Wednesday, May 14, 2014

The Guardian of Every Other Right: Part II

"Intellectual freedom cannot exist without political freedom; political freedom cannot exist without economic freedom; a free mind and a free market are corollaries." – Ayn Rand, 1963*

In Part One of this review of James W. Ely, Jr.'s book, The Guardian of Every Other Right, I began:

At the end of Ayn Rand's prophetic 1957 novel, Atlas Shrugged, a judge who is on strike with other producers against a future, nightmarish state of America (echoes of Obama) and has disappeared with them into a Rocky Mountain sanctuary, is at work. Before him is a "copy of an ancient document [the Constitution]. He had marked and crossed out the contradictions in its statements that had once been the cause of its destruction. He was now adding a new clause to its pages: 'Congress shall make no law abridging the freedom of production and trade…'"

At the end of Part One, I concluded:

…[T]he absence of a distinction between "personal" and "property" rights in the premises of the framers underscores Rand's dictum about the integration of political, economic and intellectual freedoms. Only the framers never quite put it so succinctly. One almost wishes she had attended the Convention to instruct them on that point.

James Ely wrote that James Madison, a champion of property rights, wanted to ensure the protection of property rights, and drafted a proposed statement to be attached to the Constitution.

That government is instituted, and ought to be exercised for the benefit of the people; which consists in the enjoyment of life and liberty, with the right of acquiring and using property, and generally of pursuing and obtaining happiness and safety." Perhaps thinking that the purposes of government were self-evident, Congress did not accept this declaration. (p. 54)

But outside the enumerated powers granted to Congress, many men did not think it was so self-evident what the purposes of the government were. Thus the fierce debate for and against a bill of rights in the ratification period. Ely provides further evidence of Madison's linking liberties with property rights when the Founder drafted the Fifth Amendment:

The amendment provides in part that no person shall be "deprived of life, liberty, or property, without just compensation." Madison's decision to place this language next to criminal justice protections, such as the prohibitions against double jeopardy and self-incrimination, underscored the close association of property rights with personal liberty….Like all of the Bill of Rights, however, these safeguards for property were binding only on the federal government. (p. 54)

No sooner had the Constitution with the appended Bill of Rights been ratified in November 1791, and circulated among the states, than lawsuits were filed citing the "takings" (or compensation) and contract clauses in the Constitution relating to state legislative powers.  

In Part One of this review, I noted that Ely reveals that the chief violator of property rights was not the young federal government, but the states. In his chapter, "The Development of Property Rights in the Antebellum Era, 1791-1861," Ely documents the persisting conflicts between the federal government and states. The federal government was largely barred from interfering with "states' rights" to regulate the states' internal business and economic activity:

Indeed, state governments were the primary source of economic regulation throughout the nineteenth century. The authority of the states to regulate the use of property was derived from both common law principles and the police power. The common law doctrine of public necessity and nuisance both subordinated the rights of property owners to the interests of the general community. Under the public necessity doctrine, for instance, it was lawful to destroy buildings to prevent the spread of fire or pestilence. (pp. 59-60)

The states still retain such discretionary "police power" to this day. For example, gambling, alcohol sales and/or consumption, the advertising of certain professional services, and prostitution are the subjects of restrictions or outright bans. Today, state "police powers" more or less follow federal and national trends. For example, outgoing Virginia governor Tim Kaine, a Democrat (and now a U.S. senator), signed a state law that banned smoking in all Virginia restaurants and private business establishments, including private clubs and bars, at the behest of a tenacious anti-smoking lobby. Violation of the law carries heavy financial penalties for both establishments and individuals, and not to the exclusion of arrest. The banning of smoking in private venues such as restaurants, bars, parks, and clubs represented a "taking" without compensation to property owners.

