The Constitutional Liberty We Lost

Legal scholar David Mayer explains why liberty of contract is about more than economics

"For a period of exactly 40 years, from 1897 to 1937, the Supreme Court protected liberty of contract as a fundamental right, one aspect of the basic right to liberty safeguarded under the Constitution’s due process clauses, which prohibit government—the federal government, under the Fifth Amendment, and states, under the Fourteenth Amendment—from depriving persons of 'life, liberty, or property without due process of law'…[but] following its 'New Deal Revolution' of 1937, it ceased protecting liberty of contract."

So writes David N. Mayer, professor of law and history at Capital University, in his new book Liberty of Contract: Rediscovering a Lost Constitutional Right. Although progressive legal scholars have derided liberty of contract as merely a tool of plutocrats—the most famous liberty of contract case, Lochner v. New York (1905), overturned maximum working hour laws for bakers in New York—Mayer argues that a wide range of individual liberties were properly protected under the doctrine.

Senior Editor Brian Doherty interviewed Mayer by phone in January about how and why liberty of contract was briefly a key part of the Supreme Court’s arsenal of defenses against government action, and why it’s a shame we’ve lost it.

Reason: Why is a book about the lost constitutional doctrine of liberty of contract worth writing and reading now?

David N. Mayer: We are facing a vast expansion of the 20th century regulatory and welfare state, and in debates over the welfare state it’s important that people understand that the regulatory state has been built on a number of important myths: myths about economics, myths about history, and myths about constitutional law. I hope my book shatters one of the most important myths about early 20th century constitutional law.

The traditional story goes back to Justice Oliver Wendell Holmes’ dissent in Lochner. The decision struck down a maximum hour law for bakers, and according to Holmes the majority was reading a laissez-faire economic theory into the Constitution. He accuses the majority of “enacting Mr. Herbert Spencer’s Social Statics,” referring to the most famous classical liberal English philosopher of the time.

That’s entirely wrong. The majority didn’t decide the case based on any kind of economic theory. The majority decided based on well-established principles of constitutional law. But Holmes’ accusation stuck and was repeated by several generations of Progressive movement activists, including the people who in the early 20th century were pushing these new kinds of laws—minimum wage and maximum hour laws that the Court was striking down in liberty of contract cases. What has been accepted as the orthodox view of the Lochner era is that the Court in protecting liberty of contract was engaged in libertarian judicial activism. But the Court was following traditional views about constitutional law, applying traditional definitions of the police power as limited to certain categories of activities.

Reason: If the Court had been doing what Holmes accused them of doing in Lochner, how would constitutional law have been different?

Mayer: It would have meant hundreds of laws would be struck down at the state and federal level as interfering with liberty. If trying to enact Social Statics, the Court would have limited the police power to enforcement of what Spencer called the "law of equal freedom," so that any legislative act that limited the freedom of the individual to do what they please, and didn’t directly harm someone else, would be struck down. That wasn’t the case.

In the vast majority of challenges to state police power, the court upheld the traditional categories of police power used in the 19th century: protecting public health, safety, and morality. Categories which were so broad and slippery that the Court upheld, for example, virtually every case involving challenges to paternalistic laws, for example liquor prohibition [laws] were upheld, as in Mugler v. Kansas.

In the Lochner decision, Justice Rufus Peckham pointed out that the number of hours a baker worked had nothing to do with his health, let alone the health of the public. It had everything to do with bakeries in competition with unionized bakeries—and taking the side of unionized bakeries. It was, as Peckham said, not a legitimate traditional use of police power.

Before 1937, judges took seriously the due process clauses of both the Fifth and 14th Amendment as real limitations on the power of government, protecting both liberty and property rights. I quote in the book a wonderful passage describing the broad scope of liberty the Court protected from Justice Peckham’s decision in Allgeyer v. Louisiana, the 1897 case where the Court first explicitly protected liberty of contract. [The decision overturned a Louisiana law barring its citizens from buying marine insurance from an out-of-state firm, an issue of great relevance in the health care debate]:

The “liberty” mentioned in that amendment means, not only the right of the citizen to be free from the mere physical restraint of his person, as by incarceration, but the term is deemed to embrace the right of the citizen to be free in the enjoyment of all his faculties; to be free to use them in all lawful ways; to live and work where he will; to earn his livelihood by any lawful calling; to pursue any livelihood or avocation; and for that purpose to enter into all contracts which may be proper, necessary, and essential to his carrying out to a successful conclusion the purposes above mentioned.

