Federalism

3

FEDERALISM

The meaning of federalism has been determined more by Congress, the President, and the political process than by judicial rulings. The two political branches determine the balance between states and the national government whenever they exercise the spending power, the taxing power, and the commerce clause to direct state activities. These constitutional judgments are generally affirmed by the courts and in many cases are never challenged. On those occasions where federal courts impose their views of federalism and choose to strike down congressional statutes, the judicial doctrine will prevail only if it is supported by Congress and the American people. Otherwise, the regular political process will force a correction.

Federalism is one method for allocating and dispersing power. Dividing political authority and sovereignty between the national government and the states provides a structural check on national power, protecting not only states’ rights but also individual rights. With their distrust of power, the framers tried to create a balance between the central government and the states. That balance has changed over time, prodded more by political and economic imperatives than by judicial rulings.

After America declared its independence from England in 1776, 13 states operated independently without a central government. The Articles of Confederation, drafted in 1777 and ratified in 1781, allowed each state to retain “its sovereignty, freedom and independence,” with the exception of a few powers expressly delegated to the national government. Because of inadequate national authority, the states chose delegates to meet in Philadelphia in 1787 “to devise such further provisions as shall appear to them necessary to render the constitution of the Foederal Government adequate to the exigencies of the Union.”¹

When the draft Constitution circulated, critics objected that it created a national government instead of a federal form (a confederation of sovereign states). In Federalist No. 39, James Madison conceded that some features of the Constitution gave it a national character, but other provisions vested power directly in the states. The framers had created something new, something in-between. Madison concluded that the Constitution “is, in strictness, neither a national nor a federal Constitution, but a composition of both.”

The delegates needed to strengthen the national government without sacrificing the separate identity and functioning of the states. What model would work best? They knew that the French theorist Montesquieu believed that republican government could flourish only in small countries. He reasoned that as the size of a country increased, popular control would have to be surrendered, requiring aristocracies for moderate-sized countries and monarchies for large nations. In Federalist No. 10, Madison turned this theory on its head by arguing that republican government was unlikely to survive in a small territory because a dominant faction would oppress the smaller ones. “Extend the sphere,” however, “and you take in a greater variety of parties and interests; you make it less probable that a majority of the whole will have a common motive to invade the rights of other citizens.”

Subdividing this large territory into distinct states would add another safeguard. In Federalist No. 28, Alexander Hamilton argued that the national government and the states could check usurpations from each other: “The people, by throwing themselves into either scale, will infallibly make it preponderate. If their rights are invaded by either, they can make use of the other as the instrument of redress.” This formulation depends on the regular political process as the remedy, not on litigation and court rulings.

Among the enumerated powers of Congress is the authority to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” When the scope of the commerce clause reached the Court in Gibbons v. Ogden (1824), Chief Justice John Marshall read it broadly to give Congress the power to regulate economic life in the nation to promote the free flow of interstate commerce, including actions within state borders that interfered with that flow.² Typical of Marshall’s attitude about national power is the controversy over the U.S. Bank.

Creating a U.S Bank

McCulloch v. Maryland (1819), which upheld the constitutionality of the U.S. Bank, vividly illustrates how Congress, the President, executive officials, and courts engage in three-branch interpretation. The political branches performed the initial constitutional analysis. They did the spade work and heavy lifting; their inquiry and balancing of values were later blessed by the Court.

A central constitutional question in McCulloch was whether Congress could establish a national bank in the absence of express authority in the Constitution. Was there some “implied power” that might justify a national bank? Some of those issues had been thrashed out earlier, in 1781, when the Continental Congress debated the merits of a national bank. Robert Morris, Superintendent of Finance (forerunner of the Secretary of the Treasury), proposed a national bank, and a committee further explored the idea. Congress decided that a national bank would be both proper and advantageous.³ Nine states supported the plan, one state (Massachusetts) voted against it, and one state (Pennsylvania) was divided. Of the four delegates from Virginia, Madison was the only one to vote against the bank. He objected that the Articles of Confederation contained no express authority for a national bank.⁴ A decade later, he used the same argument to oppose a national bank under the U.S. Constitution.

