Essay 17-A: Interstate Commerce, the Sherman Antitrust Act, and Popular Consent

Essay Read by Constituting America Founder, Actress Janine Turner

“The essence of government is power,” noted James Madison, “and power, lodged as it must be in human hands, will ever be liable to abuse.”

No part of the U.S. Constitution has been abused more often and with more dire consequences than the Commerce Clause. Throughout history, the federal government has created business obstacles under pressure from its constituents, amassed unconstitutional powers, and ended up serving special interest groups instead of the people.

When they met in Philadelphia in 1787, the Founders sought to establish a delicate balance between effective national governance, the rights of the states in the union, and the personal freedoms of the American citizens. They needed federal institutions that had enough resources to provide for the common defense. They also wanted the national government to be limited enough so that it would not control the lives of the people, including their market interactions.

The subsequent success of the American economy is evidence that they got the balance right at the start. During America’s Progressive Era at the turn of the twentieth century, innovator-entrepreneurs like Rockefeller and Ford produced economic improvements, amassing great fortunes by serving their customers.

As corporate power grew and progressive reformers publicized unfair or unscrupulous business practices, many Americans called for reform. Wealth bred envy, and Progressive and Populist (representing farmers) politicians rode the wave of public discontent with the rise of big business. This led Congress to pass to the passing of the Interstate Commerce Act in 1887 and the Sherman Antitrust Act in 1890. The first demanded “reasonable and just” rates for railroad customers. The second one made “monopolization” a crime.

Rather than maintaining fair markets for free enterprise, both acts were a disaster for the American consumer and for liberty itself. Instead of lowering the cost of the short-haul railroad trips, where travelers had few options, the government intervention led to higher prices for the long-haul routes, where many companies had previously competed for customers. Established businesses captured the regulators and exploited their political connections for financial gains.

The result today is that our federal government controls economic life to an extent that was unimaginable when the Constitution was ratified. This concentration of power in Washington creates opportunities for political corruption, favoritism, and obstruction.

To a large extent, this dangerous trend can be attributed to the use and abuse of the interstate commerce clause. Originally intended to expand the freedom of Americans to engage in trade, it has since become the primary means by which our public servants restrict it. Rather than supporting popular government by consent, regulation has helped to expand federal power, especially in the executive branch.

To understand why the founders included the power to “regulate commerce” among the short list of enumerated powers granted to Congress, we need the historical context. Under the Articles of Confederation, states had imposed tariffs and other trade barriers on one another. New York taxed goods entering from Connecticut. Virginia quarreled with Maryland over navigation rights. The young nation risked dissolving over regional economic disputes.

The Commerce Clause was designed as a shield against such fragmentation. Its sole purpose was to remove government-imposed obstacles. To “regulate” means to make something regular, that is, to remove obstructions; the opposite of “control.”

And “commerce” does not mean “any and all” economic activities. It strictly describes the market exchange of goods for profit. The Founders empowered Congress to prevent states from disrupting markets, not to micromanage the voluntary transactions of private citizens.

When FDR became president, he lobbied the Supreme Court to reinterpret the Commerce Clause in a way that gave the federal bureaucracies unlimited power to harass the American producers. Rather than go through the legislative process of amending the Constitution, FDR used his executive authority to force the judicial branch to find him new powers that were never granted.

The most egregious example of this abuse is the case of Wickard v. Filburn (1942). A farmer had exceeded the quota assigned for wheat production by the U.S. Department of Agriculture. The government agent forced him to destroy the extra grain.

The wheat was not sold (therefore; it was not commerce) and did not cross state lines (and was therefore not interstate). Nevertheless, the Court declared it subject to regulation under the Interstate Commerce Clause. The reason? It was a substitute for wheat that was sold. Voilà! A “substantial effect” on interstate commerce.

The Wickard precedent proved durable. In Gonzales v. Raich (2005), the issue was whether the interstate commerce clause gave the federal government the power to prohibit the use of homegrown medical marijuana. Citing Wickard, the majority ruled that growing marijuana for your own consumption in your own home had a substantial effect on interstate commerce.

In his dissent, Justice Thomas noted that if the government had the right to destroy a half-dozen marijuana plants because they substantially affected interstate commerce, then the clause would establish no meaningful limits—Congress could just as easily use that power to regulate quilting bees and potluck suppers.

The Founders crafted Article I, Section 8, to keep trade free from political obstruction. They would scarcely recognize the federal regulatory power that it was used to create.

Dr. Alex Tokarev grew up in Bulgaria under socialism and received his Ph.D. in Economics from Southern Illinois University in Carbondale.

Dr. Tokarev has received many scholarships and taught over 2 dozen different courses across several colleges and universities. He has authored hundreds of publications in English and Bulgarian on classical liberal ideas, published at World Magazine, The American Conservative, Townhall, Real Clear World, Independent Institute, Learn Liberty, The Daily Economy, Washington Examiner, Mises Institute, Acton Institute, Detroit News, Midland Daily News, When Free to Choose, Constituting America, and others. He has presented his research and given guest lectures at dozens of forums in Europe and America.

Dr. Tokarev has organized and led international ventures to Bulgaria and Albania and internships for students at the Institute for Market Economics, the Institute for Radical Capitalism Atlas, and the Experts Club for Politics and Economics in Bulgaria. He edited the Bulgarian translation of Hoppe’s “Democracy: The God That Failed,” and has been interviewed by Bulgarian National TV, Bulgarian National Radio, Bloomberg Bulgaria, The Academy on Capitalism, The Spark, the Gwartney Institute, and others.

Since 2012, Dr. Tokarev has been a part of Northwood’s faculty as an associate professor of free market economics and classical liberal philosophy. He is the founder and faculty advisor of Northwood University’s annual student-led Freedom Week. Additionally, Dr. Tokarev is a Mackinac Center for Public Policy Scholar and a Free Market Road Show speaker.

Dr. Dale Matcheck, Chair, Economics Department, Northwood University.

Kristin Tokarev, Writer for Stossel TV

Click here to receive our Daily 90-Day Study Essay emailed directly to your inbox.

Click here for the essay schedule with today’s essay and previously published essays hyperlinked.

PRINT ARTICLE