 Many states, notably Kansas, are technically "dry" states, but allow "local jurisdictions" or counties to permit the sale and/or consumption of alcohol as long as they establish liquor boards and issue licenses to sell liquor "by the glass," in bulk, or to manufacture and sell alcohol, or to serve it in restaurants or bars. Such laws also provide for state or local inspections of premises or production. Many states also have granted themselves exclusive monopolies to sell "hard" liquor; in Virginia, on the other hand, "soft" liquor, such as beer and wines, is regularly sold in supermarkets with the only restriction being sales to state-defined minors (many also contain age restrictions on sales of tobacco to minors).

Prostitution is illegal in some Nevada counties (e.g., in Clark County, which includes Las Vegas), and tolerated in others without outright prohibition, sanction, ordinance, or licensing, and brothels exist in those localities more or less on local sufferance. The Las Vegas telephone directory, on the other hand, carries numerous ads advertising "escort/dating services," a euphemism for prostitution agencies.

Ely writes about state regulatory powers:

A more potent source of regulatory authority was the general legislative power retained by the states. The bounds of such legislative capacity was [sic] described by the awkward phrase "police power." The scope of the police power proved incapable of precise delineation, but it traditionally included the authority to protect public safety, health, and morals by appropriate laws. State legislatures relied on the police power as a basis for regulating economic activity in their jurisdiction, restrained only by congressional control of interstate commerce and the property clauses of federal and state constitutions. The exercise of state police power frequently raised constitutional issues. (p. 60)

In many states before the Civil War, especially the southern states, but also including many northern states, slaves were treated as rightless property but used in population apportionment calculations to ensure representation in Congress. Ferocious arguments roiled on whether or not to count a slave as a whole person, or a fraction of one for purposes of property taxation, census taking and apportionment ends. Ely notes that slaves were regarded as the property of whoever bought, owned or sold them:

Slave property was also increasingly regulated in the years before the Civil War. Slaves were a form of personal property and represented a major source of wealth in the antebellum South. Owners were not legally at liberty to treat their slaves as they saw fit. Southern lawmakers recognized that slaves were human beings and enacted legislation that outlawed the killing or maiming of slaves by their master. Fearing the growth of a free black population, states passed statutes restricting the right of masters to free their slaves. Such laws deprived the owners of the right to dispose of their slave property. (p. 61)

In colonial Virginia, a planter or slave owner was not permitted to free his slaves en masse, but only one at a time, and this was possible only if he could get a bill introduced in the General Assembly and have his burgess shepherd it through the committee, debating, and voting process. If the bill survived that process, it was sent to the Governor's Council, where the formalities were repeated. Finally, if the bill was approved by the Council, it had to be signed by a Crown-appointed royal governor, who also had veto powers. After the Revolution, this practice carried over into state laws by default or in defiance of a proposed federal ban on the importation of slaves to take place in 1808.

However, the Gates of Vienna blog site found this interesting tidbit:

The importation of slaves into Virginia was made illegal by [Governor] Patrick Henry in 1778, a petition by the House of Burgesses having been rejected in 1772 by King George:

“Resolved, that an humble address be prepared to be presented to his Majesty, to express the high opinion we entertain of his benevolent intentions towards his subjects in the colonies, and that we are thereby induced to ask his paternal assistance in averting a calamity of a most alarming nature; that the importation of negroes from Africa has long been considered as, a trade of great inhumanity, and under its present encouragement may endanger the existence of his American dominions; that self-preservation, therefore, urges us to implore him to remove all restraints on his Governors from passing acts of Assembly which are intended to check this pernicious commerce”.

One can only be astounded by the prescience of the good burghers of Williamsburg. Could they see into the future? Could they understand the racial melee that would result from slavery? The inability of the 21st century Virginia to reject Islam because of the disgraceful but undeserved stigmas of ‘slavery’ and ‘racism’?

It is significant that King George rejected this 1772 petition. He was making an awful lot of money through the transportation of slaves; the truth of history is that the State of Virginia was the first legislature in the world to ban the importation of slaves.

