Stream of Commerce Doctrine
STREAM OF COMMERCE DOCTRINE
The Supreme Court introduced the "stream" or "current" metaphor in swift & co. v. united states (1905) to represent the movement of goods in interstate commerce. The doctrine is significant because it marks the Court's first recognition that commercial markets ignored state lines; the Justices departed from decades of constitutional interpretation in which economic reality had yielded to formal legal discrimination. The doctrine itself may be stated as follows: what appears, when out of context, to be intrastate commerce comes within the reach of the interstate commerce power if that commerce is but an incident related to an interstate continuum. Thus Congress can regulate the local aspects of commerce that are inseparably related to the current of interstate commerce, even though the flow has been temporarily interrupted by a kind of whirlpool or eddy while the product goes through some stage in the transformation of the raw material into the finished goods before being shipped again in the interstate stream to reach its final destination.
In Swift the government charged the nation's largest meat packers with conspiring to monopolize interstate commerce in violation of the sherman antitrust act. The packers asserted that their activities took place at the stockyards—solely within the boundaries of a single state—and thus involved only local or intrastate commerce. Justice oliver wendell holmes, for a unanimous Court, rejected the packers' contentions.
[C]ommerce among the states is not a technical legal conception, but a practical one drawn from the course of business. When cattle are sent for sale from a place in one state, with the expectation that they will end their transit, after purchase, in another, and when in effect they do so, with only the interruption necessary to find a purchaser at the stock yards, and when this is a typical, constantly recurring course, the current thus existing is a current of commerce among the states, and the purchase of cattle is a part and incident of such commerce.
The opinion struck hard at the rigid separation between production and commerce approved in united states v. e. c. knight & co. (1895). In recognizing that the United States no longer comprised a group of small, discrete markets, the Court began to confront the legal implications of the transportation and communications revolutions.
Although Holmes did not create the pithy metaphor, it stuck. In stafford v. wallace (1922) Chief Justice william howard taft declared that the stockyards were "a throat through which the current flows, and the transactions which occur therein are only incident to this current." The doctrine marked the "inevitable recognition of the great central fact" that such streams of commerce are interstate "in their very essence."
By the 1930s, as the circumstances that had given rise to the doctrine disappeared, the doctrine's pragmatism became increasingly well-accepted. Though the stream of commerce terminology made frequent appearances, the Court began to ignore the doctrine itself. In schechter poultry corp. v. united states (1935) and carter v. carter coal co. (1936) the Court refused to apply it. When a 5–4 Court sustained government regulation of interstate commerce in nlrb v. jones & laughlin steel corp. (1937), the Justices still chose not to base their opinion merely on the stream of commerce doctrine. Drawing upon both Stafford and houston, east & west texas railway co. v. united states (1914), Chief Justice charles evans hughes declared that only those intrastate activities that had "such a close and substantial relation" to interstate commerce would be subject to congressional control.
The Supreme Court continued to use Holmes's language into the 1940s, but the doctrine almost disappeared. Indeed, although the phrase "stream of commerce" has enjoyed renewed use in the 1970s and 1980s, the Court almost never invokes the doctrine. Instead, the Justices have echoed Holmes's rejection of technical legal inquiries.
Gordon, David 1984 Swift & Company v. United States: The Beef Trust and the Stream of Commerce Doctrine. American Journal of Legal History 28:244–279.