals of a market economy within the boundaries of the Constitution. These cases should stand as a bellwether to warn the populace of the dangers of an overzealous government in our everyday lives especially in the present lingering COVID-19 economic cloud. An interpretation of the Constitution that respects the principles of federalism and the limits of the branches of government is essential to retaining the civil liberties we enjoy in this nation, and as a safeguard against tyrannical government action.

Works Cited