But unfortunately could not emancipate existing slaves in Virginia, it being a slave state. Thomas Jefferson also regretted that the slavery issue would not be resolved in his lifetime. He predicted that there would be a civil war over the issue.

Jefferson wrote that slavery was like holding “a wolf by the ear, and we can neither hold him, nor safely let him go.”  He thought that his cherished federal union, the world’s first democratic experiment, would be destroyed by slavery.  To emancipate slaves on American soil, Jefferson thought, would result in a large-scale race war that would be as brutal and deadly as the slave revolt in Haiti in 1791.  But he also believed that to keep slaves in bondage, with part of America in favor of abolition and part of America in favor of perpetuating slavery, could only result in a civil war that would destroy the union.  Jefferson’s latter prediction was correct: in 1861, the contest over slavery sparked a bloody civil war and the creation of two nations—Union and Confederacy—in the place of one.

The Confederate states seceded from the Union over the federal government's interference in states' rights, one of which they claimed was their sovereignty over the issue of slavery.

Ely discusses in this chapter the conflicts and cases reviewed by the Supreme Court and other federal courts between federal and states' powers concerning property rights.

Looking to the precepts of natural law [i.e., largely Lockean law] rather than any specific clause of the Constitution, some federal judges adopted the doctrine of vested rights to protect established property rights from legislative interference. According to the doctrine of vested rights, property ownership was a fundament right. Laws that disturbed such rights were void because they violated the general principles limiting all constitutional governments. Justice William Paterson articulated this view in the significant circuit court case of VanHorn's Lessee v. Dorrance (1795). Observing that "the right of acquiring and possessing property, and having it protected, is one of the natural, inherent and inalienable rights of man." Paterson added, "The preservation of property…is a primary object of the social compact." (p. 63)

With the appointment of John Marshall as chief justice of the Supreme Court in 1801, Ely writes, the Court embarked, with few lapses, upon a property-rights preserving course for the next three decades.

…Marshall was sympathetic to property interests and business enterprises. He distrusted state interference with economic relationships. To Marshall, property ownership both preserved individual liberty and encouraged the productive use of resources….The contract clause, little debated at the constitutional convention, emerged as the centerpiece of Marshall Court jurisprudence….In the words of one scholar, Marshall made the contract clause a "link between capitalism and constitutionalism."  (p. 63)

One of Marshall's lapses occurred over a taxation issue. He sided with the state's right to tax a corporation, in this instance a bank charter document which did not exempt the bank from state taxation.

Stressing that taxing authority "is essential to the existence of government," he rejected the contention that a tax on the corporation's capital stock impaired the obligation of contract. Significantly, Marshall added that the Constitution "was not intended to furnish the corrective for every abuse of power which may be committed by the state governments." This ruling established the principle that grants of privileges and exemptions to corporations must be expressly set forth in the charter. (p. 67)

Ely notes that in the nineteenth century, "the contract clause figured in more Supreme Court decisions than any other section of the Constitution." Marshall's rulings were not universally popular.

Most of the criticism, however, emanated from adherents of the states rights political philosophy who were alarmed at [sic] the alleged encroachments on state power. There was little hostility to Marshall's core belief that the federal courts should safeguard established economic rights. (pp. 67-68)

The framers of the Constitution sought to bring order to the chaos that existed because of Crown laws that regulated commerce and trade between the colonies, aggravated by colonial legislatures' own laws. Thus, the "commerce clause" came into more contention between the federal and state governments.

The Commerce Clause refers to Article 1, Section 8, Clause 3 of the U.S. Constitution, which gives Congress the power “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.”

The Constitution enumerates certain powers for the federal government; the Tenth Amendment provides that any powers that are not enumerated in the Constitution are reserved for the states.

