Coal Price Regulation and the Constitution

• Author: William Draper Lewis
• DOI: 10.1177/000271622411100133
• Date: 01 January 1924
• Published date: 01 January 1924
• Subject Matter: Articles

Coal Price Regulation and the Constitution
By WILLIAM DRAPER LEWIS
Director of the American Law Institute
THE people believe they are paying a legal question. I leave its solution to
too
much for coal. There is, there-
those engaged in the industry, to the
fore, a growing demand for some relief,
economist, and to all those wise per-
though I believe the overwhelming
sons whom we call statesmen if we
sentiment of the community is at
admire them, politicians if we don’t.
present against public ownership of the
Whether Government can regulate
mines. There is, however, an insist-
prices is a legal constitutional question
ence that Government shall do more
of great and immediate practical im-
than investigate; that it shall act. The
portance. Under our American system
legal possibility and the economic
of making law a statute embodying a
desirability of price regulation have be-
new
economic policy almost always will
come
matters for serious consideration.
be challenged on the ground that it is
If we pay too much for coal it is due
unconstitutional. Putting aside, there-
either to inefficiency in production and
fore, all question of desirability: Would
distribution or to monopolistic condi-
Government regulation of the selling
tions or to both. If exorbitant prices
price of coal be constitutional?
are due principally to the inefficiencies
Legislation by Congress or by the
of the industry, Government price
state legislatures must conform to the
regulation by itself will not reduce
provisions of our Federal Constitution.
prices. The mine owners, the labor
The acts of state legislatures also
unions, the transportation companies
must conform to the requirements of
and the retailers may not be so black
their respective state constitutions.
as they are sometimes painted, but
Limitations of space confine the present
they are not engaged in philanthropic
discussion to the provisions of the
activities. They intend their expendi-
Federal Constitution. I shall also be
ture of money, brains and brawn to
obliged to place myself under one more
result in gain, not in loss. On the
limitation. I shall not discuss the line
other hand, if exorbitant prices are due
which should be drawn between the
to monopolistic conditions, then greater
powers of Federal and State Govern-
efficiency in the conduct of the indus-
ments. A
given sale of coal is either a
try may not at all reduce prices. What
transaction of interstate or of intra-
all this amounts to is that if we now
state commerce. It may be asserted
pay too much for coal, Government
that a given act of Congress regulating
regulation of the price will result in
the price of coal is a regulation of intra-
significant price reduction only if the
state commerce, and that under the
reason for exorbitant prices is the
Constitution the power to regulate
existence of essentially monopolistic
such commerce is reserved to the states.
conditions of coal production and dis-
On the other hand, a state statute may
tribution.
be attacked, not on the ground that a
state cannot regulate intra-state sales
WOULD GOVERNMENT REGULATION BE
of coal, but on the ground that the
CONSTITUTIONAL?
particular statute in question regulates
Whether Government should regu-
interstate sales and that in the ab-
late prices is an economic question, not
sence of the consent of Congress such
292

