U.S. Supreme Court Upholds Federal Powers to Regulate Commerce Summary

  • Last updated on November 10, 2022

The U.S. Supreme Court, through its broad interpretation of the commerce clause in the case of Champion v. Ames, sustained federal powers to prohibit and regulate commerce.

Summary of Event

In 1903, the U.S. Supreme Court upheld the federal government’s potential to prohibit or restrict commerce. The case of Champion v. Ames, also known as the Lottery Case, altered the delineation between interstate and intrastate commerce under Article I, section 8, clause 3, of the U.S. Constitution, the so-called commerce clause. Commerce clause (U.S. Constitution) Supreme Court, U.S.;regulation of commerce Champion v. Ames (1903) [kw]U.S. Supreme Court Upholds Federal Powers to Regulate Commerce (Feb. 23, 1903) [kw]Supreme Court Upholds Federal Powers to Regulate Commerce, U.S. (Feb. 23, 1903) [kw]Court Upholds Federal Powers to Regulate Commerce, U.S. Supreme (Feb. 23, 1903) [kw]Federal Powers to Regulate Commerce, U.S. Supreme Court Upholds (Feb. 23, 1903) [kw]Commerce, U.S. Supreme Court Upholds Federal Powers to Regulate (Feb. 23, 1903) Supreme Court, U.S.;regulation of commerce Champion v. Ames (1903) [g]United States;Feb. 23, 1903: U.S. Supreme Court Upholds Federal Powers to Regulate Commerce[00690] [c]Trade and commerce;Feb. 23, 1903: U.S. Supreme Court Upholds Federal Powers to Regulate Commerce[00690] [c]Laws, acts, and legal history;Feb. 23, 1903: U.S. Supreme Court Upholds Federal Powers to Regulate Commerce[00690] Fuller, Melville W. Harlan, John Marshall Marshall, John Beveridge, Albert J.

The circumstances brought before the Court originated in 1895 with an act of Congress. This act made it illegal to transport or conspire to transport lottery tickets from state to state. On February 1, 1899, C. F. Champion sent two Pan-American Lottery Company lottery tickets from Dallas, Texas, to Fresno, California. The tickets were transported by a vehicle owned by the Wells-Fargo Express Company. Champion was arrested in Chicago under a warrant based on his alleged violation of the act and was subsequently convicted.

The case was appealed to the U.S. Supreme Court for final review, and on February 23, 1903, the Court upheld the conviction in a five-to-four decision. Justice John Marshall Harlan delivered the majority opinion of the Court, and Chief Justice Melville W. Fuller wrote the dissenting opinion.

When the Lottery Case appeared before the Court, the power to regulate interstate commerce was a concurrent power shared by the states and the federal government. Prior to the Lottery Case, several Court decisions had begun the process of liberalizing the connotation of “interstate,” favoring federal control. One such case was Gibbons v. Ogden (1824). Gibbons v. Ogden (1824) This decision played a major role in the Court’s final disposition of the Lottery Case by initiating a method for analyzing commerce issues. A review of the facts in Gibbons shows that the state of New York granted a monopoly to Robert Livingston and Robert Fulton in the operation of steamboats in the waterways of New York. Under the monopoly, Aaron Ogden managed two licensed steamboats that ferried between New York and New Jersey. Thomas Gibbons obtained a coasting license under a 1793 act of Congress and began competing with Ogden.

Gibbons’s steamboat was not licensed to operate under the New York monopoly. The pressure of additional competition encouraged Ogden to bring action in a New York court to prohibit Gibbons from operating. Writing for the majority in Gibbons, Chief Justice John Marshall delivered the opinion of the Supreme Court, which held the New York monopoly law to be unconstitutional. In Gibbons, the Court aspired to denote interstate commerce. Gibbons’s attorneys argued that interstate commerce is traffic to buy and sell, or the interchange of commodities. The Court agreed that interstate commerce includes traffic but added the notion of intercourse.

Generally, the term “intercourse” connotes exchange between persons or groups. With this notion, the Court reasoned that interstate commerce does not end at external boundary lines between states but may be introduced into the interior. The justices determined that commerce may pass the jurisdictional line of New York and act upon the waters to which the monopoly law applied, thus concluding that the transportation of passengers between New York and New Jersey constituted interstate commerce.

In the Champion v. Ames decision, the Court went on to reference other decisions that sanction federal authority. These cases continued to expand the essence of interstate commerce. Consequently, the Court resolved that commerce embraces navigation, intercourse, communication, traffic, the transit of persons, and the transmission of messages by telegraph.

In the Lottery Case, the use of a vehicle from Wells-Fargo Express traveling from state to state was relevant. The Court held that this travel provided sufficient intercourse with interstate commerce to allow federal domination. Further, the Court viewed the congressional justification for the creation of the act as being rational. It determined that the federal government is the proper means for protecting U.S. citizens from the widespread pestilence of lotteries. The Court deemed that such an evil act of appalling character, carried through interstate commerce, deserves federal intervention.

