A conservative, pro-free market court: what happened when America’s activist judges came from the other side of the aisle?

Roger Partridge

In April 1901, a Bavarian immigrant baker named Joseph Lochner was arrested in Utica, New York. Unlike the larger bakeries, which worked two shifts, Lochner employed a single crew: his bakers arrived in the evening, prepared the dough, slept a few hours on the premises and baked before dawn.

One of them, Aman Schmitter, had worked more than 60 hours in a week. Under New York’s Bakeshop Act of 1895, no bakery employee could be “required or permitted” to work more than 10 hours in a day or 60 in a week. It was Lochner’s second offence. The fine was $50.

The Bakeshop Act was not a legislative whim. Much of New York City’s bread was baked in tenement cellars, low-ceilinged, unventilated and thick with flour dust. A journalist’s exposé of the conditions had united reformers with the bakers’ union. The Act passed both houses of the New York legislature unanimously.

Lochner appealed and lost, first in the Appellate Division and then in the New York Court of Appeals, each time by a narrow majority. In 1905, by five votes to four, the Supreme Court of the United States rescued him, holding the 60-hour limit unconstitutional (Lochner v New York 198 US 45 (1905)).

The Fourteenth Amendment to the United States Constitution says nothing about bakeries, or hours, or contracts. But its “Due Process Clause” says that no state may deprive any person of life, liberty or property without due process of law. Justice Peckham, for the majority, found freedom of contract within it.

Progressive labour market regulation had hit a conservative, pro-free market court.

The reasoning

The Fourteenth Amendment was ratified in 1868, three years after the Civil War ended. It wrote the freed slaves’ citizenship into the Constitution and set out to entrench the rights congress had just listed in the Civil Rights Act of 1866: the “same right… to make and enforce contracts, to sue, be parties, and give evidence, to inherit, purchase, lease, sell, hold, and convey real and personal property… as is enjoyed by white citizens.”

The Southern legislatures, whose Black Codes had been stripping those capacities from the freedmen, were its immediate target.

Until the amendment, the Bill of Rights had bound only the federal government, and a state legislature answered mostly to its own voters and its own constitution.

The amendment’s first section changed that, in three commands in a single sentence. No state may “abridge the privileges or immunities of citizens of the United States;” nor “deprive any person of life, liberty, or property, without due process of law;” nor “deny to any person within its jurisdiction the equal protection of the laws.”

The first names rights. The second names a procedure.

The Supreme Court closed the first within five years. The Slaughter-House Cases 83 US 36 (1873) read the Privileges or Immunities Clause as protecting only a short list of rights attached to federal citizenship, free access to the nation’s seaports among them. A clause written to carry the freedmen’s civil liberties has been all but a dead letter ever since.

Equal protection was about being treated like other people. A baker who wanted to set his own hours was not asking for that. That left the Due Process Clause.

Read as it stands, that clause promises process rather than a list of protected liberties. It does not forbid a state to take a person’s liberty. What it forbids is taking it without due process of law, a phrase descended from Magna Carta’s “law of the land”. A prison sentence takes liberty in the most literal form there is. What makes that taking lawful is the trial that preceded it.

But how could the Due Process Clause reach a “law” duly passed by the state of New York? The answer turned on the court’s view of what “law” means in the phrase “due process of law.”

If it means whatever a legislature enacts, the clause guarantees procedure and nothing more. If it means law of a certain quality, not arbitrary and not unreasonable, then a statute failing that test is not “law” at all. Applying it takes a man’s liberty without due process of law, regardless of whether a statute is properly passed or a trial is fair.

In Allgeyer v Louisiana 165 US 578 (1897), the court chose the second meaning and struck down a state statute on liberty of contract grounds for the first time.

Louisiana had forbidden its citizens to insure property in the state with marine insurers that had not complied with Louisiana law. A New Orleans cotton firm posted a letter to its New York insurer about a shipment of 100 bales, and the state sued it for the statutory penalty. The firm defended, lost and was ordered to pay $1,000. Process, in other words, ran its full and unremarkable course.

