Welcome to the third installment of Teh Commerz Clawz, where I explain the precedent to the state’s challenge to the health care bill in super simple speak. Also with lolcats. And today, lolcows.
Today’s episode deals with cows. Lotz and lotz and lotz of cows. And some railroads too. And some people. But mostly, a lot of cows, where they go, and why teh federal government had a beef with monopolies.
So when we left yesterday, we’d determined from Gibbons and E.C. Knight that there are limits to what the national government can control through teh Commerz Clawz. For example, manufacturing is not commerce, and so is regulated through state “police powers” instead. (BTW, if this police powerz thing has you a bit confused, it does everyone. There’s really no hard and fast line for what’s a state and what’s a federal police power. Don’t sweat it.)
Swift and Co. v. US also concerns monopolies, just like yesterday. In this one however, instead of nummy shoogar, we haz stockyards in Chicago wreaking havoc. (Though, come on, what else can you expect from good old Illinois, right Mr. Blagojevich?) Basically, the way the meat industry worked, and still kinda does, went something like this. Farmers raise cows. Farmers bring and sell cows to stockyards. Companies would purchase the cows from the stockyards, slaughter them, and then sell the meat to local stores in the area. Pretty simple, and everyone makes money right?
Except Swift and Co. controlled about 60% of the fresh meat market, and they weren’t doing it honestly. They made agreements with other meat houses for what prices would be so there wasn’t any real competition, and thus set artificial prices for everything. The farmers made less money for their meat, which sucks considering the cows had to transported sometimes thousands of miles on railroads. The meat monopoly men manhandled the railroads into charging them artificially low rates for transporting these cows.
So nobody was making a bunch of money except for Swift and Co.
When the government found out about it, they were obviously very pissed off about it.
Fed govt: No! We haz tell u already! No monopolies. Ur buisness practises r bad! We sue u!
Swift: Iz not interstate commerz. Our stockyards r liek 3 miles frum our slaughterhauses and stuff. Plus, how were we spossed to kno? Teh Sherman Act iz too vague 4 anyone 2 use.
Now, when the Sherman Act went into effect, President Grover Cleveland and the Court that decided E.C. Knight believed that monopolies were part of progress, and so the Sherman Act was actually really vague. One of the main ideas behind laws is that if they’re too vague for people to know what they can or cannot do, or cover too much, then they’re no good and will be thrown out. So this was actually a great argument against the Sherman Act. (This is why you can find so much porn on the Internet so easily. It’s so far been impossible for Congress to craft an easily implementable, concise law that isn’t so vague that it covers everything. More on that some other time.)
But in 1909, when this case was decided, Teddy Roosevelt and a more “liberal” court were in power, and people were starting to realize what a pain in the butt monopolies actually are. Case in point: Swift and Co.
But since most of their operations are only in a few states, would that make it interstate? Remember, in E.C. Knight, the Supreme Court didn’t let that one slide.
A new Supreme Court Kitteh shall explain:
“So, Swift saiz dat since all teh company commerz happens in teh same state, kinda, dat he iz not part of interstate commerz. BUT!
“In E.C. Knight we tellz u about teh concept of “direct” v. indirect effect on commerz. Manufacturing haz an indirect effect on commerz. But dis iz a diffurent storeh. Why? Cuz teh monopolies deal in buying and selling tings, and dat effect on commerz iz not “not accidental, secondary, or remote,” but iz very purposeful. Swift iz tryin 2 control prices by cheating ppl. Dis iz a verry direct effect.
When dey taeks da cows frum 1 state, and send dem somewhere else in a diffurent state, and da stockyardz iz inbetween, and dis happens all teh time, then it iz interstate commerce.
Teh Court iz going to taek this 1 step moar. They tink there iz a stream of commerz, and that tings affecting that stream can haz regulationz. “When this is a typical constantly recurring course, [like with the stockyards, Ali note] the current thus existing is a current of commerce among the states, and the purchase of the cattle is a part . . . of such commerce.””
So now we have this idea of a “stream of commerce.” When things go from one place to another, just because something happens in a state that stops the goods for a bit, doesn’t mean that part is out of the flow. It’s like a river. Everything from where that river starts to where it stops is part of the river. No quibbling allowed.
But then there are moar probz. What counts as the start of this stream? What if the stuff is only on the banks so to speak? When does it complete this trip?
All that and moar in Friday’s installment of Teh Commerz Clawz, when we learn about sick chickens and Teh Grate Depreshun. (Not to be confused with the current “Great Recession.” Ugh.)