Holden v. Hardy

The case was an important step in establishing the federal government's right to regulate business.

The second half of the nineteenth century in America was the age of "robber barons," industrial giants whose power to shape the nation's economy and political life seemed virtually unlimited. Big business was opposed by working people who were trying to unionize, as well as by middle-class people who were trying to pass state and federal reforms. However, these efforts to limit the power of business were often seen by the courts as going beyond the legitimate power of government.

One way to understand the climate of the time is to think of a person's right to enter into a contract as one of the greatest liberties known to humanity. The freedom to make one's own contract was viewed as so precious that only very grave circumstances could justify the government, or anyone else, interfering with it.

Many people at the time saw things differently. They argued that individual workers could not possibly make free and fair contracts with huge corporations. The corporations had enough power and wealth to force workers to agree to virtually any wages and working conditions, unless either a union contract or a government law intervened. Indeed, many people at the time thought the government's role should be to intervene on the side of the weak and powerless.

The justices of the Supreme Court, however, tended not to support this activist view of the government's role. They saw federal legislation as doubly problematic because it interfered with individual liberty to make contracts, and it usurped power that rightly belonged to the states. In order to justify most types of social legislation, the Court believed that one of four issues had to be at stake: morals, general welfare, safety, or health.