Licenses to Trade

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LICENSES TO TRADE in colonial times regulated the "common callings," such as innkeeping, carrying goods and persons, or operating a bridge. By the nineteenth century the scope of licenses to trade extended to a wider variety of occupations and included professions such as medicine and architecture. The growing concern after the Civil War over regulating businesses led many states to rely on licenses to trade for such diverse industries as ice manufacture and the operation of grain elevators. As late as the early 1930s, the U.S. Supreme Court used the due process clause of the Constitution to bar much state regulation, including restrictive licenses to trade. However, it retreated in the 1930s, and by the 1970s state licensing affected wide areas of the economy without serious constitutional doubts.

The growth of huge corporations weakened the effectiveness of state licensing of trade, however, making federal licensing of trade increasingly important, particularly in areas such as banking, electric power, gas distribution, telecommunications, and various forms of inter-state transport. At the municipal level, licenses have tended to reflect local concerns with sanitation, orderly trade, and protecting local tradespeople from outside competition, rather than with generating revenue. In many states, local licensing of trade is frequently subject to state laws and increasing state supervision.


Frese, Joseph R., S. J. Judd, and Jacob Judd, eds. Business and Government. Tarrytown, N.Y.: Sleepy Hollow Press and Rockefeller Archive Center, 1985.

Goldin, Claudia, and Gary D. Libecap, eds. The Regulated Economy: A Historical Approach to Political Economy. Chicago: University of Chicago Press, 1994.

William TuckerDean


See alsoElevators, Grain ; Government Regulation of Business ; Public Utilities .