Sunday, June 14, 2020


Interstate Commerce and Home-Grown Wheat

Speaking of M’Culloch v. Maryland’s Supreme Court decision resulting in “virtually every conceivable subject [having] been grist for Congress’s Article I mill . . . ”, [1] a prime example is  Wickard v. Filburn, which  had its genesis in FDR’s “New Deal” legislation. 

In 1938, the Agriculture Adjustment Act was passed. One declared reason for its enactment was to avoid surpluses of some foods (too much food?!) and shortages of others by establishing government control over farm production. The program was designed to support the price of farm commodities an anti-free market, “command economy” socialist scheme par excellence.

Every year, the federal bureaucrats used their crystal balls to determine how much wheat would be needed the next year. They then set production quotas.

Filburn was a small Ohio dairy and poultry farmer who also raised a small amount of winter wheat. Some he sold locally, some he fed to his own animals, some he milled into flour for his own consumption, and the rest he kept for the following year’s seeding on his own land.

Based on the Act, its regulations, and what the clairvoyant government bureaucrats predicted, in 1940 Filburn was informed that his 1941 wheat crop could occupy no more than eleven of his own acres, with a harvest yield of no more than about twenty bushels per acre.

Recklessly throwing caution to the wind and willing to risk violating federal law, Farmer Filburn sowed and harvested an extra twelve acres. When the government assessed a penalty for his “farm marketing excess,” he sued.

Eventually the case reached the Supreme Court, where Filburn argued that the wheat marketing quota provisions of the Act were unconstitutional because they did not constitute regulation of interstate commerce. Apparently, Filburn hadn’t read Marshall’s opinions in M’Culloch and Gibbons.

Filburn conceded that Article I, Section 8 of the federal Constitution vested Congress with the power to regulate interstate commerce, and that recently the Court had upheld a federal statute regulating the local production of goods simply because later they would enter the stream of interstate commerce. But, he argued, the Agricultural Adjustment Act was quite different. It went well beyond other federal laws by extending the reach of the Commerce Clause power to local farm production intended wholly for local consumption, which was in not intended for later interstate commerce.

Filburn wanted to know how Congress could regulate wheat that would never move far off his farm. A fair question. One that might have given even the great John Marshall pause, Maybe! But Justice Jackson was up to the task.

Although in Jackson’s opinion for the 8-0 Court he expressly acknowledged that the Agriculture Adjustment Act “extends federal regulation to production not intended in any part for commerce but wholly for consumption on the farm, his concession didn’t help farmer Filburn. (My italics).

The core of Justice Jackson’s opinion began by acknowledging that Filburn claimed the wheat quota “is a regulation of production and consumption of wheat. Such activities are, [Filburn] urges, beyond the reach of congressional power under the Commerce Clause, since they are local in character, and their effects upon interstate commerce are at most ‘indirect.’ In answer [wrote Jackson] the Government argues that the statute regulates neither production nor consumption, but only marketing; and, in the alternative, that if the Act does go beyond the regulation of marketing it is sustainable as a ‘necessary and proper’ [Marshall lives again!] implementation of the power of Congress over interstate commerce.” (Italics in original.)

Although Filburn’s “production and consumption” argument was entitled not to be taken lightly, instead of confronting it head on Jackson simply dismissed the farmer’s contention: ”We believe,” Jackson wrote, “that a review of the course of decision under the Commerce Clause will make plain, however, that questions of the power of Congress are not to be decided by reference to any formula which would give controlling force to nomenclature such as ‘production’ and ‘indirect’ and foreclose consideration of the actual effects of the activity in question upon interstate commerce.” In other words, apparently in 1787 the Framers did not know what “interstate” meant, their words being a mere “formula” and  subjective “nomenclature.” More important, the unanimous Supreme Court ruled, were “actual events” in 1941.

Beware! “Living Constitution” alert!

Once the Supreme Court says explicitly that cases are “not to be decided by reference to any formula” and implies that the objective meaning of words must yield to “actual effects,” it’s obvious that the justices are going to extend the law. And that’s exactly what Jackson was about to do.
As a predicate, the justice observed that:

[t]he wheat industry has been a problem industry for some years. Largely as a result of increased foreign production and import restrictions, annual exports of wheat and flour from the United States during the ten-year period ending in 1940 averaged less than 10 per cent of total production, while during the 1920’s they averaged more than 25 per cent. The decline in the export trade has left a large surplus in production which in connection with an abnormally large supply of wheat and other grains in recent years caused congestion in a number of markets; tied up railroad cars; and caused elevators in some instances to turn away grains, and railroads to institute embargoes to prevent further congestion.

Many countries, both importing and exporting, have sought to modify the impact of the world market conditions on their own economy. Importing countries have taken measures to stimulate production and self-sufficiency. The four large exporting countries of Argentina, Australia, Canada, and the United States have all undertaken various programs for the relief of growers. Such measures have been designed in part at least to protect the domestic price received by producers. Such plans have generally evolved towards control by the central government. (My italics.) 

Even though the cat was now out of the bag as to the real purpose of the quotas, and even though Marshall in Gibbons v. Ogden had provided plenty of latitude for interpretation of the commerce element of the Commerce Clause, Jackson still had to find an interstate peg to hang the wheat quotas on. Necessity, once again, proved to be the mother of invention. Jackson wrote: “One of the primary purposes of the Act in question was to increase the market price of wheat and to that end to limit the volume thereof that could affect the market. It can hardly be denied that a factor of such volume and variability as home-consumed wheat would have a substantial influence on price and market conditions.” (My italics.)

