An email from T.L., my friend, asked, “Where is the Constitutional authority for the federal [government] to interfere and manipulate private commerce?” Like many other Americans, I was led to believe that from the beginning, the so-called “Commerce Clause” in the Constitution, granted Federal Government exclusive control of all commerce in the U.S. The referenced clause reads, “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;”
Rereading this clause, with my friend’s question in mind, and believing the Founding Fathers wrote what they meant and meant what they wrote, it is obvious that private enterprise is not mentioned. So, how did Federal Government go from having only the authority to regulate commerce with specifically named sovereign entities, to regulating private commerce?
As the expanse of steel rails multiplied across the nation in the latter half of the Nineteenth Century, so did the power of the companies that controlled the rails, as railroads became the primary carriers of freight. Larger railroads would drive their competitors out of business by lowering rates and when the competition was gone, they would raise prices well above previous levels. Railroad trusts were formed to fix artificially high rates, usually for short hauls, making it impossible for local businesses to compete with nationwide conglomerates. Only those businesses that “played ball” with the railroad moguls would receive timely, economical, rail transportation for their goods.
Public outcry resulted in States passing laws to stop the discriminatory and abusive practices of the railroads. Unhappy that state governments were regulating the heretofore, unregulated monopolies, Wabash, St. Louis, & Pacific Railway, sued Illinois. In 1886, the Supreme Court ruled that state laws regulating railroads violated the “Commerce Clause” of the U.S. Constitution, which they said gives Congress the “exclusive right to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”
In one decision, apparently based on something other than the Constitution itself, the power of Federal Government went from that of regulating commerce with other sovereign governments, to include exclusive regulation of private commerce. This decision also freed railroads from the restraints of state law and dealt state control of commerce a deathblow.
Perhaps, the railroad moguls celebrated their ability to influence the “Supremes” that freed them from state regulation, but the victory was short-lived. The post Civil War Congress was willing to exercise the power taken from the states and handed to them by the Supreme Court. The following year, Congress passed and President Grover Cleveland signed into law, The Interstate Commerce Act of 1887, which, with its revisions, gives Government the authority to regulate private commerce.
A Supreme Court decision that shielded wealthy railroad moguls from state regulation; a Congress that took advantage of an opportunity to expand their power; and a President that sided with the absconding of state authority and expansion of federal authority, all came together to disregard the Constitution.
Today, the “Robber Barons” that controlled and manipulated railroad transportation, to cripple and bankrupt many American small businesses are no longer a threat, but their legacy lives in a government that does the same with excessive regulations.