The real key to Lochner-era jurisprudence was not laissez-faire, but liberty of contract. The late 19th and early 20th century was a golden age of contracts. People understood that contract law dealt with the whole realm in which individuals privately ordered their lives and reached agreements for their mutual benefit—without interference from government.

Reason: Unlike conservative legal thinkers of the Robert Bork variety, you do believe in substantive due process. Why?

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Ryan Commack||

    Not to nitpick, but 1887 to 1937 is 50 years.

  • ||

    You didn't ever have the liberty, our judges were just slackers back then. The Constitution says that Judges have total control over interpreting the Constitution.

    http://youareproperty.blogspot.....udges.html

  • ||

    Caption Contest!

    "You see this hat? It means I make good food. No argument! Now...do you want ketchup on this pastry?"

  • Fist of Etiquette||

    "Time for the most important ingredient: love. Watch the door."

  • Almanian||

    "I hope you got a license to wear that hat."

  • Fiscal Meth||

    "Metal box make dough turn bready, wonder if metal box make hand turn bready too... ouch! I have baker license"

  • Almanian||

    This sounds like Steve Smith, the Baker!

    "MAKE RAPE BREAD FOR VICTIMS...I MEAN CUSTOMERS! RAPEES LOVE RAPE BREAD! STEVE SMITH LOVE RAPE BREAD! OUCH - STEVE SMITH PUT HAND IN STEEL BOX WITH RAPE BREAD!!"

  • Doktor Kapitalism||

    Ketchup tastes good on all sorts of things: waffles, cookies...

  • ||

    hooker's asses.. AND roads.

  • ||

    got Patriot Act?

  • Barely Suppressed Rage||

    We think that there can be no fair doubt that the trade of a baker, in and of itself, is not an unhealthy one to that degree which would authorize the legislature to interfere with the right to labor, and with the right of free contract on the part of the individual, either as employer or employee. In looking through statistics regarding all trades and occupations, it may be true that the trade of a baker does not appear to be as healthy as some other trades, and is also vastly more healthy than still others. To the common understanding the trade of a baker has never been regarded as an unhealthy one. Very likely physicians would not recommend the exercise of that or of any other trade as a remedy for ill health. Some occupations are more healthy than others, but we think there are none which might not come under the power of the legislature to supervise and control the hours of working therein, if the mere fact that the occupation is not absolutely and perfectly healthy is to confer that right upon the legislative department of the Government. It might be safely affirmed that almost all occupations more or less affect the health. There must be more than the mere fact of the possible existence of some small amount of unhealthiness to warrant legislative interference with liberty. It is unfortunately true that labor, even in any department, may possibly carry with it the seeds of unhealthiness. But are we all, on that account, at the mercy of legislative majorities? A printer, a tinsmith, a locksmith, a carpenter, a cabinetmaker, a dry goods clerk, a bank's, a lawyer's or a physician's clerk, or a clerk in almost any kind of business, would all come under the power of the legislature, on this assumption. No trade, no occupation, no mode of earning one's living, could escape this all-pervading power, and the acts of the legislature in limiting the hours of labor in all employments would be valid, although such limitation might seriously cripple the ability of the laborer to support himself and his family. In our large cities there are many buildings into which the sun penetrates for but a short time in each day, and these buildings are occupied by people carrying on the business of bankers, brokers, lawyers, real estate, and many other kinds of business, aided by many clerks, messengers, and other employes. Upon the assumption of the validity of this act under review, it is not possible to say that an act, prohibiting lawyers' or bank clerks, or others, from contracting to labor for their employers more than eight hours a day, would be invalid. It might be said that it is unhealthy to work more than that number of hours in an apartment lighted by artificial light during the working hours of the day; that the occupation of the bank clerk, the lawyer's clerk, the real estate clerk, or the broker's clerk in such offices is therefore unhealthy, and the legislature in its paternal wisdom must, therefore, have the right to legislate on the subject of and to limit the hours for such labor, and if it exercises that power and its validity be questioned, it is sufficient to say, it has reference to the public health; it has reference to the health of the employes condemned to labor day after day in buildings where the sun never shines; it is a health law, and therefore it is valid, and cannot be questioned by the courts.

