Economic Liberties and the Constitution

• Author: Bernard H. Siegan
• Pages: 841-843

Page 841

Contrary to its existing practice, the United States Supreme Court was once a strong guarantor of economic liberties. This was the period (1897?1937) of "economic due process." The Fifth Amendment and FOURTEENTH AMENDMENT provide that neither the federal nor state governments shall deprive any person "of life, liberty, or PROPERTY, without DUE PROCESS OF LAW." The Court interpreted these prohibitions to mean that government could not, except in specified or extraordinary circumstances, prevent individuals or corporations from freely engaging in the production and distribution of goods and services.

However, since 1936 the Supreme Court has abandoned this interpretation; economic regulations now are subject to a very low level of review pursuant to which they are upheld whenever rationally related to the achievement of legitimate state purposes. Supporters of the more recent policy conclude that as a result, the Court has wisely steered a neutral role in the nation's economic affairs. Another interpretation of this policy, however, is that it has denied many people a fundamental liberty in a society dedicated to liberty?the opportunity to engage in economic activity. Our Constitution, it is argued, was not intended to be neutral in the conflict between liberty and authority, especially in the economic area.

There is little question that the Framers of the Constitution sought to limit greatly the commercial powers of the states. The tariffs and other economic barriers erected by the states against each other were a major source of discontent with the existing confederation. The regulatory abuses of the state legislatures are not so well detailed, but probably were no less responsible for such sentiments. According to ALEXANDER HAMILTON, writing in 1801, "creditors had been ruined or in a very extensive degree, much injured, confidence in pecuniary transactions had been destroyed, and the springs of industry have been proportionately relaxed" because of the failure of the states to safeguard commercial freedoms.

The deterioration of the economy that followed the revolutionary period led the states to what CHARLES EVANS HUGHES once described as "an ignoble array of legislative schemes for the defeat of creditors and invasion of contractual relations." Among other things, the states passed stay laws extending the due dates of notes and installment laws allowing debtors to pay their obligations in installments after they had fallen due. (See Debtors' Relief Legislation.)

JOHN MARSHALL, later Chief Justice, said in Virginia's ratification convention that economy and industry were essential to happiness, but the ARTICLES OF CONFEDERATION took away "the incitement to industry by rendering property insecure and...