In his dissenting opinion, Chief Justice Fuller asserted that the Court had imposed a burden on the state’s powers to regulate for the public health, good order, and prosperity of its citizens. To hold that Congress has general police power would be to defeat the operation of the Tenth Amendment. This argument would constitute the foundation of many later dissenting opinions. This particular conviction never became the majority view.

At the time of the Lottery Case, an escalating struggle was taking place between a desire for a strong federal government, called federalism or nationalism, and the states’ right to regulate themselves. This conflict goes as far back in U.S. history as the Constitution itself. After the Revolutionary War, the states regarded themselves as independent sovereigns. The Articles of Confederation allowed only minimal intrusion into states’ internal affairs by the Continental Congress.

Faced with the inability of the confederation to function properly, provincial patriotism had to concede. The delegates at the Constitutional Convention, in an effort to fabricate a more concentrated federal government, made many compromises. They maintained within the Constitution, however, certain seemingly insurmountable limits on the federal government. As a consequence, the judiciary generally discerns the Constitution as being a limitation on federal power. Without an expressed or implied grant of authority from within the Constitution, the federal government cannot regulate.

This policy is not easily implemented in cases concerning commerce. Under the commerce clause, Congress has the authority to regulate commerce with foreign nations and among the several states and with Native Americans. The commerce clause seems to conflict with the Tenth Amendment, Tenth Amendment (U.S. Constitution) which assigns all rights to the states unless such control is prohibited or delegated to the U.S. government by the Constitution. The Tenth Amendment is said to contain the states’ police powers. Further, the Constitution does not expressly exclude states from regulating interstate commerce. It simply limits the federal government’s jurisdiction over interstate trade and precludes interference with purely local activities.

To add another complication, consider the Constitution’s supremacy clause, Article VI, paragraph 2. This states that if legitimate state and federal powers are in conflict, then the national interest will prevail. This power is enhanced by the Court’s broad interpretation of the “necessary and proper clause” (Article I, section 8) in McCulloch v. Maryland (1819). McCulloch v. Maryland (1819)[Macculloch v. Maryland] This ruling gave Congress a discretionary choice of means for implementing implied powers.

From a political perspective, it is notable that both the McCulloch and Gibbons cases came before the Court while John Marshall was chief justice. Marshall served under President John Adams as the secretary of state and was a devout federalist. During Marshall’s tenure as chief justice, the Court vested within its jurisdiction an unusual allotment of power. It assigned to itself final interpretation rights over the constitutionality of all federal and state laws brought before the Court.

Significance

The ruling in the Lottery Case had an immediate influence on U.S. society. Social reformers quickly seized on the rationale provided by the Court and began prompting Congress to regulate. In 1906, Senator Albert J. Beveridge of Indiana successfully proposed a meat inspection amendment to an appropriations bill. The amendment, which prohibited the interstate shipment of meats that had not been federally inspected, received an influential recommendation from President Theodore Roosevelt. Additionally, Upton Sinclair’s novel The Jungle (1906) greatly intensified popular support for Beveridge’s cause. Jungle, The (Sinclair, U.) In The Jungle, Sinclair, an active socialist, characterized the life of a worker in the Chicago stockyards in such a compelling manner that President Roosevelt was induced to investigate the meatpacking industry. During the same term, Congress also approved the Pure Food and Drug Act. Pure Food and Drug Act (1906)

Later, Beveridge proposed another bill based on the commerce clause. This legislation attempted to exclude from commerce goods produced by child labor. Beveridge was certain that the Lottery Case settled the constitutionality of his proposal, but convincing his colleagues of this proved to be arduous and unsuccessful. Congress finally passed the Child Labor Act Child Labor Act (1916) in 1916, but the Court declared it unconstitutional in Hammer v. Dagenhart (1918). Hammer v. Dagenhart (1918) It would be another decade before such a law would be held valid under constitutional scrutiny by the Court.

Despite this setback, the precedent established in the Lottery Case was adequate to sustain a wide variety of laws intended to limit the movement of harmful goods. During the early twentieth century, the Court upheld the exclusion from interstate commerce of impure foods, white slavery (involuntary prostitution), obscene literature, and articles designed for indecent and immoral use.

With only some antithesis, the Court continued to reform the meaning of interstate commerce to enhance federal control. A greatly extended application of the clause can be found in Heart of Atlanta Motel v. United States (1964). Heart of Atlanta Motel v. United States (1964) This case implicated the constitutionality of Title II of the Civil Rights Act Civil Rights Act (1964) of 1964. The act strives to eliminate racial discrimination in hotels, motels, restaurants, and similar places. The owners of the Heart of Atlanta Motel disputed the constitutionality of the act. It was the motel’s policy to refuse lodging to people of color. It advertised in several surrounding states, and approximately 75 percent of its guests were from other states.

The Court upheld the constitutionality of the act. The tests employed by the Court were whether the activity is commerce that concerns more than one state and whether the act showed a substantial relation to a national interest. The Court postulated that the operation of a motel might appear local in nature, but it does affect interstate commerce. The Court resolved that a motel accommodating interstate travelers is engaged in commerce that concerns more than one state.

