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Report to the Attorney General on
Economic Liberties Protected by the Constitution

“Yesterday the active area in this field (constitutional analysis) was concerned with property.' Today it is 'civil liberties.' Tomorrow it may again be 'property.' Who can say that in a society with a mixed economy, like ours, these two areas are sharply separated, and that certain freedoms in relation to property may not again be deemed, as they were in the past, aspects of individual freedom?”

Justice Felix Frankfurter


Justice Frankfurter's statement is but a modest affirmation of principle that has long been recognized by political philosopher economic liberties are essential to the survival of personal freedom; th latter cannot exist when the former are extinguished. Reflecting th: understanding, a growing body of legal scholarship advocates that th federal courts act decisively to vindicate individual economic libertie thought to be guaranteed under the Constitution. This researc emphasizes the solicitude for individual property rights and freedom contract shown by the founders of the Constitution and made manifest i a variety of constitutional provisions. Proponents of an "economi liberties” approach to constitutional interpretation argue that the court should enforce the contract clause, the just compensation clause, and th due process clause to restrain federal and state government interferenc in private enterprise and the enjoyment of property. Widesprear acceptance of such an approach would mark a shift in judicial attitudes inasmuch as the federal courts have accorded substantial deference to federal and state "economic” legislation since the New Deal.

'F. Frankfurter, Of Law And Men 19 (1956). ? The seminal work in this field is B. Siegan, Economic Liberties and the Constitution (1980). A comprehensive recent treatment of property rights and the takings clause i: found in R. Epstein, Takings: Private Property and the Power of Eminent Domain (1985) Professors Bernard Siegan and Richard Epstein are the two most prolific contributors to the economic liberties literature.

In this Report, the Office of Legal Policy analyzes the original meaning of the Constitution's economic liberties clauses and surveys the economic liberties literature, paying particular attention to the just compensation clause, the contract clause, and the due process clause. This Report starts from the premise that the principled vindication of economic liberties must be based on the text of the Constitution -- not on judge made standards that cannot be linked to the Constitution's words. Accordingly, as we have done in other studies of constitutional provisions, we attempt to carefully analyze the text of the economic liberties clauses.

Part I of the Report sets the stage for subsequent analysis of the historical basis for the protection of economic liberties. This examination demonstrates that the founders of the Constitution clearly intended to protect certain economic liberties from encroachment by government. Parts II and III discuss the original meanings of the just compensation clause and the contract clause, respectively. Parts II and III conclude that compelling evidence exists from the Constitution's text and history for concluding that the just compensation and contract clauses accord substantial protection to property rights and contractual relations. Part IV briefly surveys other constitutional provisions that bear on the protection of economic liberties, placing particular emphasis on the due process clause. Part IV concludes that, in light of the text of the Fourteenth Amendment, the arguments for reinvigorating substantive due process protection of economic rights are unconvincing. An endorsement of economic substantive due process theory would ignore the plain procedural meaning of the term “due process.” Part IV also briefly explains why we believe that the “negative” commerce clause, the uniformity clauses, the ex post facto clauses, and the equal protection clause are not well designed to vindicate substantive economic rights. Part V concludes that the just compensation clause and the contract clause are the constitutional vehicles best directed at the vindication of individual economic rights. Appendices summarize the case law development of and academic commentaries pertaining to the two key economic liberties provisions: the just compensation clause and the contract clause.

The views set forth herein are tentative. Their aim is to stimulate public discussion, not to establish ultimate conclusions on matters of constitutional law. We take no position on the desirability from a public policy standpoint of the results we derive.

1. Historical Background Concerning the Protection of

Economic Liberties

The founders of the Constitution clearly were concerned with protecting individual economic liberties from encroachment by the powers of government." Professor Benjamin Wright, the leading historian of the contract clause, has described those state legislative actions that inspired the Constitution's founders to protect property rights:

Most of these laws took the form of providing for the issuance of paper currency, with the frequent addition of the requirement that this currency be accepted as legal tender in the payment of private debts. In addition there were “stay laws" (statutes staying or postponing the payment of private debts beyond the time fixed in contracts), installment laws (acts providing that debts could be paid in several installments over a period of months or even years rather than in a single sum as stipulated in the agreement), and commodity payment laws (statutes permitting payment to be made in certain enumerated commodities at a proportion, usually three-fourths or fourfifths, of their appraised value). Naturally the creditors preferred to receive payment at the stipulated time, and in money rather than in land, cattle, tobacco, slaves, flour, hemp, or whatever the state in question saw fit to make legal tender. We have the contemporaneous statement of Madison to support the conclusion that “the evils issuing from these sources” contributed heavily toward preparing the public mind for a general reform. The Fathers were undoubtedly opposed to the continuance of state legislation of this kind.“

3A substantial body of scholarly research supports this conclusion. See, e.g., D. Epstein, The Political Theory of the Federalist (1984); C. Beard, An Economic Theory of the Constitution of the United States (1913); 1 Farrand, The Records of the Federal Convention of 1787 424, 533-34 (1911) (hereinafter cited as “Farrand") (protection of property recognized by the framers as "the main object of society" and the primary object of society"); B. Schwartz, The Rights of Property 18-22 (framers viewed property as important as liberty); Siegan, The Economic Constitution in Historical Perspective, in Constitutional Economics 39-53 (R. McKenzie ed. 1984); Plattner, American Democracy and the Acquisitive Spirit, in How Capitalistic is the Constitution 1-21 (R. Goldwin and W. Schambra eds. 1982); B. Wright, The Contract Clause and the Constitution 4-5 (1938). *B. Wright, supra note 3, at 4-5 (citations omitted). For a survey of state legislation interfering with property rights enacted under the Articles of Confederation, see A.

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