    Sigh.... ah, the good ol' days...

  • Old Mexican||

    [...][P]rogressive legal scholars have derided liberty of contract[...]


    ... As well as liberty of association, and liberty to exchange property, and liberty to own property, and liberty to produce, and a myriad of other stumbling blocks to authoritarianism and State power.

  • RC not the Cola||

    We couldn't possibly go back to this type of court philosophy, I mean the KIIIIIDDDSSSSS, the WOOOOOMMMEEENNNN, the WOOOOORRRRKKKKERSSSSS, THE DUMB PEOPLE THAT HARM THEMSELVES BY DOING WHAT THEY BELIEVE IS RIGHT AND FAIR.

  • Almanian||

    Somalian roadz. The end.

  • RC not the Cola||

    They don't have a developed economy that would require a large road system.

  • ||

    Cambodian sneaker sweatshop: ah, freedom!

  • RC not the Cola||

    I have to agree; the right to work is a freedom. An important one that is required to lift oneself out of poverty.

  • ||

    Then the Cambodian sweatshop workers should be grateful to us. We priced ourselves out of the market with minimum wages and maximum hours and all, so they get the glory of 25 cent per hour factory work all to themselves.

    Oh well. Our loss, their gain! Hooray for the USA and its anti-factory-owner tyranny! Opening doors of opportunity to factory workers all across East Asia! Yayyyy!

  • RC not the Cola||

    The division of labor and the natural progression of wealth creation leads to basic items being made in other parts of the world. Hence an American product is designed here, built in various parts of the world, assembled in China, and finally sold to consumers worldwide by an American company.

  • ||

    So what's the problem. You're whining about nothing.

  • JoshINHB||

    Nice theory,

    too bad it has zero relationship to reality.

  • Old Mexican||

    Re: Danny,

    Then the Cambodian sweatshop workers should be grateful to us.


    And if they are not, are you going over there to call them "ingrates"?

    We priced ourselves out of the market with minimum wages and maximum hours and all, so they get the glory of 25 cent per hour factory work all to themselves.


    Yes, and those 25 cents go a long way in Cambodia, where you can get a decent meal for $1.00.

    Oh well. Our loss, their gain! Hooray for the USA and its anti-factory-owner tyranny! Opening doors of opportunity to factory workers all across East Asia! Yayyyy!


    I celebrate with you, you poor ignoramus. Oh, by the way: Once th USA goes down the tubes thanks to The Great One, I can always buy your house with me gold.

  • some guy||

    Was that a typo or are you part leprechaun? Do you have a rainbow??

  • Dave||

    Yes, I'm sure the "Cambodian sweatshop workers" would prefer starving to death.

  • DLM||

    ...so they get the glory of 25 cent per hour factory work all to themselves.

    And what are their alternatives? How much would they be making otherwise? What is the cost of living there? Context, context, context.

  • Old Mexican||

    Re: Danny,

    Cambodian sneaker sweatshop Killing Fields.


    Ahhh, Socialism!

  • ||

    Communism, rather. And let's not piss on the graves of the dead, shall we? Being a "socialist" was a pretty effective way of getting killed in Year Zero.

  • Old Mexican||

    Allgeyer v. Louisiana, the 1897 case where the Court first explicitly protected liberty of contract. [The decision overturned a Louisiana law barring its citizens from buying marine insurance from an out-of-state firm, an issue of great relevance in the health care debate]


    Ahh, freedom of contract.

