American Enterprise Institute

Capitalism and the American Revolution

Laying the Foundations for a Market Economy Notes

  1. N.Y. Const. of 1777.
  2. US Const. art. I, § 10.
  3. Brown v. Maryland, 25 US 419, 439 (1827).
  4. Almy v. California, 65 US 169 (1860).
  5. US Const. art. I, § 9, cl. 5.
  6. US Const. art. I, § 8, cl. 3. See Robert G. Natelson, “The Meaning of ‘Regulate Commerce’ to the Constitution’s Ratifiers,” Federalist Society Review 21 (2022): 308. For a contemporary exposition, see Joseph Story, Commentaries on the Constitution of the United States, ed. Ronald D. Rotunda and John E. Nowak (1833; Durham, NC: Carolina Academic Press, 1987). The sections on the commerce clause are §§ 510–35, which closely follow the views of Chief Justice John Marshall, to whom Joseph Story dedicated the volume. The juxtaposition of foreign, domestic, and Indian commerce suggests that all relate to activities across state lines. Their histories have wildly varied. For a broader perspective, see Jack M. Balkin, “Commerce,” Michigan Law Review 109 (2010): 1. For my views, see Richard A. Epstein, “The Proper Scope of the Commerce Power,” Virginia Law Review 73 (1987): 1387. Story offers strong support for Natelson’s position.
  7. See Federalist, no. 11 (Alexander Hamilton). This takes the position that we should advance “Active Commerce in our own bottoms.” And further: “If we continue united, we may counteract a policy so unfriendly to our prosperity in a variety of ways. By prohibitory regulations, extending at the same time throughout the States, we may oblige foreign countries to bid against each other, for the privileges of our markets. This assertion will not appear chimerical to those who are able to appreciate the importance.” All this is a dangerous game that hurts consumers on the one side and, critically, potential exporters who need cheap imports to lower their cost of making sales overseas.
  8. Gibbons v. Ogden, 22 US 1 (1824).
  9. Livingston v. Van Ingen, 9 Johns. R. 507 (N.Y. 1812), written by Chancellor James Kent, a major figure of the period, the first professor at Columbia University Law School, and the author of Commentaries on American Law.
  10. Hammer v. Dagenhart, 247 US 251 (1918).
  11. Willson v. Black-Bird Creek Marsh Co., 27 US 245 (1829).
  12. New York v. Miln, 36 US 102 (1837).
  13. Houston East and West Texas Railway Co. v. United States, 234 US 342 (1914).
  14. See Railroad Commission of Wisconsin v. Chicago, Burlington & Quincy R. R. Co., 257 US 563 (1921) (allowing the regulation of intrastate rates given that the property is used in both domestic and interstate commerce).
  15. For the most dramatic case, see Wickard v. Filburn, 312 US 111 (1942) (allowing the price regulation of grain fed to one’s own cows).
  16. H. P. Hood & Sons v. Du Mond, 336 US 525 (1949); and Dean Milk Co. v. City of Madison, 340 US 349 (1951).
  17. Magna Carta (1215).
  18. US Const. amend. V.
  19. Hurtado v. California, 110 US 516 (1884).
  20. See Woodrow Wilson, Congressional Government: A Study in American Politics (Riverside Press, 1885); and James Landis, The Administrative Process (New Haven, CT: Yale University Press, 1938). For my overview, see Richard A. Epstein, Design for Liberty: Private Property, Public Administration, and the Rule of Law (Cambridge, MA: Harvard University Press, 2011).
  21. Barron v. Baltimore, 32 US 233 (1833).
  22. Chicago, Quincy & Burlington Railroad Co. v. Chicago, 166 US 226 (1897).
  23. Gardner v. Village of Newburgh, 2 Johns. Ch. 162 (N.Y. 1816). Gardner was the “most prominent” of these cases but by no means the only one. See James W. Ely, “The Oxymoron Reconsidered: Myth and Reality in the Origins of Substantive Due Process,” Constitutional Commentary 16, no. 315 (1999): 334.
