The Battle over State's Rights (Part I)

Separation of powers was one of main theories our Constitution was founded. Most of us are familiar with the separation of powers that provide checks and balances between the Legislative, Executive, and Judicial branches of our federal government. These concepts were not new, they were proposed by French philosopher Baron de Montesquieu in the early 1700s and adopted at the Constitutional Convention. The novel concept created by our founding fathers was a different type of separation of powers: federalism. Federalism is dual government formation between the Federal Government and State governments. There are two ways the Constitution structure supports federalism. First, Congress powers are enumerated and well defined and secondly, the Tenth Amendment grants the states and its citizens all other functions of government not enumerated in the Constitution. In the Federalist Papers James Madison points out the Federal Government has very few powers and the States have many. No question the federal government powers have expanded much more than our founders would have expected or wanted through the use of the Spending Clause, the Necessary and Proper Clause, the Commerce Clause, and the Supremacy Clause.

The assault against the States started early in our history when the Supreme Court used the Commerce Clause combined with the Necessary and Proper Clause to overturn precedent. In a two year period the Court overturned the Legal Tender cases just after the Civil War. Initially, the Court ruled that although Congress had the Power to Coin Money, they did not have the power to make Paper Money. That was overruled because it was deemed Necessary and Proper for Congress to issue paper money to fund the War effort. The Court also said in the Legal Tender cases that it is not enough to affirm a law is unconstitutional but it must be proven without a doubt it violates the constitution. In other words, legal decisions should favor the Federal solution over a State solution. The opinion further stated “convenient” measures are necessary and proper and the “degree of the necessity for any congressional enactment, or the relative degree of its appropriateness, if it have any appropriateness, is for consideration in Congress, not here.” Once again, the benefit of the doubt should be with Congress. In Champion v. Ames (the Lottery Case), the Court decided that the Federal Government could regulate lottery tickets giving them the power to not only regulate commerce, but to prohibit commerce. Justice Harlan in his majority opinion noted “But surely it will not be said to be a part of anyone’s liberty, as recognized by the supreme law of the land, that he shall be allowed to introduce into commerce among the States an element that will be confessedly injurious to the public morals.” In other words, it is okay to regulate something like gambling since in his view it is a bad habit.

In the early part of the nineteenth century, the Court denied Congress commerce regulatory power over anything that was economic in nature. The Court held a strong position that Commerce was trade and it did not include manufacturing, production, or economic laws. In Hammer v. Dagenhart, the Court held that Congress had no authority to regulate child labor laws (wages, hours, minimum age, etc.). In United States v. E.C. Knight Company the Court held that manufacturing was not part of commerce and denied Congress the authority under the Sherman Anti-Trust Act to break up the sugar trust (monopoly). In Schechter Poultry Corporation v. United States the Court held FDR’s “Poultry Code” in the National Industrial Recovery Act unconstitutional. Congress did not have the power to regulate everything economic in the Poultry business. In Adkins v. Children’s Hospital the Court held that a minimum wage law for women was unconstitutional. But things would change when in West Coast Hotel Company v. Parrish overturned the Adkins decision just a decade later. The Court established the “substantial effects doctrine” in the case NLRB v. Jones & Laughlin Steel. The Court held that the Steel Company was engaged in “unfair” labor practices. The Court justified its decision by claiming anything “affecting” commerce can be regulated. The Court also ruled in this case that intrastate activities could also be regulated if they have a “substantial effect” or relationship with interstate commerce.

United States v. Darby was an important case because it wiped out previous precedent set in Hammer v. Dagenhart and Carter v. Carter Coal Company decided just a year earlier. Previously, the coal industry was not considered commerce (it was a manufacturing business), but Darby said “manufacturing” was now commerce as well as other economic activities such as wages and hours. Justice Stone’s majority opinion disregards the Tenth Amendment as a “truism”. In other words, the Tenth Amendment has no meaning because it is widely understood that those powers not enumerated to Congress in the Constitution would fall to the states. Stone obviously had a very broad definition of commerce that was beyond its dictionary definition. The biggest blow to State rights was the Wickard v. Filburn case where the Court held that a man (Filburn) could not exceed his wheat crop quota outlined in the Agriculture Adjustment Act even if the excess was for personal use. The Court said (hypothetically) if everyone did what Filburn did, it would have a “substantial effect” on commerce. These cases gave Congress the power to regulate anything economic regardless if it was interstate or intrastate commerce: Congress merely had to deem the “activity” had a “substantial effect” on commerce. In United States v. South Eastern Underwriters the Court overturned Paul v. Virginia which now held that insurance was commerce that could be regulated by Congress.