Relying on the Due Process Clause, Justice Peckham, for a unanimous Supreme Court, held the statute void. The “liberty” the clause protects, he wrote, embraced the right “to earn his livelihood by any lawful calling” and to make the contracts the calling required (at 589). Insuring the cotton was such a contract, so the firm had a constitutional right to make it. And a statute forbidding what a citizen has a right to do “is not due process of law, because it prohibits an act which under the federal Constitution the defendants had a right to perform” (at 591).

With this move, a clause requiring due process had condemned a statute for its substantive content. Eight years later, Justice Peckham wrote the majority judgment in Lochner.

New York had defended the Bakeshop Act in Lochner as a health measure. The majority was unpersuaded: “Clean and wholesome bread does not depend upon whether the baker works but ten hours per day or only sixty hours a week” (at 57). Statutes limiting the hours “in which grown and intelligent men may labor to earn their living” were “mere meddlesome interferences with the rights of the individual” (at 61).

Absent a real health justification, baker and master could strike whatever bargain suited them, and the legislature of New York could not stand between them.

The majority left the Act’s sanitation provisions untouched, regulations that “may be wise and valid” (at 62). It was the bargain over hours that it put beyond the legislature’s reach.

Justice Harlan, dissenting in Lochner with two colleagues, set out the medical evidence on the health of bakers that the majority had waved aside, and concluded that where the question was one on which reasonable people differed, the choice belonged to the legislature.

Justice Holmes dissented alone in the same case. It had been decided, he wrote, “upon an economic theory which a large part of the country does not entertain.”

Nor did the Constitution choose between such theories: “The Fourteenth Amendment does not enact Mr Herbert Spencer’s Social Statics” (at 75). Spencer’s 1851 tract argued for radical limits on what the state might do. A constitution, Justice Holmes argued, “is made for people of fundamentally differing views” (at 76).

On Holmes’s account, five judges had read a contested economic philosophy into the word “liberty” and struck down the legislature’s choice with it: policy preference dressed as constitutional principle.

Neither dissent, though, rested on the argument that the clause guaranteed process and nothing more. Both took “liberty” in it to protect more than freedom from physical restraint.

The word was “perverted” by the majority’s use, Justice Holmes wrote, “unless it can be said that a rational and fair man necessarily would admit that the statute proposed would infringe fundamental principles as they have been understood by the traditions of our people and our law” (at 76).

The quarrel with Justice Peckham was about when a court may override the legislature, not about whether the clause let it do so at all. Justice Holmes set his threshold where a legislature would almost always clear it: a statute survived unless no rational man could defend it, whatever the judges themselves thought of it. Justice Peckham set his at what five judges thought reasonable.

Joseph Lochner had due process. A statute of general application, passed unanimously by both houses and applied to him through indictment, trial and two appeals, gave him everything the Due Process Clause’s procedural core promises. Whatever condemned the Bakeshop Act came from somewhere else.

The majority never quite stated where. The nearest it came was Justice Peckham’s “meddlesome interferences”. Define “law” as what is not arbitrary, “arbitrary” as what is unreasonable, and let five judges decide what is reasonable. The circle closes with the judges inside it.

Thirty years of guesswork

Justice Peckham’s doctrine governed for three decades, but never evenly. In Muller v Oregon 208 US 412 (1908) the court upheld a 10-hour day for women in factories and laundries. Coppage v Kansas 236 US 1 (1915) struck down a state law that barred employers from making workers give up union membership. And in Bunting v Oregon 243 US 426 (1917) the court upheld a 10-hour day for Oregon’s mills and factories, with three hours of overtime allowed at time-and-a-half, without once citing Lochner.

Franklin Bunting was fined $50 for working an employee 13 hours in a day without paying that rate. He told the court the statute was a wage law in disguise. The court upheld it anyway – and six years later, in Adkins v Children’s Hospital 261 US 525 (1923), struck down the minimum wage for women in the District of Columbia.

Hours laws, Justice Sutherland explained there, “deal with incidents of the employment having no necessary effect upon the heart of the contract, that is, the amount of wages to be paid and received” (at 553).