Again, as in the Lottery Case, the Court determined that the evil averted by the act was a legitimate national concern. The rationale offered by the Court in Heart of Atlanta Motel exhibits the accumulation of many years of precedents. The Court asserted that the same interest that led Congress to deal with segregation prompted it to control gambling, criminal enterprises, deceptive practices in the sale of products, fraudulent security transactions, improper branding of drugs, wages and hours, members of labor unions, crop control, discrimination against shippers, the protection of small business from injurious price cutting, and resale price maintenance at terminal restaurants. The Court affirmed that Congress, in many of these examples, was regulating against moral wrongs. It concluded that segregation is a valid moral issue that would support the enactment of the Civil Rights Act.

The Court has applied various constitutional tests to interstate commerce throughout its history. Initially, the Court viewed interstate commerce as physical movement between states. Soon it began examining federal jurisdiction based on the direct versus indirect influences of the law in question on interstate commerce. By the middle of the twentieth century, the Court began examining whether the purely local activity had an appreciable effect on interstate commerce.

Another offspring of the commerce clause is the Interstate Commerce Commission Interstate Commerce Commission (ICC). The ICC consists of experts who aspire to protect and represent the public in matters of transportation in interstate commerce. This agency has immense powers and is not without its opponents.

The need to unite the country necessitated a strong centralized government, but debates persist over the effects ensuing from the expanding role of the federal bureaucracy. Some critics perceive the federal government as an inadequate regulator of business, particularly in the area of environmental protection. Other commentators reason that businesses have become dependent on the government as a form of protection from competition. Still others assert that business enterprises cannot mature and flourish because of excessive government control.

The judiciary appears to recognize one conspicuous restriction on the federal government’s authority. Regardless of how significant the legal arguments are, most courts hesitate to make decrees that will prohibit major industries from operating. In addition, certain potentially negative economic effects, such as the loss of many jobs, particularly in the automotive, steel, and oil industries, act as subtle legal shields from overly zealous government intrusion. Supreme Court, U.S.;regulation of commerce Champion v. Ames (1903)

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Amar, Akhil Reed. America’s Constitution: A Biography. New York: Random House, 2005. Examines in turn each article of the Constitution and explains how the framers drew on English models, existing state constitutions, and other sources in structuring the three branches of the federal government and in defining the relationship of that government to the states.
  • citation-type="booksimple"

    xlink:type="simple">Breyer, Stephen. Active Liberty: Interpreting Our Democratic Constitution. New York: Alfred A. Knopf, 2005. In this book, which is based on the Tanner Lectures on Human Values that he delivered at Harvard University in November, 2004, Stephen Breyer, associate justice of the United States, defines the term “active liberty” as a sharing of the nation’s sovereign authority with its citizens. He argues that the Constitution is a guide for the application of basic principles to a changing society rather than a rigid legal means for restricting that society. Presents examples in the areas of free speech, federalism, privacy, affirmative action, statutory interpretation, and administrative law.
  • citation-type="booksimple"

    xlink:type="simple">Cox, Archibald. The Court and the Constitution. Boston: Houghton Mifflin, 1987. A well-organized approach to major Court decisions. The author was a former solicitor general and the first Watergate special prosecutor. He details how the Court has kept the Constitution an important instrument.
  • citation-type="booksimple"

    xlink:type="simple">Fellmeth, Robert C. The Interstate Commerce Omission. New York: Grossman, 1970. Presents an encompassing view of the problems haunting the Interstate Commerce Commission. The Center for Study of Responsive Law produced the report, and Ralph Nader wrote the introduction.
  • citation-type="booksimple"

    xlink:type="simple">Gunther, Gerald. Cases and Materials on Constitutional Law. 10th ed. Mineola, N.Y.: Foundation Press, 1980. A well-written textbook that discusses the immense area of constitutional law. The text has remarkable depth but has a tendency to ask more questions than it answers. Provides a superior foundation in beginning constitutional research.
  • citation-type="booksimple"

    xlink:type="simple">Hilsman, Roger. To Govern America. New York: HarperCollins, 1979. An admirable compilation of data describing all features of government, including many peripheral aspects, such as philosophy and the future of American democracy.
  • citation-type="booksimple"

    xlink:type="simple">Mason, Alpheus T., and Donald Grier Stephenson, Jr. American Constitutional Law: Introductory Essays and Selected Cases. 12th ed. Englewood Cliffs, N.J.: Prentice Hall, 1998. A commendable review and analysis of constitutional law. The authors present this complex subject in a clear manner.
  • citation-type="booksimple"

    xlink:type="simple">Tindall, George B. America: A Narrative History. 5th ed. New York: W. W. Norton, 1999. A constricted narrative that shapes U.S. history into an eventful story. Presents history organized in themes such as “judicial nationalism.”

Pure Food and Drug Act and Meat Inspection Act

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Muller v. Oregon

Migratory Bird Treaty Act

Fair Labor Standards Act

Categories: History Content