  24. Gardner, 2 Johns. at 164, 166.
  25. US Const. art. I, § 10, cl. 1. See Federalist, no. 44 (James Madison) (dealing with the clause). For general accounts, see Benjamin Fletcher Wright Jr., The Contract Clause of the Constitution (Cambridge, MA: Harvard University Press, 1938), 3–26; and Robert L. Hale, “The Supreme Court and the Contract Clause (Pts. 1–3),” Harvard Law Review 57, no. 512 (1944): 621, 852. For my views, see Richard A. Epstein, “Toward a Revitalization of the Contracts Clause,” University of Chicago Law Review 51 (1984): 703.
  26. Federalist, no. 10 (James Madison).
  27. Swift v. Tyson, 41 US 1 (1842) (for the defense of this result in the Supreme Court). Chancellor Kent had taken the same position as a matter of state law. See James Kent, Commentaries on American Law (Claitor’s Pub Division, 1826), 3:81, cited in Swift, 41 US at 17.
  28. Sturges v. Crowninshield, 17 US 122, 207 (1819) (“If, in a state where six years may be pleaded in bar to an action of assumpsit, a law should pass declaring that contracts already in existence, not barred by the statute, should be construed to be within it, there could be little doubt of its unconstitutionality”).
  29. Robert Joseph Pothier, A Treatise on the Law of Obligations or Contracts, trans. William David Evans (Lawbook Exchange, 1853), 1:105.
  30. Sturges, 17 US at 197.
  31. Sturges, 17 US at 197.
  32. Sturges, 17 US at 200.
  33. Sturges, 17 US at 208.
  34. This is the central theme. See Epstein, “Toward a Revitalization of the Contracts Clause,” 703, 740–47; and Richard A. Epstein, Takings: Private Property and the Power of Eminent Domain, pt. 4 (Cambridge, MA: Harvard University Press, 1985) (showing how the same dynamic works in takings cases).
  35. West River Bridge Co. v. Dix, 47 US 507, 532–34 (1848).
  36. Ogden v. Saunders, 25 US 213 (1827).
  37. Douglas Stollery, “Statute of Frauds,” Alberta Law Review 14 (1976): 222–23.
  38. Ogden, 25 US at 215.
  39. In Jackson v. Lamphire, 28 US (3 Pet.) 280, 289 (1830), the Court upheld the state’s power to enact a recordation system notwithstanding the contract clause. The result in the case is correct, but the opinion itself is only a collection of platitudes.
  40. For something like the end, see Home Building and Loan Association v. Blaisdell, 290 US 398 (1934).
  41. Fletcher v. Peck, 10 US 87 (1810). For a concise account of the case, see Federal Judicial Center, “Fletcher v. Peck (1810),” https://www.fjc.gov/history/cases/cases-that-shaped-the-federal-courts/fletcher-v-peck. Story argued to uphold the validity of the contract the year before he was elevated to the bench.
  42. See Natelson, “The Meaning of ‘Regulate Commerce’ to the Constitution’s Ratifiers.”
  43. Dartmouth College v. Woodward, 17 US 518 (1819).
  44. US Const. art. I, § 8, cl. 3.
  45. Patent Act of 1790, 1 Stat. 109, § 1.
  46. Richard A. Epstein, “The Utilitarian Foundations of Natural Law,” Harvard Journal of Law & Public Policy 12 (1989): 713.
  47. Adam Mossoff, “Rethinking the Development of Patents: An Intellectual History, 1550–1800,” Hastings Law Journal 52 (2001): 1255.
  48. Patent Act of 1790, 1 Stat. 109, § 1.
  49. Charles River Bridge v. Warren Bridge, 36 US 420 (1837). This case ended in a 4–3 split in which the grant was not held exclusive, which is why the Warren Bridge was cheek by jowl next to the Charles River Bridge. The grant allowed the ability to charge and collect tolls for 40 years (later extended to 70 years), after which the bridge was to be turned over to the state. Note that the Charles River Bridge Company had to compensate Harvard. There is a mixture of good sense, protectionism, and public finagling in the overall deal.
  50. Patent Act of 1790, § 2.