American Constitutional History and the Supreme Court

Let us take stock of the Constitutional situation in America at the end of the Civil War in 1865. The din of the debate over the juxtaposition of national against state governments had waned into relative quietude, which set the stage for long overdue economic issues to become the Court's top priority. Additionally, the recent "emancipation" of blacks meant that their place in American society (and economy), and even their rights and privileges as Americans needed to be determined. And finally, the respect and authority the Court had gained from Marshall's time until the Civil War made it a potent "panel of officials" to preside over the issues of the Union. But who were these Justices? They were white, and represented the upper crust of even white society. By the time the Supreme Court heard the Slaughterhouse cases in 1873, the Court had in hand the self-interest of the class it represented, the logic and great promise of classical economic theory, and the ability to address economics at all, due to its own place in the power structure and to the Civil War's quieting of much of the nation-state debate. During the period from 1873 to 1930, the evolution of American constitutional jurisprudence can be seen as the unfolding of a newly defined economic system and of the methods by which this system would be regulated, and of the role of African Americans in the society and economy.

Some of the seeds of the Court's newfound interest in economic regulation have already been mentioned, but a more complete discussion is in order. Since the Court was upper class and white, McCloskey's conclusion (in his landmark text, The American Supreme Court) is that the judges would tend to take the side of the anti-regulatory businessman. The good capitalist, who is thus a predictable bedfellow of the Supreme Court justice, is interested in efficient accumulation, which was not compatible with the regulations of the day. It is worthwhile to note that the principle economic issue of the day concerned degrees of regulation. Marx, on one end of the spectrum, had no faith in the market to produce outcomes that were either desirable or fair and was an avid proponent of extreme regulation. In fact, he predicted that capitalist, free-market economies would eventually crumble. On the other end, Smith and Ricardo argued that laissez faire policies were the only way to allow for efficient markets. So, as the Court pondered degrees of regulation, what they were in fact deliberating was the very nature of the economy of the United States.

The second ingredient to the Court's interest in the economic regulation question was the issue of the Constitutionality of laissez faire economics. The tandem of the Honorable John A. Campbell and the passing of the Fourteenth Amendment are credited for introducing exactly this link during the plaintiff's arguments in Slaughterhouse. Campbell argued that the Fourteenth Amendment brought an individual's economic rights under the umbrella of national jurisdiction, rather than being left out in the downpour of state regulation. The Court ruled against his claim, but the seeds were now firmly planted and the roots beginning to grow. This is in line with the Court's long tradition of gradual change, which serves three purposes: adaptation, maintenance of the integrity and consistency of the Constitution, and keeping control completely within the Court's hands. From then until roughly 1880, a number of cases were decided concerning economic regulation. Generally speaking, the rulings were pro-regulatory if the commerce in question was either clearly intrastate or clearly interstate, and anti-regulatory where it was not clear. But in 1877, Munn v. Illinois opened the door for the Court to address regulation directly. Again, though the Court rendered an opinion that upheld the specific regulation, explicit was the notion that a regulation could be deemed so arbitrary as to be disposed of. By 1895, the Court was able to assume the role of determining the reasonableness of rates in Smyth v. Ames. Here, the hardest part of the work had been completed. The chief reasons for the turnaround from 1873-1895 were as follows: over twenty years had passed, and many subtle precedents were being set for future use; jurists at large had become able, as a result, to justify laissez faire Constitutional doctrines; and the growing problem of regulation had finally become a thorn in enough Americans' sides that it became high time to begin the real work of undoing it.

