Constitution, Economic Benefits of the (Issue)
CONSTITUTION, ECONOMIC BENEFITS OF THE (ISSUE)
The basis of the discussion in the constitutional convention during the summer of 1787 was the economic rights and the political liberties of the American people. In other words, the Constitution was an attempt to define the terms and the relationship of freedom and property. This generation saw no contradiction between the two. In 1775 Arthur Lee of Virginia summed up this reciprocal relationship of economic rights and personal freedom, stating that "[t]he right of property is the guardian of every other right, and to deprive a people of this, is in fact to deprive them of their liberty." This, undoubtedly, was the perspective of people who owned some property. The slaves in the South might be forgiven for disputing this equation. For them, after all, the property interest of the slave-holder negated their own liberty.
Following the American Revolution (1775–1783) in the mid-1780s, during the period of the Articles of Confederation (1777–1788), the states assumed the burden of government. The central government was little more than a loose and impotent alliance between the states. The Articles of Confederation reserved to the states the power to tax and regulate commerce among the states. But the states could do little to fix the underlying economic problems of the 1780s, which included trade and tax disputes among the states, an influx of cheap British goods that threatened to devastate an infant manufacturing capacity, and a lack of common currency.
These problems, as well as the threat of popular uprisings of bankrupt farmers (like Shay's Rebellion in western Massachusetts in 1787) who faced bankruptcy during the post-war depression in the mid-1780s. The Constitutional Convention, held from May to September 1787, initially set out to revise the Articles of Confederation. Soon it became clear that most of the delegates favored a complete revamping of the document. Thus was born the U.S. Constitution, which was not ratified by all states until 1788. The new government began operation in 1789.
The Constitution spoke directly to economic issues. Article 1, section 8 stated that "Congress shall have Power To Lay and collect Taxes, Duties, Imposts, and Excises"; and further gave Congress the power "[t]o regulate Commerce with foreign Nations, and among the several States." These two clauses outline a new rationale for federal power. The authors of the Constitution looked on central government to troubleshoot and regulate economic life, rather than fearing that the federal government might dominate economic and political life. The same section goes on to give the central government the power to standardize the rules of bankruptcy and to invest the federal government with the powers to coin and borrow money, to declare war, and to provide for armies and navies.
Article 1, section 10 prohibits the states from passing any law "impairing the obligation of contracts" or imposing its own imposts or duties on
imports or exports. Moreover, to ensure that southern states ratified the Constitution, the constitutional convention approved protection for slave owners. The Constitution clearly regards slaves as "chattel," or property. The three key clauses addressing slavery are article 1, section 2—the three-fifths clause dealing with representation; article 1, section 9—the international slave trade clause, which stopped the international slave trade in 1808; and article 4, section 2—the fugitive slave clause, which provided a federal guarantee of the return of runaway slaves.
Much of the legal history of the United States is the history of state and federal laws enacted to encourage and regulate economic development. Over the years new legislation—new trade regulations, for example, and the rise of tort (wrongful act) law in the nineteenth century—illustrate the way that the Constitution supports and shapes the economy. This relationship is apparent in the numerous Supreme Court decisions made during the terms of two Chief Justices, John Marshall (1803—1835) and Roger B. Taney (1836— 1864). During the Marshall years, the Supreme Court held the states to their contractual promises, in Fletcher v. Peck (1810), and the Court ruled that the contract clause of the Constitution protected private corporations from state interference, in Dartmouth College v. Woodward (1819). Marshall also upheld the validity of state bankruptcy statutes in the absence of federal regulations in the 1819 case of Sturges v. Crowninshield.
Perhaps no case better exemplifies the close relation between the law, the Constitution, and the economy than the 1824 steamboat case of Gibbons v. Ogden. In this decision, Marshall's Supreme Court held that the commerce clause of the Constitution provided Congress, not the states, with the power to establish regulations for commerce among the states. In effect, Gibbons established a national free-trade zone throughout the United States, allowing merchants to ship goods into and through various states without obstruction from the states. States could still regulate intrastate commerce (commerce wholly within their borders), but trade of this nature disappeared as the national market economy expanded over the course of the nineteenth century.
Chief Justice Taney's 1837 decision in Charles River Bridge v. Warren Bridge provides another example of the relationship between constitutional law and the economy. In this decision Taney struck down a restrictive understanding of property rights and upheld a more risk-oriented view of property rights. Taney established a legal environment that allowed for the release of entrepreneurial energies—an environment that mirrored the risk-taking values of his era. Both Charles River Bridge and Gibbons illustrate the way that constitutional law has fostered an energetic U.S. economy.
The era of the American Civil War (1861–1865) brought changes to the Constitution, shifted power away from the states and toward the federal government. In Dred Scott v. Sandford (1857) Chief Justice Taney was finally faced with having to choose between property rights and individual human liberty. He came down on the side of protecting the property rights of the slaveholder by denying the humanity of the slave, Dred Scott. In doing this, he also sought to "federalize" the question and to abolish whatever discrepancy might exist between the various states' interpretation of the law. This decision was swept away by the Civil War and the Thirteenth and Fourteenth Amendments explicitly affirm both the humanity of the ex-slave and the civil rights of all citizens, including the ex-slaves. One common theme that these judgments share with Tawney's ruling on Dred Scott is that they "nationalize" the legal condition of black people. No longer could the civil rights of black people be a function of whatever state they might live in. These post–Civil War pronouncements guarantee full civil rights to all citizens.
That industrialism took deep root in American culture is due in large part to the judicial deference to property and a willingness of Congress, the federal courts, and the states to promote corporate expansion. With the Great Depression of the late 1920s and 1930s Congress and the courts employed the language of the Fourteenth Amendment to support the rise of the social welfare state. This new approach, beginning with the New Deal's numerous regulatory boards and administrative laws, has lasted to the current day. Using the reach of the commerce clause, Congress and the administrative agencies regulate almost every aspect of the U.S. economy, theorizing that a national economy demands national regulations. Conservative states' rights advocates may not like it, but, for most Americans, the interconnected character of modern American society leads them to expect the government to assist in the development of the economy. In a reciprocal relationship, the Constitution benefits the economy and the economy is bolstered by the constitutional system.
Benson, Paul R., Jr. The Supreme Court and the Commerce Clause, 1937–1970. New York: Dunellen, 1970.
Ely, James W., Jr. The Guardian of Every Other Right: A Constitutional History of Property Rights. New York: Oxford University Press, 1998.
Kelly, Alfred H., Winfred A. Harbison, and Herman Belz, The American Constitution: Its Origins and Development, 7th ed. New York: W.W. Norton & Co., 1991.
Kutler, Stanley I. Privilege and Creative Destruction: The Charles River Bridge Case. Baltimore: The Johns Hopkins University Press, 1990.
Sunstein, Cass R. After the Rights Revolution: Reconceiving the Regulatory State. Cambridge: Harvard University Press, 1990.
the constitution spoke directly to economic issues. article 1, section 8 stated that "congress shall have power to lay and collect taxes, duties, imposts, and excises"; and further gave congress the power "[t]o regulate commerce with foreign nations, and among the several states."