Effects on Commerce
EFFECTS ON COMMERCE
"At the beginning Chief Justice [ john ] marshall described the federal commerce power with a breadth never yet exceeded." So said Justice robert h. jackson for a unanimous Supreme Court in wickard v. filburn (1946), in the course of an opinion recognizing the broad sweep of Congress's modern power to regulate the national economy under the commerce clause. Marshall's opinion in gibbons v. ogden (1824) read that clause's reference to commerce "among the several States" to mean "that commerce which concerns more States than one."
For the Constitution's first century, however, Congress did little to regulate interstate commerce. The first major national regulatory laws were the interstate commerce act of 1887, regulating railroads, and the sherman anti-trust act of 1890. It fell to another Supreme Court to define the scope of congressional power, and at first the Court's definition was narrow. In united states v. E. C. knight co. (1895) the Court interpreted the Sherman Act, which prohibited monopolizing "any part of the trade or commerce among the several States," to exclude from its coverage a monopoly of sugar refining. Manufacturing was not commerce, said the Court; that "commerce might be indirectly affected" by a manufacturing combination producing ninety-eight percent of the nation's refined sugar was insufficient to bring the combination under the act's terms.
"Direct" effects on commerce, however, were found in a series of Sherman Act cases culminating in swift & co. v. united states (1905). (See also stafford v. wallace.) Yet the Court persisted in its assertion that manufacturing was not commerce, even to the extent of holding in hammer v. dagenhart (1918) that a congressional regulation of the interstate transportation of goods made by child labor was invalid because its purpose was to regulate manufacturing.
Meanwhile, the Court was developing quite another view of congressional power to regulate railroads. In Houston, East and West Texas Railway Co. v. United States, the "Shreveport case" (1914), the Court upheld an Interstate Commerce Commission order requiring a railroad to equalize certain interstate and intrastate rates. Such railroads were "common instrumentalities" of interstate and local commerce; the ICC was regulating only the relation between local and interstate rates. Taken seriously, the shreveport doctrine implies congressional power to regulate intrastate activity because of its effect on interstate commerce.
After two decades of resisting the implications of the Shreveport case, the Court returned to its logic in National Labor Relations Board v. Jones & Laughlin Steel Corporation (1937), the most important judicial victory for franklin roosevelt'snew deal. There the Court upheld the wagner act's regulation of collective bargaining in application to a large steel manufacturer that obtained its raw materials in interstate commerce, manufactured steel in Pennsylvania, and shipped finished products to many other states. The opinion was written by Chief Justice charles evans hughes, who had written the Shreveport case's opinion. A strike by manufacturing employees, said Hughes, would "directly" obstruct interstate commerce. "It is the effect upon commerce, not the source of the injury, which is the criterion."
In every succeeding case, the Supreme Court has applied this "effects on commerce" rationale to sustain congressional power. wickard v. filburn was the culminating case of economic regulation, upholding congressional control of a small farmer's on-the-farm consumption of wheat, on the theory that Congress had a rational basis for believing that the aggregate of all such farmers' consumption would have "a substantial economic effect" on commerce. More recently the Court has employed similar reasoning to sustain congressional regulations aimed at distinctly noneconomic purposes. (See perez v. united states, extortion through "loan sharking"; heart of atlanta motel v. united states, racial segregation). Today, the "effects on commerce" rationale effectively allows Congress to be the judge of its own commerce clause powers.
Kenneth L. Karst
Stern, Robert L. 1946 The Commerce Clause and the National Economy, 1933–1946. Harvard Law Review 59:645–693, 883–947.