The Commerce Clause has historically been viewed as both a grant of congressional authority and as a restriction on states’ powers to regulate. The “dormant” Commerce Clause refers to the prohibition, implied in the Commerce Clause, against states passing legislation that discriminates against or excessively burdens interstate commerce.  The meaning of the word "commerce" is a source of much of the controversy.  The Constitution does not explicitly define the word.  Some argue that it refers simply to trade or exchange, while others claim that the founders intended to describe more broadly commercial and social intercourse between citizens of different states. Thus, the interpretation of "commerce" affects the appropriate dividing line between federal and state power.

Ely notes that the commerce clause was little used or paid attention to by Congress in the antebellum period. "Trade between the states increased markedly, however, the state regulatory legislation inevitably affected the movement of persons and goods across state lines." Again, it was an issue of state "police powers" versus what the Constitution enumerated as a federal power. In virtually all the cases Ely discusses in this chapter, the Supreme Court sided with the federal government's claim to regulate commerce across the board, and usurped state governments' presumption of that regulatory "right."

Today, however, the term "regulate" is understood to mean the power of especially the federal government to micromanage any business, regardless of the state, and to set and police the prices, conditions, and venues of business enterprises.

Eminent domain, or the state power to confiscate or seize property (usually land) for state projects such as roads, dams, canals, lighthouses, and fortifications, and even private railroads also received little attention at the convention and afterward. Ely writes:

Unlike the contract clause and the commerce power, the use of eminent domain to take private property did not receive much attention from the federal courts before the Civil War. The Constitution makes no direct reference to the power of eminent domain, but the Fifth Amendment requires that private property be taken only for "public use" and on payment of "just compensation." Eighteenth-century judicial thinking was heavily influenced by natural law doctrine. (p. 76)

Often, particularly in the south, Ely writes, the state government did not directly seize land or property, but granted a private company the right and power to do so, if the state had a vested interest in "public improvements" that would benefit a state's economy. Victims of eminent domain had little chance of winning a lawsuit, because state courts usually upheld any eminent domain arrangement, and federal courts as a rule danced around the issue.

The most recent and memorable instance of the Supreme Court addressing a state's power of eminent domain was the Court's siding in 2005 with the state of Connecticut in Kelo v. City of New London. According to the New York Times in a 2009 story, "Pfizer to Leave City That Won Land-Use Case," the City of New London reached a deal with the giant pharmaceutical company, Pfizer, to develop some land in the city to erect a "multi-use" mall. The city condemned perfectly habitable homes under eminent domain:

Economic development officials in Connecticut used that plan — and a package of financial incentives — to lure Pfizer to build a headquarters for its research division on 26 acres nearby. With an agreement that it would pay just one-fifth of its property taxes for the first 10 years, Pfizer spent $294 million on a 750,000-square-foot complex that opened in 2001….

Ms. Kelo lived in a small pink house in the Fort Trumbull section that was square in the sights of city and state officials who wanted to revitalize the area. The city had created the New London Development Corporation to buy up the nine-acre neighborhood and find a developer to replace it with an “urban village” that would draw shoppers and tourists to the area….

In a 5-to-4 decision, the high court ruled that it was permissible to take private property and turn it over to developers as part of a plan to bolster the local economy. Conservative justices, including Clarence Thomas, dissented. Justice Thomas called New London’s plan “a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation.”

But Pfizer changed its mind. It left New London, and left behind the flattened, ploughed land that was once dotted with private homes. Fox News on March 20th reported on the land in "Seized property sits vacant nine years after landmark Kelo eminent domain case." In all cases cited by Ely, the decision endorsing the power of eminent domain was based on altruistic premises such as the "public good" or to boost the "local" or state economy.

Part Three of this review will move on the post-Civil War "Gilded Age and the Challenge of Industrialization." This era saw the beginning of the disintegration of any protection of property rights.

The Guardian of Every Other Right: A Constitutional History of Property Rights, by James W. Ely, Jr .. New York: Oxford University Press, 2007. 216 pp.

*From "For the New Intellectual," in For the New Intellectual: The Philosophy of Ayn Rand, by Ayn Rand. New York: Signet, 1963. 224 pp.  p. 25.

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