Richard Nisley

Economic Regulation on Trial–Lochner v. New York
History - American Released - Aug 25, 2018
We tend to think of activist Supreme Courts as being liberal. That's not always been the case, as the following court case attests:

On the surface the case seemed simple enough. The state of New York passed a law limiting bakery workers to no more than ten hours per day or sixty hours per week. A bakeshop owner, John Lochner, was fined for violating that law. He took the matter to court and lost, and appealed the decision all the way up to the Supreme Court. In its majority opinion, the Court ruled the state law was an unconstitutional infringement on bakery owners’ “right to contract” as embodied in the Fourteenth Amendment. The case was Lochner v. New York (1905), one of the most important and most frequently cited cases in Supreme Court history, and the subject of this marvelous (and somewhat difficult) book: LOCHNER V. NEW YORK: ECONOMIC REGULATION ON TRIAL. The author, Paul Kens, a professor at Texas State University, does a bang up job in explaining the many issues that went into the court’s 5-4 ruling, and its aftermath.

What’s notable is that the substantive due process clause, and the liberty of contract clause, on which the court based much of its opinion, are two clauses found nowhere in the Constitution. In fact, they’re theories that were developed in the 19th century and adopted by the Court to justify what amounted to laissez-faire constitutionalism, and used to determine the outcome of a number of important Court decisions (in favor of business), of which Lochner v. New York is one of the most notorious.

The author examines the two theories, as well as two legal principles that figured in the case: “negative state” and “police power.” But the keys to the decision were the first two: the substantive due process clause, and the liberty of contract clause.

The Court’s economic interpretation of the due process clause of the Fourteenth Amendment, restyled as "substantive due process," had its origin in a book by an English philosopher named Herbert Spencer. Published in the U.S. in 1865, the book is entitled SOCIAL STATICS. In it, Spencer blended social Darwinism with laissez-faire in an attempt to develop a universal moral law that amounted to something akin to societal survival of the fittest. Add the ideas of William Graham Sumner, the chair of political and social science at Yale, and you arrive at an explanation for poverty and a justification for inequality. In their view, the only way to reduce inequality would be to take from the fit and give to the unfit. Not only would this neutralize the purpose of the laws of nature, it would violate the social Darwinist concept of liberty. At a time when socialism was on the rise, and labor was striking for more pay and better working conditions, and collectivism appeared to threaten the liberty of the individual, the Supreme Court looked for a doctrine to quell what they believed was a threat to individual liberty and therefore a threat to private enterprise. The Spencer-Sumner theory did the job nicely, and was used to retool the due process clause so that it protected business interests above all else. No thought was given to the welfare of workers, who were virtually all immigrants; in this scenario, the government would allow them no comfort and no aid. Survival of the fittest, indeed.

The other theory, of liberty of contract—a.k.a. the Liberty-of-Contract Doctrine—was developed by Justice Stephen J. Field, which stretched the concept of property to include the potential for profit. Beginning with his dissent in the Slaughter-House Cases, Field melded the concepts of liberty and property—both protected by the Fourteenth Amendment—to arrive at a concept not found in the Constitution but rather upon the idea of natural rights, at least a version of natural rights expounded by laissez-faire economists. According to the author, “it was as if Field had laid a page of the UNITED STATES SUPREME COURT REPORTS over SOCIAL STATICS and traced Herbert Spencer’s first principle.”

Not everyone on the High Court was buying into the liberty of contract/substantive due process clauses, notably Justice Oliver Wendell Holmes. Holmes’ dissent in Lochner v. New York was brief and pointed: “The Fourteenth Amendment does not enact Mr. Herbert Spencer’s Social Statics.” In other words, there was nothing “natural” about laissez-faire. It was just an economic theory, and “a constitution is not intended to embody a particular economic theory,” Holmes said. “It is made for people of fundamentally different views, and the accident of our finding certain opinions natural and familiar or novel and shocking ought not to conclude our judgement upon the question whether statutes embodying them conflict with the Constitution of the United States. General principles do not decide concrete cases.”

The Lochner decision ushered in what has become known as the Lochner Era—in which the Court struck down a number of state economic regulations—and ended in 1937 with West Coast Hotel v. Parrish. The landmark case upheld a Washington State minimum wage law by rejecting the Liberty-of-Contract Doctrine. The majority opinion was written by Justice Charles Evans Hughes: “The exploitation of a class of workers who are in an unequal position with respect to bargaining power and are thus relatively defenseless against the denial of a living wage is not only detrimental to their health and well being, but casts a direct burden for their support upon the community.” Further on he wrote: “What the workers lose in wages, the taxpayers are called upon to pay and the community is bound to provide what is in effect a subsidy for unconscionable employers. The bare cost of living must be met.”

Final note: the Lochner Era was one of judicial activism run amok— conservative judicial activism, that is—infamous for a number of decisions that undermined the working class, the rights of minorities, and free speech. It was followed by an era of judicial restraint in which the Court reversed a number of bad Lochner Era decisions while making a few bad decision of its own, most notably Hirabayashi v. U.S. (1943) where, during World War II, the Court ruled that interning Japanese Americans was legal. Brown v. Board of Education (1954) ushered in a new era of judicial activism—liberal judicial activism—with a host of decisions that bolstered the rights of minorities, the rights of the accused, free speech, free press, and the right to privacy. The era lasted roughly to 1973. Since then, the Court has become less activist and more conservative.

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