At my informal law and economics seminar last evening, we discussed the Slaughterhouse Cases, which were decided by the U.S. Supreme Court in 1873. The seminar is conducted in conjunction with the George Mason University Economics Society, a great student-run libertarian group that is interested in free-market, Austrian economics.
The Slaughterhouse Cases planted the seeds of economic liberty and substantive due process, concepts that would ultimately form the basis for a tremendous legal battle that would culminate during the New Deal era of President Franklin Roosevelt.
To set the background to the case, we began with a discussion of the Constitution, the document which called the federal government into existence. It provided for a government of limited, enumerated powers. If the power wasn’t enumerated, then it couldn’t be exercised.
It was the other way around for the states. The Constitution didn’t enumerate the powers of the states. That’s because the states were authorized to exercise whatever powers they wanted, unless such powers were expressly prohibited by the Constitution (or limited or prohibited by the state’s own constitution). For example, the states were expressly prohibited by the Constitution from making anything but gold and silver coins a medium of exchange.
So, then why was it necessary to amend the Constitution with the first ten amendments, which expressly restricted the federal government’s infringement on fundamental rights and guaranteed important procedural protections? The answer is because the American people weren’t convinced that the enumerated-powers concept would work to constrain the type of people that would be attracted to work for the federal government. They wanted express protections, which was what the Bill of Rights was all about.
After the Civil War, the Constitution was amended with the Thirteenth Amendment (slavery), the Fourteenth Amendment (due process and privileges and immunities), and the Fifteenth Amendment (voting rights).
The Slaughterhouse Cases involved the grant of a monopoly by the Louisiana legislature to a private corporation in New Orleans to operate the only slaughterhouse in the city. All other slaughterhouses were required to close down. Anyone who wished to butcher would be permitted to do so by using space within the monopoly slaughterhouse.
The state justified the law under the “police powers” of the state. Those were powers that historically had fallen within the sovereign powers of government. The police-powers concept, which stretched back into English and European history, of course didn’t apply to the federal government because the federal government had no sovereign powers — its powers were limited to those enumerated within the Constitution. But the concept still applied to the states.
Prior to the enactment of the law, there were slaughterhouses located north of New Orleans. It was a nasty business. When the cows were butchered, the entrails would be thrown into the Mississippi River, which would then carry them through New Orleans. Thus, the law was justified under the state’s police powers — to preserve the “health, safety, and welfare” of the citizenry.
Another factor, however, was one involving public-choice theory. It turns out that the owners of the monopoly corporation had bribed members of the legislature to provide them with the monopoly, a point the Court might not have been aware of.
What is a monopoly? It is a legal privilege granted by the government to an entity that enables the entity to be the sole provider of a good or service. The law prohibits any competitors. Shielded from competition, the grant enables the monopolist to charge higher prices than would otherwise be the case, increasing its profits. The Court pointed out the long history of revulsion among the English people against monopolies, especially because they always come with abusive treatment and shoddy products and services.
What’s a modern-day example of a monopoly? Not Apple or Google or IBM or any other big company. As long as the law doesn’t prohibit competition, there is no monopoly, no matter how big and successful a firm might become. The Postal Service is an example of a monopoly. The law outlaws any competition in the delivery of first-class mail. If someone tries to compete against the Postal Service, the federal courts will immediately grant a request by the Justice Department to shut it down.
The lawyer representing the plaintiffs in the Slaughterhouse Cases was a brilliant attorney named John A. Campbell, who had been serving on the U.S. Supreme Court at the outbreak of the Civil War. Believing that he needed to fight on the side of his country, he resigned his lifetime appointment on the Court and returned to the South to become Assistant Secretary of War in the Confederacy. At the end of the war, he was arrested and imprisoned for six months. Starting all over again in New Orleans, he took on the case of the Louisiana butchers.
Campbell obviously had an uphill battle in the Slaughterhouse Cases. After all, the states were empowered to enact laws to protect the “health, safety, morals, and welfare” of the citizenry. Clearly, this law related to protecting the people of New Orleans from polluted water.
What did Campbell do? He took the language of the Fourteenth Amendment and created an ingenious argument. He argued that under the Constitution states could no longer deprive people of their life, liberty, and property without due process of law. Within that context, he argued that there were certain rights that were so fundamental that the government could not take them away even if the correct procedures were followed.
In other words, even though the legislature had openly debated and discussed the law and then duly enacted it, that still wasn’t sufficient to extinguish fundamental rights. Campbell’s argument became known as “substantive due process,” which would provide the due process clause with two dimensions — procedural and substantive.
What was the fundamental right that the Louisiana legislature was infringing upon? That right was economic liberty — the right of a person to pursue any occupation he desires. That fundamental right, Campbell argued, trumped the police powers of the state.
The case was decided by a 5-4 vote, in favor of the monopoly. The majority held that the three post-Civil War amendments were enacted to protect the rights of the former slaves. The majority refused to interpret the Fourteenth Amendment in the way that Campbell suggested. The Court held that under the state’s police powers, the state had the authority to grant the monopoly.
But the real significance of the Slaughterhouse Cases lay with the dissenting opinions, especially the one by Justice Stephen J. Field, who himself had had a colorful legal career. He had begun practicing law on the east coast, but then set out for a life of adventure by taking a ship around South America to California during the Gold Rush. After a successful legal career out west, he was appointed to the U.S. Supreme Court, which caused him to move to Washington, D.C.
Field, along with his fellow dissenting justice, Joseph P. Bradley, agreed with Campbell’s argument. He said that the Louisiana law was a clearly unconstitutional infringement on the fundamental right of people to engage in an occupation. He even quoted Adam Smith’s famous 1776 treatise The Wealth of Nations:
The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of a poor man lies in the strength and dexterity of his hands; but to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbour, is a plain violation of this most sacred property. It is a manifest encroachment upon the just liberty both of the workman, and of those who might be disposed to employ him. As it hinders the one from working at what he thinks proper, so it hinders the others from employing whom they think proper. To judge whether he is fit to be employed, may surely be trusted to the discretion of the employers whose interest it so much concerns.
Field pointed out that the state could have addressed the pollution problems with regulations that didn’t involve the grant of a monopoly, such as requiring slaughterhouses to operate south of New Orleans.
Even though Field was in the dissent, his opinion would be read by lawyers and judges across the land, many of whom would find it to be persuasive.
At the same time, the Progressive movement was beginning, which called for socialistic economic programs and interventionism in economic activity.
Thus, in late 1800s America, the battle was being set, a battle that would rage at all levels of American life — the battle between economic liberty and economic statism. It would constitute the biggest battle in the history of the U.S. Supreme Court, one that would culminate in 1937 in the case of West Coast Hotel vs. Parrish.