By Katherine Hobson When it comes to
business, said Supreme Court Justice Louis Brandeis,
Americans hate monopoly and love bigness. Brandeis,
who thought both were bad for consumers, made his
observation in the early 1900s. But his words hold
true today: We buy our books at Barnes & Noble,
our burgers at McDonald's, and just about
everything at Wal-Mart because we like the low
prices. Yet we applaud the government for getting
tough when Microsoft makes it hard to buy anyone
else's software.
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The power to intervene in
the market didn't spring fully formed from the
Constitution, which allows Congress to regulate
commerce not only with other nations but also
"among the several states." That power,
argued Alexander Hamilton, was essential to
producing a "unity of commercial . . .
interests" and to avoiding "a fruitful
source of contention" in the form of
separate--and squabbling--tariffs and other trade
policies.
It's hard to imagine that the
Congress we know and love would ever fail to use
such a power; after all, by 1990, it was trying to
justify a federal law barring guns within a local
school zone by claiming a connection between
education and interstate commerce. (The Supreme
Court didn't buy it.) But for many years after
the adoption of the Constitution, the so-called
commerce clause was invoked only to prevent
interstate trade wars.
That is, until the
Supreme Court opened the door a little wider. In
1824, the Court decided Gibbons v. Ogden, a spat
between two steamboat operators that became a
landmark case. Under license from steamboat inventor
Robert Fulton and his patron Robert Livingston,
Aaron Ogden had the exclusive rights, granted by the
State of New York, to operate his boat between New
Jersey and New York. Thomas Gibbons, a competitor
who held a federal boating license, wanted to run
his steamers along the same route. The court
concluded that New York's law improperly butted
up against Congress's right to oversee
interstate commerce. And it made clear, in the words
of Chief Justice John Marshall, that while Congress
couldn't regulate the "completely
internal" commerce of a state, it did have the
authority to oversee "that commerce which
concerns more states than one."
The
price of milk. The decision kicked off a debate
that continues today: Is commerce defined only as
trade? Or does it include manufacturing? And what
about labor? Over the years, numerous Supreme Court
decisions have turned on such questions. Meanwhile,
the government has successfully used the commerce
clause to regulate everything from civil rights to
the price of milk.
Although the court pointed
the way, Congress did little to regulate business
until after the Civil War. During Reconstruction, as
the agrarian economy developed into an industrial
one, the public grew increasingly concerned about
the size and power of the railroad industry. Small
farmers were outraged at the rates the railroads
charged, which were higher for short-haul routes
than for long ones and exceedingly low for the
largest companies.
In an 1881 article in the
Atlantic Monthly, social critic Henry Demarest
Lloyd said that "for ten cents [railroad
tycoon] Mr. [Cornelius] Vanderbilt hauled for the
Standard [Oil Co.] a barrel weighing 390 pounds over
400 miles, and hauled back the empty cars, at the
same time that he charged forty-five cents for
hauling a can of milk weighing ninety pounds for
sixty miles." Lloyd didn't mince words.
Such practices, he proclaimed, meant "the
forces of capital and industry have outgrown the
forces of our government."