As the Supreme Court entered the 20th century, its prejudices towards capitalism, and thus in favor of wealth, were given more room for influence; but the Court, with its usual restraint, did not indulge itself very lavishly. One prominent example, however, of the Court's intentions is in the striking down of an 1894 national tax that effectively would have begun redistributing wealth to the benefit of the poor. But this case does not exemplify the majority of the tax cases of the day. After all, regulation was the issue at hand, and taxes were the main tool by which state governments could regulate. Eventually, regulatory tax cases began to have some commonality: if the Court deemed that the purpose of a tax, on its face, was not for the raising of revenue, but for the regulation of an industry, then they could elect to strike it down. Of course, the Court retained ultimate control in the interpretation of this guideline, in part by handing down such seemingly contradictory decisions as McCray v. United States (1904) and the Child Labor Tax case (1922). In the former, the Court upheld a tax intended to discourage the production of oleomargarine (margarine colored to look like butter), and in the latter, the Court struck down a tax on products known to be made by child labor. The Court had developed the tool of subjectivism to a new degree of sophistication, so that in the end, it was simply up to the discretion of the Court (and not to a more objective formula) whether a regulatory tax could stand. In the meantime, however, there was increasing sentiment that not all regulation is bad. In fact, in many cases where a limited market economy might fail, regulation is actually useful to the public good. Hence, in the decade of the 1920s, the number of pro-regulatory decisions handed down doubled as compared with the ten years prior, and a more moderate view of regulation was taken. On the whole, the trend of Constitutional jurisprudence during this time showed a gradual loosening of the shackles of regulation, and eventual refinement of this methodology; and while it kept in line with the tradition of the Court since Marshall, it also upholds the idea that the Court was interpreting the rules of this new game, laissez faire economics, as they relate to the established rules of the nation.

This same period did not yield nearly as many groundbreaking decisions concerning race relations, but an examination of this fact, when taken with the decisions that were handed down, produces interesting results. Prior to the Civil War, in the 1850s, race and slavery issues were prominent to Constitutional jurists. However, when the War was over and the dust had settled, the economic questions had risen to the top. Slave labor, particularly in the South, was extremely profitable. There was little compensation for workers, and they were very productive. People who held large numbers of slaves tended to be plantation owners, and emancipation certainly looked disdainful, at least because of its wage implications. It has already been shown that the Court had a pro-wealth accumulation bias, and this bias lived itself out in the subordination of civil rights issues to capitalist ones. After all, if black workers were competitive, then to allow equal rights would certainly mean that many white workers' standing could be compromised in a "free" market. In fact, it would be a priority to keep the slave race uneducated, disenfranchised, and generally disadvantaged until racism against "equal" citizens could become as institutionalized as the economic system itself. The major race-relations cases of this period included Plessy v. Ferguson, Buchanan v. Warley, Roberts v. City of Boston, Butts, and South Covington. In 1896, the Court ruled that states could enforce segregatory policies, so long as provisions were substantially equal, with this last term being very liberally defined. So, in Plessy, there is a clear indication that the white ruling class could determine the facilities, schooling, and even health of the black communities. In a seemingly opposite spirit, the Court struck down a powerful Jim Crow law regarding residential segregation policies in their Buchanan decision. But this decision must be taken in the context of others. It was not necessary to the maintenance of white dominance to segregate neighborhoods because, as it was clear in the Roberts decision, localities could still segregate in all economically meaningful ways such as schooling. In addition, the same court decided in Butts and South Covington in favor of Jim Crow. As Benno Schmidt put it, the effect of Buchanan was to modestly limit Jim Crow, rather than to destroy it. Thus the letter of the Jim Crow law was altered but its spirit, which was to oppress blacks, remained quite intact. From these things, it is clear that the Court, while very slowly working towards equal rights of citizenship, was in no hurry to undo what four hundred years of slavery had done.

So it seems that issues of economic regulation and race relations were strangely intertwined; as McCloskey put it: the Court would, indeed, be in a bind if it had chosen to defend both the businessman and the African American. But at heart, the Court from 1873 to 1930 did not want to defend all aspiring capitalists, but in particular, the white ones. It seems that the Court did not take seriously the rules of laissez faire economics: there ought not be any interference for or against any party, unless it is absolutely necessary. After all, the Court upheld many such interferences by State governments in the economic and social liberty of the African American, even as it was striking down many interferences for white businessmen. This, combined with the Court's history of goal-seeking, creates a strong argument in favor of the notion that even prima facie "economic" decisions had strong implications for the institutional inequality of the races.



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