There had been little discussion about a national bank at the Constitutional Convention of 1787. As part of Article I, regarding the power of Congress to establish post offices and post roads, the delegates considered giving Congress power to grant charters of incorporation necessary for the United States. Rufus King of Massachusetts objected that Congress might use this power to establish a national bank. The banking communities in Philadelphia and New York feared that Congress would charter a competing banking institution. The delegates decided to remove the language on incorporation.⁵

The issue resurfaced in 1790 when the House of Representatives asked Secretary of the Treasury Alexander Hamilton to prepare a report on creating a national bank.⁶ Debate the following year in the House of Representatives focused primarily on the constitutional authority of Congress to act in this area. Madison noted that the power of establishing an incorporated bank was not among the powers vested in Congress by the Constitution. Several lawmakers challenged his analysis, with some pointing out that Madison had argued strongly in 1789 that the President had the power to remove executive officials even though that power is not specifically stated in the Constitution.⁷ Others remarked that Madison, in one of his essays in The Federalist, had repudiated the doctrine of enumerated powers.⁸ After extensive debate, the House voted 39 to 20 to create the bank, with Madison the most prominent opponent.

With the bill now heading to the President, George Washington asked his Cabinet to advise him on the constitutionality of the bank. Attorney General Edmund Randolph and Secretary of State Thomas Jefferson concluded that Congress had no authority to create a bank. Jefferson hedged a bit, advising Washington that if “the pro and the con hang so even as to balance his judgment, a just respect for the wisdom of the legislature would naturally decide the balance in favour of their opinion.”⁹ Randolph argued that governments with written constitutions are circumscribed by the powers specified for them.¹⁰ Jefferson said the Tenth Amendment meant that all powers not expressly delegated to the federal government were reserved to the states or to the people. However, the legislative history of the Tenth Amendment shows conclusively that the qualifier “expressly” (used in the Articles of Confederation) was deliberately excluded on the ground that there “must necessarily be admitted powers by implication, unless the Constitution descended to recount every minutiae.”¹¹ The author of that insight: James Madison.

Hamilton’s analysis was by far the most penetrating of the three Cabinet members. Having drafted the bank bill, he could hardly claim detachment and objectivity, but the other major players—Madison, Jefferson, and Randolph—also started with strongly held opinions. Hamilton argued forcefully that the doctrines promoted by Jefferson and Randolph “would be fatal to the just & indispensable authority of the United States.”¹² Persuaded by Hamilton’s analysis, Washington signed the bill.¹³

When a case challenging the constitutionality of the U.S. Bank was brought before the Supreme Court in 1819, Hamilton’s arguments carried the day. Chief Justice Marshall acted on his Federalist leanings and wrote an opinion in McCulloch that embraced an expansive view of Congress’s powers. Marshall borrowed wholesale from Hamilton’s interpretation of implied powers, sovereignty, and the Necessary and Proper Clause. The creative and constructive role of interpreting the Constitution thus belonged to Congress and the executive branch.

The controversy about the U.S. Bank continued into the 1830s, when President Andrew Jackson waged a personal war against the Bank. Congress tried to renew the Bank in 1832, but Jackson was ready with a veto. Although previous Congresses and Presidents had regarded the Bank as constitutional, and despite the Court’s reasoning in McCulloch, Jackson relied on his own independent judgment that the bill was unconstitutional. He insisted that each branch must be guided by its own opinion of the Constitution. That interpretation of the veto power has been followed ever since.

A Silent or Dormant Power

The dialogue between the courts and elected officials on the meaning of federalism is revealed in other ways. If Congress does not exercise its commerce power, that authority is called silent or dormant, and the Supreme Court may decide that a state action is forbidden by the commerce clause. At that point, if Congress enacts legislation to authorize the state action, the courts will acquiesce to the legislative judgment.

This pattern was established in 1852, when the Court held that the height of a bridge in Pennsylvania, constructed under state law, made it “a nuisance” because it was so low it obstructed navigation. Congress quickly passed legislation declaring the bridges at issue to be “lawful structures.” In the face of this statutory authority, the Court ruled that the bridge was no longer an unlawful obstruction.¹⁴

In dissent, Justices McLean, Grier, and Wayne expressed dismay that a Court decision could be set aside by Congress. How could Congress reopen an issue that had been adjudicated? Wasn’t a court ruling final and binding? Said McLean: “The congress and the court constitute co-ordinate branches of the government; their duties are distinct and of a different character. The judicial power cannot legislate, nor can the legislative power act judicially.”¹⁵ However, when Congress passed legislation declaring the bridges to be lawful structures, it was not acting in a judicial capacity. Lawmakers considered the issue to be one of fact, not law, and they determined that some vessels deliberately elevated their smokestacks so they would not clear the bridge. To Congress, it was necessary for ships to accommodate the bridge, not the bridge to accommodate the ships.