  • MNG||

    Where is this section with the right of freedom of contract in the Constitution? I can't find it...Is it before the part about the right to privacy or the right to keep unicorns?

    It's always fun to see the same folks who feel like the actual words of the Commerce Clause have been stretched too far fall over themselves advocating for a Constitutional right that was so fundamental the Founders forgot to put it in the document at all...

    ah, results oriented jurisprudence!

  • ||

    You're right, MNG. The Founding Fathers forgot to specifically state "The Right to contract shall not be infringed" and "The Right to Privacy shall not be infringed". Therefore, we must assume that the Federal Government was granted the authority to interfere with and regulate these perceived "freedoms".

  • Concerned Citizen||

    Read Article 1, Section 10, first paragraph.

  • Tncm||

    The 10th Amendment, how the hell does it work?

  • GNM||

    Commerce Clause...good and proper...General Welfare...
    The rest of the Constitution is hereby canceled!

  • sarcasmic||

    That's my line!

  • WTF||

    Sorry - it's too good not to steal!

  • ||

    Did you mean 9th amendment? or shall we at least put the two together here?

    The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

    You know, the one our local idiot MNG, is too f$^&ing; dumb to understand.

    So MNG, WTF were the framers of the USC supposed to do? List every possible right?

    The right of the people to wear bow ties shall not be infringed.

    The right of the people to eat fish shall not be infringed.

    The right of the people to go to plays shall not be infringed.

    Are you getting it MNG?

  • GroundTruth||

    MNG:

    IX: "The enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people."

    X: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

    Got it?

  • 35N4P2BYY||

    As per usual you are missing the point of the limited government. The constitution was written to clearly and specifically outline what the GOVERNMENT is allowed to do, vice the typical progressive take, of granting rights to the citizenry.

    As dictating the terms and specifics of a contract is NOT in the constitution the government may NOT do it.

  • Ezra Klein||

    Hey, man, the Constitution is like 100 years old and it's hard to understand what the framers really meant. Or something.

  • DLM||

    Hey, man, the Constitution is like 100 years old and it's hard to understand what the framers really meant. Or something.

    It's a good thing they knew how to write back then.

  • ||

    Please be sure to indicate where the power to prevent me from contracting comes from, other than mob rule, that is.

    If you, as an individual, don't have the power to do something, then the state sure as hell shouldn't have the power.

  • Barely Suppressed Rage||

    Further demonstrating your lack of knowledge or understanding of the history of the Constitution, how or why it was written and how it always was understood to work - until the New Deal Court started going off in a completely different direction than the Court had ever gone before.

    It's pretty simple, actually - the power to act comes FROM the people, who gave CERTAIN powers to the government. If the Constitution does not give a particular power to Congress, it doesn't have that power, period. See the 9th and 10th Amendments.

    Rights and liberty do not come from the Constitution. The Constitution does not enumerate all rights and freedoms that the people retained. In fact, that was one reason some of the Framers expressly argued against a Bill of Rights - because they were concerned that if they called out certain rights as being protected against government infringement, someone later would argue that those were the only rights the people had - which is why they included the 9th and 10th Amendments, to try to make it clear that was not the case.

    Even the most ardent Federalist, Alexander Hamilton, argued that there was no reason to set forth a Bill of Rights, because the Constitution didn't give Congress the power to do anything that would infringe upon those rights anyhow - and everyone understood that the people had those rights.

  • sarcasmic||

    Some people do not understand that rights can exist without being granted by government.

    They don't get it.

    For them freedom is not being free to do that which is not prohibited, it is being free to do that which is allowed.

    Free to do that which is not prohibited frees the mind and imagination.
    It is the core of the free enterprise system that made this country so great.

    Free to do that which is allowed frees a person from using their mind or imagination. If they can't find it written down somewhere or otherwise handed down from Authority, then it doesn't exist.
    These people will commonly say "where did you read that?" or "says who?", revealing that they are incapable of independent thought.

    To put it another way, they're functionally stupid.