In Wickard, an Associate Justice of the Supreme Court of the United States was claiming that homegrown, home-consumed wheat never moving off Filburn’s farm, let alone beyond the State of Ohio, would not merely have an “influence on price and market conditions,” but a substantial one.

In what way?

Here was Jackson’s explanation for the unanimous Supreme Court:

This may arise because being in marketable condition such wheat overhangs the market and if induced by rising prices tends to flow into the market and check price increases. But if we assume that it is never marketed, it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market. Home-grown wheat in this sense competes with wheat in commerce. The stimulation of commerce is a use of the regulatory function quite as definitely as prohibitions or restrictions thereon. 

There is so much revealed in these four sentences that emphasizing individual words and phrases is inadequate to explain it all.

To begin with, by Filburn’s wheat “overhanging” the market Jackson meant that the farmer’s few paltry acres of the grain were somehow part of the worldwide universe of wheat from such places as neighboring states, Canada, Ukraine, even faraway Australia. By itself, Jackson’s musing was meaningless.

Jackson built on this flimsy foundation with a string of yet more speculative “maybes.” With Filburn sitting on his drop-in-the bucket supply of homegrown wheat, maybe prices would rise. Ignoring his own uses for the wheat, maybe Filburn would be induced to sell it into the market. Maybe Filburn’s wheat would “check” price increases. But then again, maybe not.

Apparently, Jackson realized that these “maybes” were hardly bedrock upon which the Court could construct a broad, far-reaching interpretation of the interstate Commerce Clause’s regulation of purely intrastate activity. Bedrock? The Supreme Court was building on sand.

Accordingly, Jaclson conceded that Filburn’s wheat might never leave his farm. In that case, according to him, Filburn himself would consume it—and when he did, he would not be buying wheat from Kansas (let alone Australia!). Kansas is, of course, another state of the United States of America—which brings Jackson closer to what he needs: interstate commerce. Indeed, Jackson wrote that “[h]ome-grown wheat in this sense competes with wheat in commerce.” An interesting idea: not buying something interstate in some way is related to interstate commerce. [Below, I will deal with Mr. Obama’s health care “reform,” where not buying medical insurance somehow affects interstate commerce.]

Jackson’s sophistry impaled Filburn on the horns of a dilemma the farmer could not escape.

If he sold his wheat, it would somehow affect interstate commerce. If he consumed his wheat, he would not purchase other wheat that was in interstate commerce, and in thus “overhanging” the market he was affecting interstate commerce. No matter what Filburn did, according to the Supreme Court, his wheat had a sufficient connection with interstate commerce to justify the congressional Agriculture Adjustment Act and the command economy production quotas it imposed.

And what precedents did Jackson rely magically to justify converting purely intrastate wheat-growing into interstate commerce, and thus allow Congress to regulate the local production of agricultural products? Well, our two old friends from Chief Justice John Marshall’s day, M’Culloch v. Maryland and Gibbons v. Ogden.

If those two cases could justify congressional legislation under the Commerce Clause to control Filburn’s wheat, the clause could be (and has been) stretched to reach virtually any activity, economic and non-economic alike.

Unfortunately, Wickard is only one mid-Twentieth Century example of Congress’s use of the Commerce Clause to sacrifice the private interests of some people (like the producers of America) to others (needy bread-consumers in, say, Texas) anointed by the sacrificial collectivists (here, Congress). From the time of Gibson and Wickard to the present, the Commerce Clause has been used by Congress and the Supreme Court to justify government Wickard-like control of transportation, communication, investments, banking, labor relations, power, energy, trade, food, drugs, and much more.

Understandably, it is this aspect of Wickard v. Filburn — concerning the scope and application of federal interstate commerce power — which has received the most notoriety in constitutional law circles. Yet ethically more important is the unusually explicit collectivist-statist premise upon which the Agricultural Adjustment Act and the Supreme Court’s decision in Wickard rests.

In essence, Filburn argued that by forcing him, and others similarly situated, into the market to purchase small amounts of needed wheat they were able to grow themselves, the government was hurting them in order to benefit others—consumers and commercial wheat farmers.

Filburn wanted to know why small dairy/poultry farmers like him should be penalized to keep wheat prices high for commercial wheat farmers—why his interest in growing a little wheat for his own purposes should be sacrificed to the perceived need of other farmers to obtain a government-supported price higher than the free market would provide them.

The answer Filburn received from the Supreme Court was that “[i]t is the essence of regulation that it lays a restraining hand on the self-interest of the [individuals] regulated and that advantages from the regulation commonly fall to others.” This is naked sacrifice-collectivism incarnate.  And it was through an indefensible interpretation of the Commerce Clause that the Court justified Congress’s command economy allocation of those costs and benefits.

Wickard v. Filburn’s distortion of the Interstate Commerce Clause in economic cases was bad enough. In 1964, however, Congress and the Supreme Court teamed up to use the Commerce Clause as an engine of moral righteousness, in compelling a forced sacrifice of individual and property rights to the collectivists and statists.

I will cover that in my next blog.


[1] See Worst Decisions of the Supreme Court of the United States: M’Culloch v. Maryland, elsewhere in this blog.

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