The positions of McLean and his colleagues have remained a minority view. The Court noted in a federalism case in 1946: “[W]‌henever Congress’ judgment has been uttered affirmatively to contradict the Court’s previously expressed view … this body has accommodated its previous judgment to Congress’ expressed approval.”¹⁶ More recently, in 1995, a concurrence by Justices Kennedy and O’Connor conceded that “if we invalidate a state law, Congress can in effect overturn our judgment.”¹⁷

State Controls on Incoming Liquor

In the nineteenth century, the Supreme Court developed the doctrine of exclusive jurisdictions. Whatever fell under national control was excluded from state control, and vice versa. As the Court noted in 1876: “The powers which one possesses, the other does not.”¹⁸ Judicial doctrine had never been that crisp, as is evident by the earlier dispute over the dormant commerce clause. Congress could always intervene and give states power that the Court had denied.

The theory of mutually exclusive powers produced a head-on collision between the Court and Congress in 1890. The Court ruled that a state’s prohibition of intoxicating liquors from outside its boundaries could not be applied to original packages or kegs. Only after the original package was broken into smaller packages could the state exercise control. The power of Congress over interstate commerce, said the Court, trumped state police powers and local options. The Court qualified its opinion: states could not exclude incoming articles “without congressional permission.”¹⁹

After the Court’s decision, imaginative entrepreneurs opened up “original-package saloons,” making it impossible for states to exercise any control. Brewers and distillers from outside the state packaged their goods “even in the shape of a vial containing a single drink.”²⁰ Within a matter of months, Congress considered legislation to overturn the decision.

The irreverent attitude in Congress is reflected in the remarks of Senator George Edmunds of Vermont. The opinions of the Supreme Court regarding Congress “are of no more value to us than ours are to it. We are just as independent of the Supreme Court of the United States as it is of us, and every judge will admit it.” If the Court made an error with its constitutional analysis “are we to stop and say that is the end of the law and the mission of civilization in the United States for that reason? I take it not.” The Court’s word was not final. Further consideration by Justices might produce a different result: “[A]‌s they have often done, it may be their mission next year to change their opinion and say that the rule ought to be the other way.”²¹

Congress overturned the decision by passing legislation that made intoxicating liquors, upon their arrival in a state or territory, subject to the police powers “to the same extent and in the same manner as though such liquids or liquors had been produced in such State or Territory. …”²² On the distribution of power between the national government and the states, Congress had the final word. A year later, the Court upheld this statute.²³

Regulating Child Labor

A similar dialogue between Congress and the Court, with the legislative branch having the last word, is illustrated by child labor legislation. In attempting to prohibit the transport of goods that had been produced by children—goods that were themselves entirely harmless—Congress was asserting a significantly new national power. Writing in 1908, soon-to-be-President Woodrow Wilson opposed child labor legislation, as did William Howard Taft, President from 1909 to 1913.²⁴

By 1916, however, both the Democratic and Republican party platforms advocated child-labor legislation.²⁵ That same year, Congress passed a bill to prevent the products of child labor from being shipped interstate, basing the statute squarely on the national power to regulate commerce. No producer, manufacturer, or dealer could ship or deliver for shipment in interstate or foreign commerce any article produced by children within specified age ranges. The House Labor Committee concluded that “the entire problem has become an interstate problem rather than a problem of isolated States and is a problem which must be faced and solved only by a power stronger than any State.”²⁶ Wilson, breaking ranks from his previous association with states’ rights Democrats, signed the bill. His advisers warned that the vote in the November elections would be close and that “women will vote in a large number of states.”²⁷