  • Concerned Citizen||

    This might sting a little...Article 1, Section 10 - "No State shall...pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

  • ||

    I can get around that easy..by determining what the terms of a contract may be we are not impairing the obligation of a contract. The one acts before a contract is entered into, the other, which would impair a contract is after.

    Not saying it's right, only that it's easily evaded.

  • Concerned Citizen||

    A competent Supreme Court would just say a contract cannot be fraudulent, and must be entered into knowingly, willingly, and voluntarily. Of course, that would nullify the Social Security ponzi scheme.

  • ||

    "competent Supreme Court"

    hehe hehe hehe

  • Concerned Citizen||

    A boy can dream, can't he?

  • ||

    Overall, broadly agreed.

    Still, I wonder if this would get rid of mandatory overtimer after 8 hours. How many people would give that up?

  • sarcasmic||

    I would in a heartbeat.

    Because my employer bills for my work at a fixed hourly rate, they can't pay me time and a half since that exceeds what they charge.
    However if I work more than 8 hours a day or 40 hours a week, if they're going to pay me for those hours it must be time and a half.
    Their solution? Don't pay me at all for those hours and still bill the client.
    If those laws mandating that they pay me time and a half did not exist, I could get paid straight time for those extra hours. But because of that law I am paid nothing at all.

  • sarcasmic||

    One more thing.
    Until five or six years ago, restaurants were exempted from mandatory overtime. Yet most of them paid it anyway to attract good employees, not because they were forced to by law.
    Sure some did not pay it, but they were generally high turnover establishments run by pricks.
    So in an interview I would ask if they paid OT, and if they said "no" I'd get up and leave right there because I knew I'd be working for a bunch of cocks.
    Now that they have to pay OT I would have to take the job to discover that my employer is a certified assclown.

  • ||

    I wonder how many others would though.

    I would imagine not many based on the slide in econonmic freedom ove the last 80 years.

  • sarcasmic||

    I wonder how many others would though.

    Can you be a little less vague?

  • ||

    I work two jobs to pay for my education, and if I had the option, I would work one of the jobs 60 hours a week instead of wasting an hour each day commuting between jobs. Maximum hours laws are nice for people who don't want to work a terribly large amount, but they certainly help create larger socio-economic divides by hurting folks with less resources to start with (my parents were able to help pay for the first two years of my college, and helped with a car and cosigning my loans) And I work with many people who do not have the same opportunity, and who would gladly work for 60 hours a week if possible, and if there weren't overtime, those people could also be rewarded with a higher base pay if they opted out of overtime.

  • ||

    I work two jobs to pay for my education, and if I had the option, I would work one of the jobs 60 hours a week instead of wasting an hour each day commuting between jobs. Maximum hours laws are nice for people who don't want to work a terribly large amount, but they certainly help create larger socio-economic divides by hurting folks with less resources to start with (my parents were able to help pay for the first two years of my college, and helped with a car and cosigning my loans) And I work with many people who do not have the same opportunity, and who would gladly work for 60 hours a week if possible, and if there weren't overtime, those people could also be rewarded with a higher base pay if they opted out of overtime.

  • ||

    Maximum hour laws also prevent employers from forcing people into mandatory overtime. And from sending them home/laying them off at will, before their normal shifts/hours are over. I agree with your point, I've had to work two jobs more than once, but a lot of employers would probably abuse the privelege.

  • ||

    BTW, in regard to substantive due process(haven't read his book), I disagree. First, the Magna Carta says this...39. No freemen shall be taken or imprisoned or disseised or exiled or in any way destroyed, nor will we go upon him nor send upon him, except by the lawful judgment of his peers or by the law of the land.

    We don't have a king with royal prerogatives, but "elected" representatives, so in theory the substance if one wants has already occurred in passing a law, and the people sitting on juries insure through due process that no one's life, liberty or property.

    I may be incorrect, but I have always seen due process to mean that one can not have one's life, liberty, or property arbitrarily taken away, it must be proven that they committed a crime against someone worthy of such.

  • Kevin||

    We now live in a police state. Judges are no longer umpires, but prosecutors with greater power. The war on drugs has destroyed our liberties and gutted the 4th Amendment.

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