The Liberty Amendments: Restoring the American Republic (15 page)

Barnett wrote, “In Madison’s notes for the Constitutional Convention, the term ‘commerce’ appears thirty-four times in the speeches of the delegates. Eight of these are unambiguous references to commerce with foreign nations which can only consist of trade. In every other instance, the terms ‘trade’ or ‘exchange’ could be substituted for the term ‘commerce’ with the apparent meaning of the statement preserved. In no instance is the term ‘commerce’ clearly used to refer to ‘any gainful activity’ or anything broader than trade.”
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Barnett continued, “In none of the sixty-three appearances of the term ‘commerce’ in the
Federalist Papers
is it ever used to unambiguously refer to any activity beyond trade or exchange.”
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Furthermore, he wrote, “Having examined every use of the term ‘commerce’ that appears in the reports
of the state ratification conventions, I found that the term was uniformly used to refer to trade or exchange, rather than all gainful activity.”
⁷
In the end, writes Barnett, “if anyone in the Constitutional Convention or the state ratification conventions used the term ‘commerce’ to refer to something more comprehensive than ‘trade’ or ‘exchange,’ they either failed to make explicit that meaning or their comments were not recorded for posterity.”
⁸

In 2002, the late constitutional scholar Robert H. Bork and attorney Daniel E. Troy, also examining the Constitution’s Commerce Clause, explained:

Early American writings distinguish “commerce” from the class of subjects to which it is separate but connected in two ways: either by a direct discussion of what is excluded from commerce, or by implication. Alexander Hamilton’s writings in
The Federalist Papers
provide many of these definitions by implication. Hamilton often included “commerce” in a list of concepts which are similar in one way (activities critical to the success of the nation, for instance), but distinct enough to call for separate identification, as in “the state of commerce, of arts, of industry.” These early discussions of the nature of the Union suggest that “commerce” does not include manufacturing, agriculture, labor, or industry. In short, “commerce” does not seem to have been used during the founding era to refer to those acts that precede the act of trade. Interstate commerce seems to refer to interstate trade—that is, commerce is “intercourse for the purposes of trade in any and all its forms, including the transportation, purchase, sale, and exchange of commodities between the . . . citizens of different States.”
⁹

In fact, time and again the Framers made clear their intentions. In
Federalist
42, Madison stated, in part: “A very material object of this power was the relief of the States which import and export through other States from the improper contributions levied on them by the latter. Were these at liberty to regulate the trade between State and State, it must be foreseen that ways would be found out to load the articles of import and export, during the passage through their jurisdiction, with duties which would fall on the makers of the latter and the consumers of the former.”
¹⁰
In
Federalist
45, Madison wrote famously that “[t]he powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.”
¹¹

For the Framers, promoting and securing commerce and trade were not matters of theoretical and academic debate but national survival. They were addressing a dire problem that threatened the existence of the country following the Revolutionary War. The young nation was weak economically. The country barely survived war with one of the world’s superpowers, Great Britain. The individual states had often functioned like individual countries and were given to frequent squabbles. Now the fledgling nation found itself surrounded by European powers in Canada, Florida, and Louisiana. In an age of mercantilism, Europe sought advantages in trade by excluding American businesses and promoting their own.
¹²
The states themselves, although joined together in 1781 by the Articles of Confederation, sought to gain advantage over each other with tariffs and regulations.
¹³
States even printed their own currency, which added to the confusion.
¹⁴

It is difficult to see how America could have long survived under this type of system. Yet this was the state of American enterprise
in the early days of the republic. As Associate Justice Joseph Story observed:

It is hardly possible to exaggerate the oppressed and degraded state of domestic commerce, manufactures, and agriculture, at the time of the adoption of the Constitution. Our ships were almost driven from the ocean; our work-shops were nearly deserted; our mechanics were in a starving condition; and our agriculture was sunk to the lowest ebb. These were the natural results of the inability of the General Government to regulate commerce, so as to prevent the injurious monopolies and exclusions of foreign nations, and the conflicting, and often ruinous regulations of the different States.
¹⁵

Story’s commentaries on the Constitution are considered some of the most significant early works on the subject. It is important to note that Story, although writing in the 1800s, used the language typical of the time of the Constitution’s drafting and ratification.
¹⁶
Commerce, manufacturing, and agriculture were separate and distinct areas of economic activity, as is plain from, among other things, their multiple references in the
Federalist Papers
.
¹⁷
“Commerce” was not a catchall to describe all three. If commerce was not agriculture or manufacturing, then it would indicate that the Framers did not intend the federal government to regulate without severe and effective limits. The separation of the three concepts, in other words, indicates a significant and purposeful limitation to the commerce power.

Indeed, commerce was so important in the early days that it was a catalyst for the Constitutional Convention. In 1786, Virginia invited the other states to a meeting in Annapolis, Maryland,
to deal with commercial issues. That September, several delegates met but realized that commerce could not be separated from larger issues of governance. They called for another convention and returned to their states.
¹⁸
Congress agreed and, of course, in 1787 representatives convened in Philadelphia at what would later be known as the Constitutional Convention.

James Madison, among others, had been troubled by the many deficiencies in the Articles of Confederation, including their detrimental effect on commerce. In 1787, he wrote a critique of the Articles, listing their many “vices.” Within a section focusing on “Trespasses of the States on the rights of each other,” he identified how the individual states had been engaging in trade wars.

