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Nebbia v. New York

Supreme Court Declares That The State Can Regulate Any Business

In 1877, the Court decided Munn v. Illinois that although there are certain businesses which are immune from state control, those "in which the public has an interest"--in that case, it was grain elevators--are subject to regulation by state governments. One argument advanced against this ruling was that state regulatory power was in conflict with the Commerce Clause of Article I, section 8 of the Constitution, which gives Congress the power "To Regulate Commerce . . . among the several States." The other was that state regulation of business was unconstitutional because of the Due Process Clause of the Fourteenth Amendment, which provides: "No state shall . . . deprive any person of life, liberty, or property without due process of law."

This second argument was adopted in an important dissenting opinion written by Justice Stephen J. Field. Field elaborated the argument into a legal theory that came to be known as "substantive due process," which holds that the Constitution protects certain rights--most notably, property--from all legislative interference. Field's theory proved to be highly influential for the remainder of the nineteenth century and lasted well into the next century. It determined the outcome of most economic issues that came before the Court during that period, causing a majority of the justices to vote consistently in support of business interests. In 1885, for instance, the Court denied that the Sherman Anti-Trust Act applied to manufacturing monopolies in United States v. E. C. Knight, and ruled that the Sherman Act could be used as a weapon against labor unions in In re Debs.

With the onset of the Great Depression, however, it became harder for the justices to support substantive due process, which in effect gave business free rein. The American people were suffering and while the federal government adopted President Franklin Roosevelt's New Deal program of economic reforms, states shaped legislation along the same lines. One such piece of New Deal-inspired state legislation was the New York Milk Control Act of 1934 at issue in Nebbia.

Writing for the Court, Justice Roberts now declared that the state could regulate not just businesses "affected with the public interest," but any economic activity it saw fit to control:

[I]n the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such policy, or when it is declared by the legislature, to override it.

The old substantive due process argument was laid out for the dissent by Justice McReynolds, who maintained that the Due Process Clause of the Fourteenth Amendment gave the Supreme Court the authority to uphold any economic legislation it found reasonable and to override any it found unreasonable. McReynolds's dissent was joined by three other justices: Van Devanter, Sutherland, and Butler. These four justices tended to vote together as a bloc--particularly on economic issues. The consistency of their conservative stance caused them to be popularly known as the Four Horsemen, after the Four Horsemen of the Apocalypse, who brought ruin to the land in the last book of the Bible. Often they were joined by one or more of the "swing votes" on the Court to defeat New Deal legislation. Although they lost the debate in Nebbia, it was not until Roosevelt announced his plan to "pack" the Court with justices of his own choosing that the Four Horsemen permanently lost their clout.

Additional topics

Law Library - American Law and Legal InformationNotable Trials and Court Cases - 1918 to 1940Nebbia v. New York - Significance, Supreme Court Declares That The State Can Regulate Any Business, Related Cases, Public Enterprise And Private Enterprise