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COAL PRICE REGULATION AND THE CONSTITUTION
293
regulation by the state trespasses on
Supreme Court of the United States, it
the power of Congress.
will not be settled. If the Supreme
In discussing the constitutionality of
Court decides that regulation of coal
regulating the price of coal the vital
prices is forbidden by the due process
question is not as to the distribution of
clause, such regulation will be impossi-
the power among the Federal and State
ble unless a subsequent constitutional
Governments, but as to whether such
amendment authorizes it.
power exists in either.
The Fifth
Amendment to the Constitution
FUNCTIONS OF SUPREME COURT
was
adopted in 1791. It contains certain
To explain how the Supreme Court
limitations on the methods by which
will deal with this question should it
the Federal Government may exercise
be presented to them for final decision,
its power. The Fourteenth Amend-
it is necessary to point out the functions
ment was adopted after the Civil War
exercised by the Supreme Court in our
in 1868. It imposes limitations of a
Constitutional System.
similar character on the exercise by
The Constitution, as adopted in
the states of their reserved powers.
1789, created not merely a Federal
Both of these amendments declare
Government but a Federal State. It
that: &dquo;No person shall be
de-
vested certain
...
powers in the Federal
prived of his life, liberty or property
Government and also in effect reserved
without due process of law.&dquo;
to the states all other powers. From
The constitutionality of any law
time to time disputes arise as to the
regulating coal prices will be attacked
respective extent of these powers. The
on the ground that it deprives the
final determination of these disputes,
sellers of coal of their property without
if not left to negotiation and compro-
due process of law. Some states have
mise, must be vested in some body.
already enacted statutes creating an
Under the leadership of Chief Justice
agency for the regulation of the price
Marshall the Supreme Court of the
of coal for short periods to meet what
United States by disregarding an act of
is declared in the statute to be an
Congress or a state statute which they
existing emergency or when the execu-
believed contrary to the Constitution
tive authority of the state declares an
became the final arbiter of all questions
emergency to exist.
One of these
involving the respective powers under
statutes was enacted by the legislature
the Constitution of the State and
of Indiana (Chapter 44, Indiana Acts,
Federal Governments. No other body
1920, page 43). The United States
has a prospect of functioning so well.
District Court in Indiana refused to
To permit each state to determine the
grant a preliminary injunction against
extent of its own powers would reduce
any order being issued by ’the state
the national government to impotency;
commission, basing their opinion on
to permit Congress to be the sole judge
the ground that &dquo;the general power of
of its powers, as some suggest, would
the state to touch in some way the
leave the constitutional rights of the
coal-mining industry exists&dquo; (Ameri-
states at the mercy of a temporary
can Coal Mining Co. v. Special Coal
majority of a body moved by political
and Food Commission, 268 Fed. 563).
motives. Let the man who wants to
The case, however, does not hold that
tinker with the Constitution by requir-
the price of coal may always be regu-
ing less than a majority of the court
lated by law. Even if it did, until the
to declare an Act of Congress uncon-
question has been passed on by the
stitutional, or by vesting in Congress

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294
THE ANNALS OF THE AMERICAN ACADEMY
the power to determine the extent of
its
&dquo;WITHOUT DUE PROCESS OF LAW &dquo;
own
powers, face the facts: What
he
advocates would virtually destroy our
The provision that no person shall be
American system of national and state
deprived of life, liberty or property
Governments, each supreme within its
without due process of law is a tech-
own
sphere of action. For the preserva-
nical legal expression to be construed
tion of our Federal State created by the
in the light of its’growth in Constitu-
Constitution the Supreme Court must
tional history. Even as thus construed
be continued as the final arbiter of
it is perhaps capable of at least three
the limitations of Federal and state
widely different meanings. In the first
powers.
place, it may mean that an official of
The Supreme Court not only decides
the Government, to deprive a person
finally questions concerning. the respec-
of life, liberty or property, must show
tive powers of the Federal and State
that he is acting in accordance with the
Governments but it determines also
customary rules of law or in accordance
the relative spheres as defined in the
with the definite provisions of a statute.
Constitution of the three branches of
Under this interpretation, if the official
the Federal Government, legislative,
shows that his conduct is justified by
executive and judicial. Though the
the terms of a statute, no matter how
latter function is of far less importance,
arbitrary those terms may be, he has
it prevents any fundamental alteration
shown that he is acting in accordance
in the structure of the Federal Govern-
with due process of law.
ment not sanctioned by formal Con-
The second possible meaning of the
stitutional Amendment.
term is that in addition to the protec-
In declaring a Federal or state
tion afforded under the interpretation
statute unconstitutional because its
just mentioned, it is designed to protect
provisions deprive the persons affected
the individual from having his life,
of their life, liberty or property without
liberty or property taken from him by
due process of law, the Supreme Court
legal process (in the prosecution of
performs still another function,-the
criminal or civil cases against him)
protection of individual constitutional
which is justified by the provisions of a
rights. There are several clauses in the
statute, but is nevertheless arbitrary
Constitution as originally drafted and
and not in accordance with the customs...