Supreme Court Decision
Munn v. Illinois
Munn is a little bit of a strange case. It touched a variety of constitutional issues, and in its majority opinion, held a position that was strangely out of place in the nineteenth century, but familiar in the twenty-first.
The case involved an Illinois statute which set the prices grain elevators were allowed to charge their customers -- the farmers -- in any city with a population in excess of 100,000. This pretty much limited the effect of the law to elevators operating in Chicago, pleasing the local Grange organization, whose member farmers were convinced that the elevator operators were fixing prices and gouging customers.
For their part, the operators charged that the statute not only infringed Congress' constitutional right to regulate commerce, but also violated their private property rights under the Due Process clause of the Fourteenth Amendment
In finding for the Grangers, Chief Justice Morrison R. Waite stated in his majority opinion that it was well within the rights of the state of Illinois to regulate commerce within its boundaries, that any effect on interstate commerce was incidental. He went further -- and this is where the slope gets slippery -- to suggest that when private property exposes itself to a public interest, it ceases to be private. When a business enterprise places its property in a use "in which the public has an interest, [it], in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good, to the extent of the interest [it] has created."
Addressing the issue of whether the public good was necessarily served by the state's actions against private property, he broadly pronounced that "we must assume that if a state of facts could exist that would justify such legislation, it actually did exist when the statute under consideration was passed." [Emphasis added.]
Justice Waite did, however, express a comfortably nineteenth century perspective on Judicial Review when he stated that, in general, complaints about bad legislation must be taken "to the polls, not to the courts."
Justices Stephen J. Field and William Strong dissented, refusing to accept the public interest argument, and pointing out that if Justice Waite's opinion represented good law, then "all business and all property in the state are held at the mercy of the legislature." They held that a substantive construction of the Due Process clause protected private rights against public power.
While Justice Waite's opinion did, in fact, come to reflect the judicial view of economic rights in the later twentieth century -- at least at the federal level -- the dissenting opinion formed some of the early thought on what became "substantive due process". Under this latter doctrine, citizens are found to have "fundamental rights", including freedom of contract and property rights, which mitigate against state interference for less than overwhelming public need. The substantive due process view of economic freedom governed the Court's outlook for about the first quarter of the twentieth century.
In a further twist, the fundamental rights aspect of substantive due process, abandoned in its economic arguments for far more interventionist policies, came to support the post-war discovery of new personal rights, especially that of privacy and its subsidiaries.
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Other decisions pertaining to Economic Freedom:
Allgeyer v. Louisiana [165 U.S. 578 (1897)] Fuller Court
Wickard v. Filburn [317 U.S. 111 (1942)] Stone Court