Economy

• Author: Donald J. Pisani
• Pages: 850-853

Page 850

The United States Constitution is much more than the formal document ratified in 1789. It is the preeminent symbol of the American preference for continuity over radical change, a collection of myths that provides a common faith, and a complicated dialogue between written and unwritten rules of law. As such it reflects and embodies many of the conflicting values at the core of American culture. The law itself, as an extended commentary on the Constitution, has perpetuated many of those conflicts by seeking to balance essentially irreconcilable objectives. It has always attempted, with mixed success, to reconcile elitism and democracy, individual opportunity and community, enterprise and equity, growth and stability, competition and cooperation, and freedom and responsibility. Moreover, it has both liberated and encouraged economic growth even as it has tried to make economic institutions responsible and accountable.

The Constitution's Framers could not anticipate the dramatic changes that occurred in the United States during the first half of the nineteenth century. After all, they drafted the document to serve an economy in which most farmers practiced subsistence agriculture and in which factories were rare, transportation limited, banking and credit primitive, and business transactions simple and direct. Nevertheless, the Constitution provided a congenial legal environment during the first phase of industrialization. The rapid expansion of the nation in size and population was an inherently decentralizing force, as the Supreme Court recognized when it began to interpret the COMMERCE CLAUSE and the CONTRACT CLAUSE. The Court might have defined constitutional power over the economy in several ways. For example, in explaining the meaning of the commerce clause, it might have prohibited the states from enacting any statutes regarding interstate trade. It might also have ruled that state laws could coexist with federal laws in the absence of direct conflict between the two or that the states could legislate only until Congress decided to address the same subject. But in an age when the fear of centralized power was all-pervasive, particularly in the South, the Court's decisions were inevitably compromises. Although the Court prohibited states from taxing the federal government, blocked them from limiting or excusing debts, denied their right to violate corporate charters, banned them from directly interfering with INTERSTATE COMMERCE, confirmed the sanctity of contracts between individuals in two or more states, and granted CORPORATIONS perpetual existence?all important prerequisites to the establishment of national markets?it left the states plenty of responsibilities. They could charter, license, and regulate businesses, and they could regulate working conditions. And because the Constitution provided for a government of ENUMERATED POWERS, leaving a broad economic arena to the states under the TENTH AMENDMENT, the relationship between federal and state law hinged on the assumption that state statutes were constitutional unless prohibited by the Constitution or preempted by Congress.

In short, even JOHN MARSHALL'S most nationalistic decisions reinforced the idea of separate realms of power with separate responsibilities. The Supreme Court's commentary on economic powers did not end with its early decisions regarding the commerce and the contract clauses. Following the depression of 1837, the Court formally recognized a general federal commercial law and a national credit system protected by "impartial" federal courts. That business law provided national rules for the marketplace, but did not entirely displace state rules. Hence, corporations could "forum shop" for the laws, state or federal, best suited to their needs. Then, at the end of the century, the I. M. Singer Company and the Big Four meat-packing firms persuaded the Court to strike down state licensing and tax laws designed to exclude the products of out-of-state corporations. By doing so, the Court may have played an even more important part in creating a continental market than did the railroads.

During the nineteenth...