THE EXERCISE OF JUDICIAL
REVIEW: FEDERALISM AND
ECONOMIC REGULATION
Topic #16
How Would Judicial Review be Used by
the Supreme Court?
• In the beginning, there were no precedents and all
constitutional ambiguities remained open.
• Marbury v. Madison established the precedent that the
Supreme Court would play a leading role in resolving
these ambiguities by exercising its power of judicial
review.
• What kind of cases would you expect to come before the
Supreme Court in the first decades of the U.S.
government? [Study Guide Q1]
Three Historical Periods of SC Activism
• 1820 – 1850:
– Focus: The division of governmental powers -- specifically the
boundaries between delegated powers of the federal government and the reserved powers of the state governments.
– Decisions: The court generally interpreted the Constitution in
ways favorable to the powers of the federal government.
• 1875 – 1935
– Focus: The power of government at either the state or federal
level to regulate economic life.
– Decisions: The Court generally restricted the economic powers
of both the federal and state governments, in effect incorporating
the economic doctrine of "laissez-faire" into the Constitution.
• 1940 -- present
– Focus: Civil rights and liberties, i.e., the status of racial
minorities (in particular African-Americans in the “Jim Crow”
South) and the non-economic rights of individuals versus the
authority of government at any level.
– Decisions: Mixed, but generally more favorable to minorities
and individual rights than in earlier periods.
The Necessary and Proper Clause
• The enumerated powers of Congress:
• Article I, Section 8:
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The Congress shall have power
to lay and collect taxes, duties, imposts and excises, to pay the debts
and provide for the common defense and general welfare of the United
States; but all duties, imposts and excises shall be uniform throughout
the United States;
to borrow money on the credit of the United States;
to regulate commerce with foreign nations, and among the several
states, and with the Indian tribes;
[plus 14 other enumerated powers]
to make all laws which shall be necessary and proper for carrying into
execution the foregoing powers, and all other powers vested by this
Constitution in the government of the United States, or in any
department or officer thereof.
• Is this Necessary and Proper Clause a grant of
additional powers to Congress, or a limitation on the
powers enumerated just above?
McCulloch v. Maryland (1819)
• In exercising its enumerated powers, Congress will
routinely authorizes the building of army forts, navy
yards, post offices, federal court buildings, etc., that will
be located within the boundaries of states.
• Can states then impose taxes or regulations on such
federal facilities?
– Congress charted a Bank of the United States.
– It had a branch in Baltimore (McCulloch was its manager).
– Maryland imposed a tax all banks in the state not chartered by the state,
including this branch of the U.S. Bank.
– McCulloch refused to pay the tax, on the grounds that Maryland was
intruding on the delegated powers of Congress.
– McCulloch lost in state courts (Maryland v. McCulloch).
– McCulloch appealed to the U.S. Supreme Court, on the grounds that the
case raised a question about the powers of the federal government.
McCulloch v. Maryland (cont.)
• Marshall was still Chief Justice and remained the Court’s
dominant member.
• The Court reversed the decision of the state court.
• Marshall wrote the opinion, saying the case raised two
issues.
– Question 1: Did Congress have the power to
incorporate a bank in the first place?
• Incorporating banks is not an explicitly enumerated power of
Congress.
• And if the bank was not legitimately incorporated, it could
hardly claim constitutional protection from state taxes.
– Question 2: If Congress does has such a power, does
Maryland nevertheless have the power to tax such a
bank?
McCulloch v. Maryland (cont.)
• Answer to Question 1:
– Yes, Congress has implied powers to choose among a variety of
means to exercise its enumerated powers.
– This government is acknowledged by all to be one of enumerated
powers. . . . Among the enumerated powers, we do not find that of
establishing a bank or creating a corporation. But there is no
phrase in the instrument which, like the articles of confederation,
excludes incidental or implied powers; and which requires that
everything granted shall be expressly and minutely described. A
constitution, to contain an accurate detail of all the subdivisions of
which its great powers will admit, and of all the means by which
they may be carried into execution, would partake of the prolixity of
a legal code, and could scarcely be embraced by the human mind.
Its nature, therefore, requires, that only its great outlines should be
marked, its important objects designated, and the minor
ingredients which compose those objects be deduced from the
nature of the objects themselves. . . . In considering this question,
then, we must never forget that it is a constitution we are
expounding.
