US Economic History 2 — Interstate Commerce & the Constitution
The Constitution’s Interstate Commerce clause was supposed to liberate American markets. Video created with the Bill of Rights Institute to help students ace their exams.
This is the second video in a series of nine with Professor Brian Domitrovic, which aim to be a resource for students studying for US History exams, and to provide a survey of different (and sometimes opposing) viewpoints on key episodes in U.S. economic history. How do you think we did?
- Know Your (Bill of) Rights (blog post): This blog post explains what rights each amendment of the Bill of Rights protects, as well as common threats to those rights today.
- The Original Purpose of the US Constitution – Learn Liberty (video): Professor Randy Barnett explains that the constitution was written to protect the rights of the people. https://www.youtube.com/watch?v=EiMOtS_lzZc
- Constitutional crisis or the Constitution at work? (blog post): Professor Lauren Hall explains how the constitution is being used to constrain President Trump’s powers today.
When the United States separated from Britain during the Revolutionary War, the first national government was established under the Articles of Confederation. The Articles created a minimal national government that had little ability to bend the will of the states towards the national interest. This limitation of federal authority became apparent when several states in the new nation became involved in trade disputes. In the years prior to the passage of the Constitution, in 1789, states routinely passed tariffs on each other. If a merchant in one state brought a good across a state border, the merchandise was subject to attacks, collectible by a customs agent. Tariffs caused ill will among the states as trade wars developed. Meanwhile, the national Congress was unable to get all the states to agree to a standard tariff on imported goods to raise tax revenue, and government was deeply in debt from the Revolutionary War and needed the revenue. The national government, under the Articles, could not do anything about these problems. Leaders became concerned that the tension could undo the union. Just before the Constitutional convention met in 1787, James Madison wrote a pamphlet called the Vices of the Political System.
In that essay, he wrote that, “The practices of many states in restricting commercial intercourse with other states, and putting their productions and manufacturers on the same footing as with foreign nations. They’re not contrary to the federal Articles. It’s certainly a verse to the spirit of the union, and tends to beget retaliating regulations.… They are destructive of the general harmony.” This was one of the reasons some founders supported a new federal government that would replace the Articles of Confederation. And so it came to pass that the Constitution was ratified in 1789. Now one of the most significant new powers of the federal government under the Constitution was the power of Congress to regulate trade as outlined in Article I section 8 of the Constitution. The document specified that Congress had the power to “regulate commerce with foreign nations and among the several states, and with the Indian tribes.” Furthermore, Congress, but not the states was also authorized to levy “taxes, duties, imposts, and excises.” Upon ratification of the Constitution, states could no longer regulate trades among themselves, only Congress now had that authority, but even here the power was limited in that federal taxes had to be uniformed across all the states.
Congress retained sole authority to regulate trade with other nations. Nonetheless, in future eras, including today, the commerce clause is used to justify almost any Congressional regulation of the economy, and many Congressional laws. This appears to be at variance with the narrow and define purpose of the commerce clause. Article I Section 8 at the time it was written. Its purpose was to end state tariffs and duties, to prevent in concert with other articles in the Constitution, Congress from discriminating against trade from any particular state, and to give Congress the sole power of imposing taxes on foreign goods. The development of a vast administrative and regulatory state in the 20th and now the 21st Century, came because Congress and the courts felt that the commerce clause of Article I Section 8 of the Constitution, could be interpreted much more broadly, than it initially was in the 1780s and 1790s.