Two years later, the Supreme Court, by the narrow margin of 5 to 4, struck down the statute as unconstitutional. It reasoned that the production and manufacture of goods were not part of commerce and could not be regulated by Congress.²⁸ Within a matter of days, members of Congress introduced new measures to regulate child labor, this time relying on the taxing power. An excise tax would be levied on the net profits of persons employing child labor within prohibited ages.²⁹ Senator Robert L. Owen (D-Okla.) was particularly combative. His bill on child-labor legislation, based entirely on the commerce clause, contained language that was anything but subtle: “Any executive or judicial officer who in his official capacity denies the constitutionality of this act shall ipso facto vacate his office.”³⁰ He rejected the idea that the Court had a supreme or exclusive role in interpreting the Constitution:

It is said by some that the judges are much more learned and wiser than Congress in construing the Constitution. I can not concede this whimsical notion. They are not more learned; they are not wiser; they are not more patriotic; and what is the fatal weakness if they make their mistakes there is no adequate means of correcting their judicial errors, while if Congress should err the people have an immediate redress; they can change the House of Representatives almost immediately and can change two-thirds of the Senate within four years, while the judges are appointed for life and are removable only by impeachment.³¹

The child-labor amendment to the tax bill passed the Senate by a healthy margin (50 to 12), was accepted by the House, and became law.³² A federal district court in North Carolina declared the excise tax unconstitutional. When the issue was taken to the Supreme Court, Solicitor General James M. Beck prepared a brief that defended the tax. He cautioned the Court to exercise political prudence when reviewing, and possibly overturning, the considered efforts of its coequal branches, Congress and the President. The belief that the judiciary is fully empowered to judge the motives or objectives of the other branches “is a mischievous one, in that it so lowers the sense of constitutional morality among the people that neither in the legislative branch of the Government nor among the people is there as strong a purpose as formerly to maintain their constitutional form of Government.” If the Court would announce that in the field of child labor legislation there was no judicial review, and that any remedy must lie with the people, “the people will themselves protect their Constitution.” The idea that the Court is “the sole guardian and protector” of the Constitution inevitably led to an impairment of what Beck called “the constitutional conscience.” In his judgment, the Constitution “will last in substance as long as the people believe in it and are willing to struggle for it.”³³

This time, the Court struck down the child-labor tax 8 to 1. Taft, now sitting as Chief Justice, wrote for the majority, objecting that Congress had passed not a provision but a “mere penalty.” Although courts are generally reluctant to speculate about legislative motives, the Court stated it “must be blind not to see that the so-called tax is imposed to stop the employment of children within the age limits prescribed.”³⁴

Congress responded by passing a constitutional amendment in 1924 giving it power to regulate child labor. However, the amendment never attracted sufficient support in the states. By 1937, only 28 of the necessary 36 states had ratified it. Congress returned to the commerce clause a year later when it included a child-labor provision in the Fair Labor Standards Act of 1938.³⁵ Thus, Congress revived the very constitutional power that had been denied by the Court in 1918: the commerce power. This may appear to be asking for another rebuff, but the Court of 1938 was not the Court of 1918 or 1922. Because of new appointments after the court-packing fight of 1937, the Court was more receptive to the power of Congress to regulate child labor. The statute of 1938 was challenged, taken to the Court, and upheld unanimously in 1941. Remarkably, the Court apologized for the deficiencies of its decision in 1918, which “was novel when made and unsupported by any provision of the Constitution.”³⁶

Over these two decades, the Court decided to return to the doctrines of Chief Justice Marshall who had given generous support to the power of Congress to regulate commerce. Congress refused to accept the narrow judicial construction adopted by the Court in the child-labor cases. Legislators persevered and won. The Court later admitted that “the history of judicial limitation of congressional power over commerce, when exercised affirmatively, had been more largely one of retreat than of ultimate victory.”³⁷

Packing the Court

The fight over child labor was one of many federalism battles between the Justices and elected officials. In a series of bold rulings, the Supreme Court struck down several New Deal statutes in the 1930s that were intended to cope with the Great Depression. The Court in 1935 invalidated the National Industrial Recovery Act (NIRA), which had invoked the commerce clause to create industrial codes to regulate economic activities.³⁸ The Court held the statute unconstitutional in part because Congress had failed to provide adequate standards to guide the executive branch, but President Roosevelt knew that the question of delegating legislative power was less important than the Court’s narrow definition of the commerce clause. He lashed out at the Court for taking the country back to the “horse-and-buggy” days.³⁹

In 1936, Roosevelt won reelection by an overwhelming margin. He bided his time until early the next year, at which point he unveiled a plan to “reorganize” the federal judiciary. Claiming that the Supreme Court was unable to function effectively, he proposed that for every Justice over 70 years of age, he should be empowered to appoint an additional Justice until the number of Supreme Court Justices reached 15. He asked for similar powers to appoint judges in the federal appellate and trial courts. At face value, the purpose seemed to be a desire to improve the efficiency of the courts by dealing with the problem of “aged or infirm judges.”