In Nebbia v New York 291 US 502 (1934) the court upheld New York’s milk price controls. There was “no closed class or category of businesses affected with a public interest”, Justice Roberts wrote, and a court’s function was “to determine in each case whether circumstances vindicate the challenged regulation as a reasonable exertion of governmental authority or condemn it as arbitrary or discriminatory” (at 536). Yet, on Justice Sutherland’s test, the price of milk was the heart of the bargain, not an incident of it. The doctine’s best distinction lasted little more than a decade.

As late as Morehead v New York ex rel Tipaldo 298 US 587 (1936), with the Depression nearly seven years old, the court struck down New York’s minimum wage law, the majority declining to revisit Adkins because it had been asked to distinguish the case, not to overrule it.

No reading of “due process of law” separates a bakery from a flour mill. What separated them was the judges’ views. In Muller it was their view of what work women were suited to. Estimates of that kind are legislation.

How it ended

The story usually told is one of political intimidation. President Franklin D Roosevelt wins the 1936 election in a landslide while the court dismantles the New Deal. In February 1937, he announces his court-packing plan, a new justice for every sitting justice over 70, up to six.

Weeks later Justice Owen Roberts abandons the majority that had controlled the court. West Coast Hotel Co v Parrish 300 US 379 (1937) upholds Washington’s minimum wage law by five votes to four, and the era is over. The switch in time that saved nine.

The justices’ papers tell it differently. Justice Roberts cast his vote to uphold the Washington statute at the justices’ conference on 19 December 1936, seven weeks before Roosevelt announced his plan. The judgment waited on Justice Stone, who was ill, and by the time it was delivered at the end of March the plan was before Congress and the decision looked like surrender.

Justices Hughes and Roberts both denied that the plan had moved the court, and on the plan itself the dates acquit them. Historians still argue whether the wider political weather had reached the conference room.

Legal criticism alone did not dislodge the doctrine. When Justice Roberts voted in December, Roosevelt’s landslide was six and a half weeks old. A court that had spent a decade striking down popular legislation had watched the country deliver its verdict on the programme it was blocking.

Roosevelt’s judicial appointments entrenched what that vote had begun. The court-packing plan died in Congress, but Roosevelt named seven of the nine justices within five years. West Coast Hotel expressly overruled Adkins, United States v Carolene Products 304 US 144 (1938) settled that economic legislation would thereafter be presumed constitutional, and the liberty of contract doctrine did not return.

Rather than trimming the offending decisions one by one, the court repudiated the method that produced them. In the economic field the repudiation held. One majority had made freedom of contract a trump over legislation. The next left it a liberty like any other, subject to regulation. The words never changed.

But the method did not die with it. Within a generation, the Supreme Court was reading substantive content into the same words again, this time for personal liberties. Substantive due process, as it came to be called, long outlived its economic phase.

Be careful what you wish for

Those who welcome our Supreme Court’s jurisprudence because they share its values should ask how the Lochner era would have looked from the other side of it.

For three decades the American labour movement watched its wage laws and its union protections die in a courtroom, struck down by a judicial method that is applauded today when it faces the other way.

After 1905, nobody could say which labour statutes would survive. The court let a state limit a mill hand’s hours but not a baker’s, and a woman’s hours but not her wages.

Nothing in the words of the Fourteenth Amendment yields those lines, and no legislature could have worked them out in advance. Nor could anyone subject to the statutes know where they stood.

New York’s legislature had the exposé, the union’s evidence and the reformers’ case in front of it, and both houses voted for the 60-hour week without a dissenting voice. Five judges, on a record and a set of briefs, decided that the bakers’ health did not require it. Justice Harlan set out the medical evidence and was outvoted.

Whether long hours in a flour-thick cellar harm a man is a question for a legislature that can commission the research and answer at an election for getting it wrong. An appellate court can do neither.

A court whose direction can be corrected only by choosing its members has become a political institution, whichever party does the choosing.

That is the last thing the judges of 1905 would have wanted. Yet it is what their method delivered.

Roger Partridge

Roger Partridge is chair and a senior fellow of The New Zealand Initiative. He is a former Bell Gully litigation partner and chair. He is an honorary fellow and former executive director of the Legal Research Foundation and a former member of the New Zealand Law Society Council.