McCulloch v. Maryland (cont.)
– Although, among the enumerated powers of government, we do
not find the word "bank," or "incorporation," we find the great
powers to lay and collect taxes; to borrow money; to regulate
commerce; to declare and conduct a war; and to raise and support
armies and navies. The sword and the purse, all the external
relations, and no inconsiderable portion of the industry of the
nation, are entrusted to its government. It can never be pretended
that these vast powers draw after them others of inferior
importance, merely because they are inferior. Such an idea can
never be advanced. But it may with great reason be contended,
that a government, entrusted with such ample powers, on the due
execution of which the happiness and prosperity of the nation so
vitally depends, must also be entrusted with ample means for their
execution.
McCulloch v. Maryland (cont.)
– But the constitution of the United States has not left the right of
Congress to employ the necessary means, for the execution of
the powers conferred on the government, to general reasoning.
To its enumeration of powers is added that of making "all laws
which shall be necessary and proper for carrying into execution
the foregoing powers, and all other powers vested by this
constitution, in the government of the United States, or in any
department thereof."
– We admit, as all must admit, that the powers of the government
are limited, and that its limits are not to be transcended. But we
think the sound construction of the constitution must allow to the
national legislature that discretion, with respect to the means by
which the powers it confers are to be carried into execution, which
will enable that body to perform the high duties assigned to it, in
the manner most beneficial to the people. Let the end be
legitimate, let it be within the scope of the constitution, and all
means which are appropriate, which are plainly adapted to that
end, which are not prohibited, but consist with the letter and spirit
of the constitution, are constitutional. . . .
McCulloch v. Maryland (cont.)
• Answer to Question 2
– The power to tax is concurrent (shared by states and federal
governments).
– This great principle is, that the constitution and the laws made in
pursuance thereof are supreme [by virtue of the Supremacy Clause]; that
they control the constitution and laws of the respective States, and
cannot be controlled by them. From this, which may be almost termed an
axiom, other propositions are deduced as corollaries. . . . These are, 1st.
that a power to create implies a power to preserve. 2nd. That a power to
destroy, if wielded by a different hand, is hostile to, and incompatible with
these powers to create and to preserve. 3d. That where this repugnancy
exists, that authority which is supreme must control, not yield to that over
which it is supreme. . . .
– That the power to tax involves the power to destroy; that the power to
destroy may defeat and render useless the power to create; that there is
a plain repugnance, in conferring on one government a power to control
the constitutional measures of another, which other, with respect to
those very measures, is declared to be supreme over that which exerts
the control, are propositions not to be denied.
• Similar implications for the power of the federal government to tax
entities created by state governments.
Gibbons v. Ogden (1823)
• The Interstate Commerce Clause:
– The Congress shall have the power . . . to regulate commerce . . .
among the several states. . . .
• Ogden had a exclusive license issued by the state of New
York to operate a steamboat in certain navigable waters
of New York [on the Hudson River].
• Congress had passed a law for the licensing of vessels
operating in the navigable waters of the U.S.
– Gibbons had such federal license and went into competition with
Ogden.
– Ogden went into state court (Ogden v. Gibbons) and got an
injunction against Gibbons.
– Gibbons appealed to the U.S. Supreme Court.
Gibbons v. Ogden (cont.)
• The SC reversed the state courts.
• Marshall again wrote the opinion of the Court.
– Commerce, undoubtedly, is traffic, but it is something more - it
describes the commercial intercourse between nations, and parts of
nations, in all its branches, and is regulated by prescribing rules for
carrying on that intercourse. . . . If commerce does not include
navigation, the government of the Union has no direct power over that
subject . . . . Yet this power has been exercised from the
commencement of the government, has been exercised with the
consent of all, and. has been understood by all to be a commercial
regulation. All America understands, and has uniformly understood, the
word commerce to comprehend navigation.
– The subject to which the power is next applied is to commerce among
the several states. The word among means intermingled with. . . .
Commerce among the states cannot stop at the external boundary line
of each state, but may be introduced into the interior.
– [Only] the completely internal commerce of a state, then, may be
considered as reserved for the state itself.
Gibbons v. Ogden (cont.)
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The power of Congress, then, whatever it may be, must be exercised within
the territorial jurisdiction of the several states.