But in an address on March 9, 1937, Roosevelt was more candid. He described the national government as “a three-horse team” of Congress, the President, and the courts. Two of the horses “are pulling in unison today; the third is not.” Roosevelt accused the Supreme Court of acting “as a policy-making body” by invalidating federal and state statutes. The problem was no longer mere inefficiency: “[W]‌e must take action to save the Constitution from the Court and the Court from itself.” Roosevelt promised to appoint additional Justices “who will not undertake to override the judgment of the Congress on legislative policy.”⁴⁰

Opponents of the plan quickly marshaled their forces. On March 21, Chief Justice Hughes released a letter to Senator Burton K. Wheeler (D-Mont.), explaining that the Court “is fully abreast of its work.” By denying that the Court was overworked or in need of additional Justices, Hughes helped pull the plug on the bill by spotlighting Roosevelt’s political agenda.⁴¹ Gallup polls revealed that most voters opposed restrictions on the Court.⁴² Fearing the central planning and executive supremacy associated with the totalitarian governments of Hitler and Mussolini, voters strongly opposed a radical transformation of the balance of power among the three branches of government.

Nevertheless, the bill picked up some support. Democrats in Congress might not have liked the scheme, “but they could not justify frustrating the President while the Court persisted in mowing down legislation.”⁴³ On March 29, the Court gave these Democrats a way out. Approving state and federal reform initiatives, including its reversal of a 10-month-old decision that New York’s minimum wage law was unconstitutional, the Court signaled its willingness to uphold Roosevelt’s New Deal initiatives.⁴⁴ Over the next few weeks, the Court signed off on both the Social Security Act and the National Labor Relations Act.⁴⁵ In the words of one of Roosevelt’s close associates, “the Court, with no change of its Justices … convinced the Court of Public Opinion that the sentence of reorganization proposed by the court bill might safely be suspended, at least during a period of probation.”⁴⁶

On June 7, the Senate Judiciary Committee issued a report opposing the reorganization plan. Probably at no time in history has a presidential proposal been so savaged by a congressional report. The committee exposed Roosevelt’s real purpose: to use force against the judiciary. Using blunt and powerful language, the committee ripped the proposal with such unsparing thoroughness that no President has repeated Roosevelt’s plan. The report chastised the bill “as a needless, futile, and utterly dangerous abandonment of constitutional principles. It was presented to the Congress in a most intricate form and for reasons that obscured its real purpose.”⁴⁷ Proclaiming “[w]‌e are not the judges of the judges. We are not above the Constitution,” the report concluded with the admonition that “it is far better that we await orderly but inevitable change of personnel than that we impatiently overwhelm them with new members.”⁴⁸

Although the Senate trashed the court-packing bill, Congress completed action on a bill to provide full pay for Supreme Court Justices who retired. The bill shot through both Houses and was enacted on March 1.⁴⁹ After a decent interval, Justice Van Devanter announced his retirement to take advantage of retirement benefits. Roosevelt nominated Senator Hugo Black for the position. On January 5, 1938, Justice Sutherland announced his intention to retire. To replace Sutherland, Roosevelt picked Solicitor General Stanley Reed. Justice Cardozo died on July 9, 1938, giving Roosevelt a third opportunity to appoint a Justice. This time, he turned to a close friend, Felix Frankfurter. Justice Brandeis retired on February 13, 1939, and was replaced by William O. Douglas, who had served in the Roosevelt administration as chairman of the Securities and Exchange Commission. Justice Butler died on November 16, 1939. Frank Murphy, after filling several positions in the Roosevelt administration, including Attorney General, took Butler’s place.

Having gone four and a half years without a chance to name anyone to the Court, within a little over two years, Roosevelt had now appointed five Justices. Later, in evaluating the court-packing episode, Roosevelt said he lost the battle but won the war. The Court began to read the commerce clause more generously to uphold presidential initiatives and congressional legislation.⁵⁰