by Peter Irons
One of the first Sherman Act cases brought by the Justice Department sought to dissolve the American Sugar Refining Company and its subsidiaries, which between them controlled 98 percent of the industry. The federal government filed suit against one subsidiary, the E. C. Knight Company, which pleased the families—and voters—who resented the high prices they paid for sugar. The Supreme Court, however, preferred to drink its coffee unsweetened. Every justice but John Harlan voted to limit the reach of the Sherman Act in United States v. E. C. Knight Company, holding that the Commerce Clause did not allow Congress to regulate the “manufacture” of products that were later shipped from one state to another.
Chief Justice Melville Fuller’s opinion for the Court took semantics to hair splitting extremes. “Commerce succeeds to manufacture, and is not a part of it,” he wrote. Fuller conceded that sugar produced at the Knight Company’s refinery in Philadelphia was “undoubtedly” shipped into other states, and that the monopoly’s aim was “manifestly private gain” from its control over sugar refining. But he stubbornly refused to admit that the sugar monopoly had “any intention to put a restraint upon trade or commerce” between the states, despite the mountain of evidence. presented by the Justice Department. The fact that sugar prices might be “indirectly affected” by monopoly power did not budge Fuller from his narrow, reading of the Commerce Clause. The American people lost this case, and paid for the Court’s decision every time they opened a sugar bowl.
The second important case decided in 1895 involved another federal statute, enacted the previous year, that Congress also passed in response to populist pressures. The first national income tax imposed a 2 percent levy on corporate profits and personal incomes. Those with incomes under $4,000 were exempt from the tax; most working people earned less than this amount, and the law’s burden fell largely on the wealthy class. One member of this class, Charles Pollock of New York, filed a suit on behalf of fellow shareholders in the Farmers’ Loan ant Trust Company, seeking to block the bank from paying the tax. This was clearly a “collusive” lawsuit, since both Pollock and the company wanted to avoid taxation. The bank’s lawyers argued that the law violated the Constitution’s provision, in Section 9 of Article II, that no “direct” tax could be imposed “unless in proportion to the census” of the population. In other words, federal taxes must apply the same rate to every citizen, without any exemptions based on income.
The case of Pollock v. Farmers’ Loan & Trust Company, which the justices accepted for argument within a few months of the law’s passage, split the Court down the middle. In fact, the justices divided four to four after the case was first argued, since Justice Howell Jackson was bedridden with tuberculosis and could not vote. After Jackson returned to the bench—just. three months before his death—the Court heard further argument from leaders of the corporate bar. Joseph Choate, the most eminent Wall Street lawyer of the time, denounced the tax law as “communistic in its purposes and tendencies” and predicted that no justice “will live long enough to hear a case which will involve a question of more importance than this, the preservation of the fundamental rights of private property” from “populistic” attacks.
Five justices heeded Choate’s warning and voted to strike down the law. Chief Justice Fuller again wrote for the majority, holding that an income tax was “unconstitutional and void because not apportioned according to representation” under the provision of Article II of the Constitution. Fuller’s opinion distorted history and twisted precedent, dismissing the Court’s rulings in cases that went back to 1796 as “a century of error” on this question. justice Henry Brown, certainly not a communist, issued the most pointed of the four dissents. “The decision involves nothing less than a surrender of the taxing power to the moneyed class,” he wrote. “Even the spectre of socialism is conjured up to frighten Congress from laying taxes upon the people in proportion to their ability to pay them.”
The Pollock decision provoked denunciation from labor and “progressive” groups, but they had little influence until pressure mounted for more equitable ways to finance the expanding federal government. The “spectre of socialism” did not frighten Congress from voting in 1912 to submit for state ratification a constitutional amendment to reverse the Pollock decision. Only twice before, first in 1795 with the Eleventh Amendment and then in 1868 with the Fourteenth, had Congress and the states responded to unpopular Supreme Court decisions by amending the Constitution. The Sixteenth Amendment, the first addition to the Constitution since Reconstruction, gave Congress the “power to lay and collect taxes on incomes, from whatever source derived” and “without regard to any census or enumeration.” The Senate adopted the amendment without a single dissent, the House approved it by a margin of 318 to 14, and it sailed through the state legislatures with little opposition, winning final ratification in 1913.
The last of the Court’s 1895 decisions provoked another storm of protest, and calls for judicial impeachment. The Debs began the year before with another railroad strike, even larger and more violent than the bitter conflict of 1877. Again, the economy was crippled by depression and working people felt the sting of poverty and privation. Railroad workers fared better than most; engineers were the “aristocrats of the rails” and earned an average of $957 in 1890, but railroads had their caste system and brakemen took home only $212 that year for the most dangerous job on the trains. More than two thousand railroad workers died in accidents each year, and thirty thousand suffered injuries. The Panic of 1893 prompted a small band of workers to form the American Railway Union, under the leadership of Eugene Debs of Indiana, who began working on the roads at fifteen and joined the Brotherhood of Locomotive Firemen. Each job category had its own union, which allowed managers to pit workers against each other. After a friend was crushed to death under a locomotive, Debs left the roads and later took a job as a railway billing clerk. The union Debs helped to found hoped to unite all railroad workers, from engineers to laborers. “It has been my life’s desire to unify railroad employees and to eliminate the aristocracy of labor,” he stated.
The railway strike of 1894 began in June when workers at the Pullman Palace Car Company near Chicago walked off their jobs, to protest five successive wage cuts, the most recent of almost 30 percent. These workers made the Pullman cars in which passengers ate and slept on long trips. The American Railway Union, whose ranks had swelled to 150,000 members, supported the Pullman strikers and asked its members not to handle Pullman cars, which brought passenger trains across the nation to a shuddering halt. The strike quickly spread to freight lines, and the General Managers Association—which spoke for twenty-four railroads—vowed to break the strike and crush the union that Debs headed. The managers called on Attorney General Richard Olney for help, and the former railroad lawyer responded with federal warrants for the arrest of anyone who “obstructed” the U.S. mails. Since most letters and packages were shipped by rail, Olney’s warrants could be served on any striking worker.
At Olney’s direction, the federal attorney in Chicago persuaded federal judges to issue a sweeping injunction against the use off “threats, intimidation, persuasion, force, or violence” to block trains moving in interstate commerce. Ironically, the judges based the “Debs injunction” on the Sherman Antitrust Act, which the Supreme Court had refused to apply to business monopolies in the Knight case. The judicial prohibition on “persuasion” by strikers or sympathizers, which effectively banned all picketing and distribution of handbills, was unprecedented, and it outlawed the only peaceful means of reaching other workers and the public. Debs vowed to defy the injunction and called on his members to refrain from violence. Many strikers, however, vented their anger by derailing freight cars, blocking tracks, and dragging engineers from their cabs if they refused to quit work. President Grover Cleveland, taking the advice of Attorney General Olney, sent federal troops to Illinois. On July 6, 1894, hundreds of soldiers battled a crowd of five thousand strikers
and their supporters in Chicago. When the gunfire ended, thirteen people lay dead, fifty-seven were seriously injured, and seven hundred went to jail. Four days later, federal marshals arrested Debs and he was charged with “contempt of court” for violating the injunction. The strike was broken, the union was wrecked, and the victorious railroad managers placed thousands of strikers on a “blacklist” that barred them from any railway job in the country.
Labor suffered a crushing defeat, and the Supreme Court upheld “government by injunction” when it unanimously affirmed Debs’s contempt conviction and his two-year prison sentence. Justice David Brewer spoke for a Court that included several former railroad lawyers, including himself. “The strong arm of the National Government may be put forth to brush away all obstructions to the freedom of interstate commerce or the transportation of the mails,” he wrote. “If the emergency arises, the army of the Nation, and all its militia, are at the service of the Nation to compel obedience to its laws.”
Reaction to the Court’s decision split along political lines. One conservative lawyer wrote that “all must applaud the promptness and vigor with which the Federal power acted, saving the country perhaps from a reign of anarchy and bloodshed.” On the other side, Governor Sylvester Pennoyer of Oregon, elected on the combined Democratic-Populist ticket, denounced the Debs ruling and the decisions in the Knight and Pollock cases: “Our constitutional government has been supplanted by a judicial oligarchy,” he wrote in the American Law Review. He called on Congress to “impeach the nullifying Judges for the usurpation of legislative power” and suggested that its members assume the power to reserve the Court’s decisions. During the presidential election campaign of 1896, the Democrats adopted a platform that deplored “government by injunction as a new and highly dangerous form of oppression” by federal judges. But the Republicans won that election, and the next three, and named ten Supreme Court justices over the next sixteen years.
The Court’s ruling in the Debs, case made a lasting impact on American politics. Eugene Debs entered prison as a Democrat and emerged as a Socialist. “I was to be baptized in Socialism in the roar of conflict,” he later wrote; “in the gleam of every bayonet and the flash of every rifle the class struggle was revealed.” Debs became the Socialist Party’s charismatic leader and four-time presidential candidate, winning close to a million votes in both 1912 and 1920. He crossed the country dozens of times, speaking in hundreds of cities and towns; perhaps a million Americans heard Debs speak, before the time of radio and television. His appeals to working people did not lead the country to socialism, but they forced other politicians to borrow from his party’s platform to keep their own voters from defecting to Debs.
20
“The Work Was Light and Healthful”
The claim that the Due Process Clause of the Fourteenth Amendment protected “liberty of contract” as a substantive right won converts among conservative legal writers and state judges well before the Supreme Court confronted this issue in 1897. The case of Allgeyer v, Lousiana dealt with a state law that barred Louisiana citizens and corporations from purchasing property insurance from any out-of-state company not licensed to conduct business within the state. The state prosecuted the E. Allgeyer Company in New Orleans for notifying a New York marine insurance firm—not licensed in Louisiana—that it was shipping goods under a policy written by the “foreign” firm. The company challenged its conviction, arguing that the state law infringed its “liberty” under the Due Process Clause to enter contracts that did not violate laws regulating “domestic” insurance firms. Since it discriminated between insurance firms within and outside the state, the law could also have been challenged on equal protection grounds, but the Company staked its case on the “liberty of contract” doctrine.
The company’s gamble paid off in spades. Every justice joined the opinion of Rufus Peckham, who defined “liberty” in broad terms that embraced “the right of the citizen to be free in the enjoyment of all his faculties; to be free to use them in all lawful ways ; to live and work where he will; to earn his livelihood by any lawful calling; to pursue any livelihood or avocation, and for that purpose to enter into all contracts which may be proper, necessary and essential to his carrying out” these rights. Peckham made a slight bow to the “police powers” doctrine, writing that states could limit the right to contract when it conflicted with “the policy of the State as contained in its statutes,” but he warned state lawmakers “not to infringe upon those other rights of the citizen which are protected by the Federal Constitution.” Peckham’s opinion did not specify these “other rights,” but his wording suggested—without invoking its provisions—that the Ninth Amendment’s mention of rights “retained by the people” limited state power to the bare minimum of protecting the public against clear dangers to its health and safety. Barring its citizens from contracting with out-of-state firms for insurance coverage was certainly not a legitimate exercise of Louisiana’s police powers.
Having inserted “liberty of contract” into the Constitution, the Court was not quite ready to scrap the police powers doctrine. Ruling in 1898, the year after the Allegeyer decision, seven of the justices who had joined Peckham’s opinion voted in Holden v. Hardy to uphold a Utah law that set an eight-hour working day for “hard-rock” miners, primarily those who tunneled for coal, lead, and copper. The Utah constitution required its legislature to “pass laws to provide for the health and safety” of miners, and state judges had found that working long hours in hard-rock tunnels posed a serious threat to miners, whose death rate from accidents far exceeded that in any other industry. Confronted with hard figures and gruesome accounts of rock falls and explosions, the Court rejected the argument of company lawyers that miners were “perfectly competent to contract” on an equal basis with their bosses and to assume the risk of disability or death without any protection from state law. The “liberty of contract” doctrine rested on the notion that workers and employers held “equal bargaining power” in negotiating the terms of wages, hours, and working conditions. Only the most dogmatic judge could actually believe that John D. Rockefeller and the immigrant and illiterate workers in his hard-rock mines sat around the bargaining table on equal terms and hammered out fair contract terms.
Writing for the majority in Holden v. Hardy, Justice Henry Brown dismissed the Company’s “right of contract” argument. This implied right, he wrote, was “subject to certain limitations which the State may lawfully impose in the exercise of its police powers.” While Brown found this power “inherent in all governments,” he concluded that “it has doubtless been greatly expanded in its application during the past century, owing to an enormous increase in the number of occupations which are dangerous” to workers or “detrimental” to their health. Brown did not, however, hand the states a blank check in passing “health and safety” laws; he reserved for judges the power to decide whether a legislature acted “in exercise of a reasonable discretion or whether its actions be a mere excuse for an unjust discrimination.” Perhaps because of this assurance, Justices Peckham and Brewer, the Court’s laissez-faire stalwarts, filed their dissents in the Holden case without writing opinions.
justices Peckham and Brewer might well have written a strong dissent in the Holden case had they not suffered the loss, just months before that decision, of their strongest ally with the retirement of Justice Stephen Field, the Court’s most effective and eloquent defender of laissez-faire doctrine. After thirty-four years on the bench, spanking the terms of nine presidents, Field was determined to break John Marshall’s record of service, even though he could barely lift his pen during his last two years. His colleagues persuaded Justice John Harlan to visit Field and suggest that he resign. Years later, Chief Justice Charles Evans Hughes recounted the scene, relying on the memories of justices who had served with Field. Hughes wrote that Harlan approached Field in the Court’s robing room, where he sat alone, “apparently oblivious
of his surroundings.” Harlan diplomatically reminded Field of the time he had been delegated, thirty years earlier, to make the same request of Justice Robert Grier. “The old man listened, gradually became alert and finally, with his eyes blazing with the old fire of youth, he burst out: ‘Yes! And a dirtier day’s work I never did in my life!’ ” True or not, this story reflects Field’s dogged persistence and fierce will. Hanging on until he broke Marshall’s record by one month, Field finally submitted his resignation to President William McKinley. He wrote his own judicial epitaph during his last year on the Court. “Timidity, hesitation and cowardice,” he said, were traits that “deserve only contempt” in a judge. Setting his own standard, Field never yielded to “the clamor of the crowd” in voicing his conservative views.
McKinley made his only Supreme Court appointment in filling the “California seat” that Field had vacated with a member of his cabinet, Joseph McKenna. Turning to a political crony, as many other presidents did, McKinley replaced a brilliant conservative with an incompetent one. McKenna had served with McKinley in Congress and later joined his administration as attorney general. “He was a poor lawyer and knew it,” one biographer wrote. After McKenna had served twenty-seven lackluster years on the bench, his colleagues suggested that he retire; like Field, he first refused and later stepped down, after learning that the other justices had agreed not to decide any cases in which his vote would determine the outcome.