What is this power? It is the power to regulate, that is, to prescribe the rule
by which commerce is to be governed. This power, like all others vested in
Congress, is complete in itself, may be exercised to its utmost extent, and
acknowledges no limitations other than are prescribed in the Constitution. . .
. As the sovereignty of Congress, though limited to specified objects, is
plenary as to those objects, the power over commerce with foreign nations
and among the several states is vested in Congress as absolutely as it
would be in a single [i.e., unitary] government, having in its constitution the
same restrictions on the exercise of the power as are found in the
Constitution of the United States.
In argument, however, it has been contended that, if a law passed by a
state in the exercise of its acknowledged sovereignty comes into conflict
with a law passed by Congress in pursuance of the Constitution, they affect
the subject and each other like equal opposing powers.
But the framers of our Constitution foresaw this state of things and provided
for it by declaring the supremacy not only of itself but of the laws made in
pursuance of it. The nullity of any act inconsistent with the Constitution is
produced by the declaration that the Constitution is supreme law. . . . In
every such case, the act of Congress [made in pursuance of the
Constitution] is supreme; and the law of the state must yield to it.
Hammer v. Dagenhart (1918)
• In this era, the SC generally interpreted the Constitution so as to
restrict the economic powers of both the federal and state
governments, in effect incorporating the economic doctrine of
laissez-faire into the Constitution.
– The U.S. economy had shift from largely agricultural to largely
industrial.
– Congress had previously enacted laws to prohibit or limit the use
of child labor in interstate commerce.
– The SC had previously ruled such laws unconstitutional, on the
grounds that what happened in fields, mines, and factories is not
part of commerce (or, in any case, of interstate commerce).
– Congress then passed a law that prohibited the sale of goods
produced by child labor in interstate commerce.
• The SC had previously upheld the power of Congress to limit or
even prohibit the sale in interstate commerce of such products as
explosives, poisons, dangerous drugs, etc.
– The constitutionality of this law was at stake in Hammer v.
Dagenhart.
Hammer v. Dagenhart (cont.)
• The SC declared this law unconstitutional.
– The controlling question for decision is: Is it within the authority of
Congress in regulating commerce among the States to prohibit the
transportation in interstate commerce of manufactured goods, the
product of a factory in which children have been employed or permitted
to work.
– In Gibbons v. Ogden, Chief Justice Marshall that the commerce power
“is the power to regulate; that is, to prescribe the rule by which
commerce is to be governed." In other words, the power is one to
control the means by which commerce is carried on, which is directly
the contrary of the assumed right to forbid commerce from moving and
thus destroy it as to particular commodities. But it is insisted that
adjudged cases in this court establish the doctrine that the power to
regulate given to Congress incidentally includes the authority to prohibit
the movement of ordinary commodities and therefore that the subject is
not open for discussion. The cases demonstrate the contrary. They rest
upon the character of the particular subjects dealt with and the fact that
the scope of governmental authority, state or national, possessed over
them is such that the authority to prohibit is as to them but the exertion
of the power to regulate.
• Hammer v. Dagenhart was an example of “conservative activist”
judges at work.
The Great Depression and the New Deal
• The 1929 stock market crash led to the Great Depression:
– GDP approximately cut in half
– 25% unemployment, etc.
• Election of President Franklin D. Roosevelt and his New
Deal program:
– Far greater federal intervention in the economy than ever
previously attempted.
– This put New Deal on a collision course with the Supreme Court.
• No SC vacancies occurred in the first five years of FDR’s presidency,
– perhaps in part due to strategic non-retirement.
– By 1935, cases challenging the constitutionality of New Deal laws
began to reach the SC, which began to invalidate a number of
New Deal laws.
“Court Packing” and the “Switch in Time”
• In 1936, FDR was re-elected by a massive majority.
– FDR was embolden to put forward [what his opponents called]
the “Court Packing Plan.”
• The plan was very controversial in Congress in elsewhere.
• In West Coast Hotel v. Parrish (1937), the SC
unexpectedly upheld the constitutionality of the new
federal minimum wage law.
– Justice Owen Roberts switched sides.
– The “switch in time that saved nine [justices on the SC]”
– Conservative justices began to retire.
• Since then SC has essentially said that Congress’s
power to regulate the economy will not be limited by
judicial review (i.e., almost total judicial self-restraint with
respect to economic issues),
– though it has issued a few warning barks to Congress in recent
years and may do more in the near future.