Monopolies, Privileges and Immunities in America

We know the Constitutional debates indicated the Founders agreed monopolies were noxious, but the document never acknowledges that fact.  What may have happened is that Benjamin Franklin probably wanted a national postal system, which would initially have been a monopoly to be efficient enough to survive.  Similarly, patents and copyrights are temporary monopolies.  

“Privileges and Immunities” came from Magna Carta.  Some of these are included specifically in the Constitution as well, but even if not, the whole of them are covered in the understanding of Amendment IX.  The break with England was primarily caused by England withholding “privileges and immunities” to its colonies’ citizens.  These rights ultimately derive from the emancipation of the serfs in the Middle Ages:  the privileges and immunities, franchises, and liberties summed up the legal rights of freemen, which were inestimably greater than those afforded to the serf, the indentured servant, or the foreigner.  The Crown granted them to the colonists in the new World to the same extent as to freemen in England itself.  The Declaration of Independence calls this to the attention of The Crown, to no avail.   

Absent recognition in the Constitution the power of Congress to deal with monopolies is null, and the power to create monopolies lies only in the states by reason of Amendment X.  However, the Supreme Court found the power to restrict monopolies within the Commerce Clause; Article I, Section 8, Clause 3.  Additionally, price-fixing and marketing schemes were deemed to be “in commerce” and subject to Congress’s power to regulate as “discovered” by the Supreme Court in Addyston Pipe & Steel Co. v. United States (1899), thus salvaging the Sherman Act and other later regulation of monopolies.  

During the presidency of Andrew Jackson, the charter for the Second United States Bank was approved by Congress and sent to Jackson for signature.  He vetoed the Act in strong language because the bank produced great power and benefits for the private shareholders (6) and not for the “general welfare.”  This veto stood even though the Supreme Court had approved the First US Bank as an extension of the power of Congress to conduct Treasury operations – collect revenues and pay the debts.  Roger Taney a Supreme Court justice was greatly impressed by Jackson’s thinking and applied it to the Charles River Bridge case.  The State of Massachusetts approved a new bridge in direct competition to the long-existing Charles River Bridge.  The shareholders of the Charles River Bridge sued for damages to their franchise caused by loss of revenue to the new bridge.  Putting the Constitution’s “contract clause” aside, Taney opined based on the public sentiment against monopolies found in the Bank veto and dismissed the case.  It would seem that a president’s veto of an unrelated bank statute would not show precedent and afford Stare Decisis for the Bridge case.  That said, the case is done.  

The same Roger Taney was to create havoc in constitutional order in his majority opinion in Dred Scott v. Sandford(1857).  Scott, a slave, sued for freedom from his master.  Taney’s decision cut off Scott completely; it would require a Constitutional amendment to repair.  Taney reasoned that Scott was not a person, but only a chattel (personal property, owned).  After the Civil War, Congress passed the Thirteenth, Fourteenth and Fifteenth amendments to establish the civil rights of former slaves in the states.  The Fourteenth amendment provided “No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life liberty, or property, without due process of law.” Congress intended this to restore all the rights Dred Scott v Sanford had eliminated!  (If that is the sole intent, it seems a peculiar way to express it!)  So, in the 1873 Slaughterhouse cases, the Supreme Court found the Fourteenth Amendment’s protection only restricted Constitutional rights, and not those given by individual states. This neutered the citizenship of black persons residing in the former Confederate States, and permitted each state to enact “Black Codes” — “Jim Crow” laws restricting voting, housing, jury duty, of non-citizens.  

In the 1930s states began licensing various occupations specified in trades such as barbers. Thus, to cut hair without a license from the state became illegal.  To obtain a license to cut hair would require a certain amount of training (cost paid by student), a period of apprenticeship (without pay) and annual license fees.  The purpose was to monopolize barbering. Today, every state, the Federal District, and the five territories have established occupational licensing for a variety of trades.  Over 1100 types of separate trades have been licensed. The average is about three dozen trades in each jurisdiction.  The number of persons occupationally licensed is more than one-quarter of the total labor force, and growing annually.  

On a larger scale, beginning in 1964, state health care agencies began regulating construction of new hospitals or additions to existing hospitals.  The ostensible purpose of a Certificate of Need (“CON”) is to halt hospitals’ wastefully creating more hospital beds in “oversaturated” metropolitan areas.  The concept has expanded to other industries using CONs, as for example ice manufacturing and distribution, moving and storage companies, and hair braiders. The result is monopolization. It probably has been a factor of insufficient beds in large cities to care for Covid-19 patients within the 35 states having CON laws.                                                                                              July 28, 2021