In response to the overwhelming support for teh first installment of Teh Commerz Clawz (amount of page reads only topped by my election coverage! Yay!) we shall continue today with the case of US v. E.C. Knight.
There are, according to my lovely Constitutional Law TA Leticia (she iz teh shizz fo sho), 3 phases to the Supreme Court’s interpretation of the Commerz Clawz. The first, exemplified by Gibbons v. Ogden, is the Defining Phase. It ran from 1789-1835, and was basically just full of the Court figuring out wtf teh Commerrz Clawz means in the first place. Like figuring out what the rules of college are after years of public schooling where someone else told you what to do all the time.
With E.C. Knight, we now enter the second phase, The Laissez-Faire Era, where the Court and the federal government fight a lot about teh Commerz Clawz and the balance between the rights of states to regulate their own commerce under the 10th Amendment (Chief Justice Fuller and mah kitteh shall explain) and the right of the national government to regulate interstate commerce for the wellbeing of everyone involved.
This case involves the favorite drug of hyperactive children everywhere… No, not adderal. That’s college kids. I’m talking about plain old-fashioned, awesome…shoogar.
So, in the Industrial Revolution age, when people were finally figuring out how to mass produce things, lots of businesses liked to get together and create monopolies. Made them tonz moar money, because they could set all the prices. The federal government realized that that was bad for business and bad for the people, so they decided to do something about it.
Federal government in 1890: No! Bad companiez! We maek teh Sherman Anti-Trust Act with our awesome Commerz Clawz powrs!. Nao u no can haz monopoly. Iz bad for America. Free trade rulez!
But E.C. Knight Co. didn’t care, and decided to merge with American Sugar and create a ridiculously huge monopoly.
E.C Knight Co.: We do no care! We maek monopoly! Manufacshuring iz not commerz! U can no regulate us! We control 98% of all teh shoogar in teh WHOOOOOOOOOOLE United Statez! We setz all teh prices! We maeks tonz and tonz of monies! Yay!
Federal govt: Yes, we can! Teh Sherman Anti-Trust Act saiz so! Bad company! We sue u!
E.C. Knight: Noez! Teh Sherman Anti-Trust Act iz unconstitushunal! Besides, we tell u already! Manufacshuring iz not commerz!
E.C. Knight argued that the Sherman Anti-Trust Act violated the powers of teh Commerz Clawz, and also that since manufacturing and commerce are separate parts of industry, the Sherman Anti-Trust Act couldn’t apply to them.
Now, in the age we now live in, that may not make much sense. Obviously, if sugar is manufactured and then sold, it’s part of commerce, right? At least the abilities of American Sugar to control the prices should be part of commerce. But according to the Fuller Court, it’s not quite so simple. And remember, there’s not a lot of precedent. We’ve only been a country for about 100 years, and we only just now discovered industrialization. On top of that, we looooooove the idea of a laissez-faire economy.
Mah kitteh Zipper has been hanging out with Chief Justice Fuller recently and shall explain further:
“So, we already kno frum Gibbons v. Ogden dat commerz haz rules for what Congrez can regulate. It can regulate teh ‘intercourse’ between da statez. But, E.C. Knight saiz that they iz not in commerz. They only do manufacshuring, which happens b4 commerz and iz not part of it.
“Chief Justice Fuller agrees. Him saiz “Commerce succeeds to manufacture, and is not a part of it…The fact that an article is manufactured for export to another State does not of itself make it an article of interstate commerce…”
“Him iz worried about the sovereignty of teh states to keep control of their ‘police powerz.’ Police powers iz teh power of the statez to regulate within their borders for the health and wellbeingz of their citizenz, and dat balance between “the independence of the commercial power and the police power, and the delimitation between them…must always be recognized and observed.”
Fuller saiz dat teh effect of Knight’s monopoly iz an “indirect effect” on commerz. It iz up to teh statez to regulate this. Teh national Congrez can no do it.”
So, here we see the beginning of the understanding of the Commerce Clause that takes us through to after the Great Depression. Though it evolves, as we shall see the rest of this week, the general idea is that some activity has a direct effect on interstate commerce, for example, transporting sugar from one state to another. Other activity, such as the actual manufacture of sugar in one state for later transport to another, does not. And an indirect effect is not enough to give Congress any power.
Remember also, that intrastate commerce, like sugar being sold in a store in one state, is also not under the regulation of commerce, and instead falls under state police powers.
Business wins! Government loses! But will it stay that way? Only time and moar lolcatz will tell!