Source: The Supreme Court : "A New Kind of Justice"
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In the case of Lochner v. New York, Justice Stephen Fields established the legal theory of “liberty of contract.” According to this theory, government should not and cannot interfere with business contracts, including agreements about wages made between employers and employees. This video from the series The Supreme Court gives background on the case and shows how the idea of liberty of contract was derived from the Due Process Clause in the 14th Amendment to the Constitution.
Download and ShareIncreasing immigration and manpower, technological innovations, abundant natural resources, and the human spirit laid the ground work for the United States to become a superpower in the decades following the Civil War. The economy from the late 1870s to the late 1920s was dominated by the robber barons, industrialists whose great wealth was derived in part by unchecked and non-competitive business practices. They were supported by the idea of protectionism – that private property and the wealth derived from it was sanctified and protected through the Fourteenth Amendment as a privilege and right of citizenship. However, as the corporations grew, their power was opposed by the growing American labor movement, which sought to organize workers and change unfair labor practices for the nation’s poorest citizens, who often worked on subsistence wages. The gap between the wealthy and the poor widened.
There was a feeling among many conservatives that the nation teetered on the brink of socialism, communism, and anarchy. Numerous labor strikes challenged labor and business practices. One of the first national strikes was the Pullman Strike of 1894. Workers for the Pullman Palace Car Company, a maker of railroad cars, were required to live in Pullman’s “company town” where the company controlled everything. Workers often owed all their wages back to the company to pay for food, rent and other basic services. George Pullman, the owner of the company, decreased wages by twenty-five percent as a result of the economic panic of 1893. When Pullman did not reduce the rent for housing to correspond with the wage decrease, workers staged a strike that resulted in the suspension of all rail traffic west of Chicago.
Under pressure from conservatives, President Grover Cleveland called out the National Guard to end the strike. By the end of the strike, the Guard had killed five workers and the labor leader Eugene V. Debs was tried, found guilty of violating a court injunction to end the strike, and sentenced to six months in prison.
Debs appealed his conviction to the Supreme Court, arguing that the federal government did not have the authority to issue the injunction to end the strike. The Court ruled unanimously that the federal government did have the right to issue the injunction as part of its authority to “ensure the general welfare of the public,” regulate interstate commerce and to guarantee the operations of the Postal Service.
One of the Justices who heard the case was Justice Stephen J. Field. Field was an early proponent of a free market system and of the theory of the “liberty of contract” --- that the Fourteenth Amendment requires that government not interfere with the rights of people to enter into contracts. Field led the Supreme Court to issue numerous decisions that the rights of business interests and property owners would be protected ahead of the rights of workers.
NARRATOR: Just three years into Holmes's tenure, a case came before the Court that highlighted stark divisions among the justices, drawing the battle lines for a quarrel that would play out over the next 30 years. And Oliver Wendell Holmes girded up for the second big fight of his life.
In 1897, the state of New York had passed a law limiting the number of hours bakers could be required to work. And when Utica bakery owner Joseph Lochner refused to abide by the law, he was twice convicted, fined $50, and ordered to jail until he paid up. Instead of paying, Lochner challenged the maximum-hours law, forcing a fight that finished in the United States Supreme Court.
When the case finally landed in the Old Senate Chamber in 1905, New York defended its law: states had been ceded "police power" to ensure the public health and safety of their citizens. But the Court struck down the New York State maximum hours law.
POWE: In Lochner, which is a law that imposed a maximum 60 hours a week for bakers to work, Peckham asks, well, does this law have anything to do with health? And he concludes no, it doesn't have anything to do with health. Bread is bread. And while bakers die younger than others, somebody's gotta die first.
Therefore the law isn't part of the police power. Instead, it is trying to regulate the employer/employee relationship, and this is not subject to the police power. This is the liberty of contract that individuals have the right to engage in.
KOBYLKA: What the Court's saying is that when government tells me that I can't work 80 hours a week as a baker, government is infringing on my liberty to contract my labor. Government is infringing on me as a person telling me what I can do with myself.
NARRATOR: "Liberty of contract" was an idea straight from Stephen J. Field, teased from the soft phrases of the Fourteenth Amendment. It went to the heart of free market ideals. When employers and employees were negotiating terms of a contract, government almost always had to stay clear. That laborers might not have the same leverage as owners was unfortunate -- but not within government's power to fix.
KLARMAN: Where does this liberty of contract get? Where does the Court find it in the Constitution? They find it in the Due Process Clause, which says, "Government shall not deprive people of life, liberty, or property without due process." And the Court says, included in that liberty protection is a right for liberty of contract. It's a very creative reading. It's basically a made-up doctrine. There's a lot of pressure on judges to reach results that they regard as just, and they're willing to stretch and strain with the text if necessary. And in 1973, a lot of judges felt like a woman's right to abortion was pretty important, and the Court found it in the Constitution. In 1905, a lot of people thought that a right to contract was important, and the Court found it in the Constitution.
NARRATOR: John Marshall Harlan -- joined by two other justices -- dissented in Lochner. The state of New York had presented compelling facts as to the health hazard to bakers. That was good enough for him.
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