The practice of many States in restricting the commercial intercourse with other States, and putting their productions and manufactures on the same footing with those of foreign nations, though not contrary to the federal articles, is certainly adverse to the spirit of the Union, and tends to beget retaliating regulations, not less expensive & vexatious in themselves, than they are destructive of the general harmony.
¹⁹

States with navigable ports extracted taxes from adjoining states, whose merchants were exporting their goods to foreign markets. States taxed imported goods from other states and, in some instances, at rates even higher than foreign countries. In the preface to the debates, Madison laid the problem bare:

[T]he States having ports for foreign commerce, taxed & irritated the adjoining States, trading thro’ them, as N.Y. Pena. Virga. & S—Carolina. Some of the States, as Connecticut,
taxed imports as from Massts higher than imports even from G.B. of wch Massts. complained to Virga. and doubtless to other States. In sundry instances of as N.Y. N.J. Pa. & Maryd. the navigation laws treated the Citizens of other States as aliens.
²⁰

The
Federalist Papers
, designed to rally support behind state ratification, mentioned frequently the importance of a national commercial system without internal barriers. In
Federalist
11, “The Utility of the Union in Respect to Commercial Relations and a Navy,” Alexander Hamilton wrote:

An unrestrained intercourse between the States themselves will advance the trade of each by an interchange of their respective productions, not only for the supply of reciprocal wants at home, but for exportation to foreign markets. The veins of commerce in every part will be replenished, and will acquire additional motion and vigor from a free circulation of the commodities of every part.
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A common thread in the critiques of the Articles of Confederation and the arguments in support of the Constitution is that the Framers wanted to
promote
commerce. The Commerce Clause was the solution to a specific problem: the erection of trade barriers that threatened commerce and trade. The Framers did not say that the Articles of Confederation were deficient because Congress lacked the power to set wages for workers or limit how much wheat a farmer could grow. If anyone suggested such a thing in Philadelphia, he might have been tarred and feathered. At the very least, the Commerce Clause would never have survived state ratification.
Put another way, the Framers did not empower the federal government, in small ways and large, to control the economy for whatever good and promised ends federal officials might proclaim.

This understanding of the limited powers of the Commerce Clause was actually reflected in the decisions of the Supreme Court for most of our history—up to 1937. Although the Court struggled with various factual scenarios in applying the clause, and constructed different tests for that purpose, to its credit the Court mostly attempted to honor the text of the clause and the Framers’ intent.

In 1824, the Court first addressed the Commerce Clause in
Gibbons v. Ogden
. In that case, New York had granted exclusive navigation rights to its waterways to Robert R. Livingston and Robert Fulton for boats powered by “fire or steam.” Congress, however, had passed a law in 1793 regulating coastal trade. The Court, under Chief Justice John Marshall, considered whether the power to regulate commerce included the power to regulate navigation. While holding that it did, Marshall noted that Congress could regulate “navigation” because “[a]ll America . . . has uniformly understood, the word ‘commerce,’ to comprehend navigation. It was so understood, and must have been so understood, when the constitution was framed.”
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But the Court also noted that this power to regulate commerce “among the several states” did not extend to purely internal commerce.

Comprehensive as the word “among” is, it may very properly be restricted to that commerce which concerns more States than one. . . . The genius and character of the whole government seem to be, that its action is to be applied to all the external concerns of the nation, and to those internal concerns which affect the States generally; but not to those which
are completely within a particular State, which do not affect other States, and with which it is not necessary to interfere, for the purpose of executing some of the general powers of the government.
The completely internal commerce of a State, then, may be considered as reserved for the State itself.
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New York’s attempt to grant a monopoly over navigation rights was struck down. The limitations on the Commerce Clause acknowledged by
Gibbons v. Ogden
were generally followed by the Court for well over one hundred years.

Even during the earliest days of the New Deal, the Supreme Court acknowledged the limits the Commerce Clause placed on Congress and the president. Congress had passed a number of laws and established several new agencies that centralized within the federal government decision-making on a broad spectrum of economic matters having nothing to do with commerce among the several states. In 1934, Congress passed the Railroad Retirement Act, which established compulsory retirement plans for railroad workers. The Court invalidated it in 1935 because Congress had no constitutional authority to regulate a business relationship between employer and employee. The Court wrote, “We feel bound to hold that a pension plan thus imposed is in no proper sense a regulation of the activity of interstate transportation. It is an attempt for social ends to impose by sheer fiat non-contractual incidents upon the relation of employer and employee, not as a rule of regulation or commerce or transportation between the States, but as a means of assuring a particular class of employees against old age dependency.”
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Thereafter, the Court struck down sections of the National Industrial Recovery Act of 1933 in the
Schechter Poultry
or “sick chicken” case, holding that the Commerce Clause did not empower
Congress to enact a law setting wages and hours of poultry workers in Brooklyn, New York. The Court also found that the chickens never left the state, writing, in part: “So far as the poultry here in question is concerned, the flow in interstate commerce had ceased. The poultry had come to permanent rest within the state. It was held, used or sold by defendants in relation to any further transaction in interstate commerce and was not destined for transportation to other states.” The Court declared, “If the commerce clause were construed to reach all enterprises and transactions which could be said to have an indirect effect upon interstate commerce, the federal authority would embrace practically all the activities of the people.”
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In 1936, the Court ruled that another New Deal law, the Bituminous Coal Conservation Act, was unconstitutional. The act created a national coal commission, as well as coal districts, and fixed coal prices, wages, hours, and working conditions of miners throughout the country. The Court concluded: