Federalism

The Constitution in Service to Business

Time Frame

• These events in the history of federalism in the U.S. take place between the end of Reconstruction (1877) and the beginning of the New Deal (1932)
• The “Second Constitutional Era” in your text’s terminology

What to look for:

• From the 1880s until 1937 the Supreme Court severely limited the ability of the federal government and the states to regulate business
• A solid majority of the justices of this era were devoted to an extreme version of laissez-faire capitalism and a rigid conception of dual federalism

How the Court Limited the Power of Congress

Congress and Business Regulation

• Remember: Congress must have a constitutional basis for every law it passes
• Most economic regulation is premised on the commerce clause
• Art. I, § 8, cl. 3 gives Congress the power to regulate commerce among the several states, with foreign nations and Indian tribes
• Notice how the Congressional power over domestic commerce power is limited to interstate commerce

The Legal Arguments

• In upcoming cases example people upset with a federal law asked the Court to nullify the law on two related grounds:
• Congress exceeded the power granted to it by the Constitution’s commerce clause
• Congress unconstitutionally exercised powers reserved to the states by the 10th Amendment
• To decide the cases, the Court determine the meaning of the phrase “commerce among the several states”

Defining Interstate Commerce

• Before 1937 the Court defined interstate commerce consistent with the idea of dual federalism
• The Court made a rigid distinction between the powers of the national government and the powers of the state
• If something physically moved across state lines, it could be regulated by Congress
• If something was “local in nature” (i.e., did not move across state lines), it was reserved to the states to regulate

The National Scandal of Child Labor

To the Supplement

More on this Era

• Despite the Court, both federal and state government began to grow in size
• One reason: The Progressive Movement
• Government-if run correctly-could be an engine of social improvement
• Classic Progressive Personality: T. Roosevelt

A Needed Change

• In October, 1929 the stock market crashes
• US enters a depression of unprecedented scale
• President Hoover (R) seen as not doing enough
• Franklin D. Roosevelt (D) elected on promise to use government to help the nation out of the Depression
• Remember for history of political parties