“Intellectual freedom cannot
exist without political freedom; political freedom cannot exist without
economic freedom; a free mind and a free market are corollaries.” – Ayn Rand, 1963*
In
Part One of this review of James W.
Ely, Jr.’s book, The
Guardian of Every Other Right
, I began:
At the end of Ayn Rand’s
prophetic 1957 novel, Atlas Shrugged,
a judge who is on strike with other producers against a future, nightmarish
state of America (echoes of Obama) and has disappeared with them into a Rocky
Mountain sanctuary, is at work. Before him is a “copy of an ancient
document [the Constitution]. He had marked and crossed out the contradictions
in its statements that had once been the cause of its destruction. He was now
adding a new clause to its pages: ‘Congress shall make no law abridging the
freedom of production and trade…'”
At
the end of Part One, I concluded:
…[T]he absence of a distinction
between “personal” and “property” rights in the premises of
the framers underscores Rand’s dictum about the integration of political,
economic and intellectual freedoms. Only the framers never quite put it so
succinctly. One almost wishes she had attended the Convention to instruct them
on that point.
James
Ely wrote that James Madison, a champion of property rights, wanted to ensure
the protection of property rights, and drafted a proposed statement to be
attached to the Constitution.
That government is instituted,
and ought to be exercised for the benefit of the people; which consists in the
enjoyment of life and liberty, with the right of acquiring and using property,
and generally of pursuing and obtaining happiness and safety.” Perhaps
thinking that the purposes of government were self-evident, Congress did not
accept this declaration. (p. 54)
But
outside the enumerated powers granted to Congress, many men did not think it
was so self-evident what the purposes of the government were. Thus the fierce
debate for and against a bill of rights in the ratification period. Ely
provides further evidence of Madison’s linking liberties with property rights
when the Founder drafted the Fifth Amendment:
The amendment provides in part
that no person shall be “deprived of life, liberty, or property, without
just compensation.” Madison’s decision to place this language next to
criminal justice protections, such as the prohibitions against double jeopardy
and self-incrimination, underscored the close association of property rights
with personal liberty….Like all of the Bill of Rights, however, these
safeguards for property were binding only on the federal government. (p. 54)
No
sooner had the Constitution with the appended Bill of Rights been ratified in
November 1791, and circulated among the states, than lawsuits were filed citing
the “takings
(or compensation) and contract
clauses in the Constitution relating to state legislative powers.  
In
Part One of this review, I noted that
Ely reveals that the chief violator of property rights was not the young
federal government, but the states. In his chapter, “The Development of
Property Rights in the Antebellum Era, 1791-1861,” Ely documents the
persisting conflicts between the federal government and states. The federal
government was largely barred from interfering with “states’ rights”
to regulate the states’ internal business and economic activity:
Indeed, state governments were
the primary source of economic regulation throughout the nineteenth century.
The authority of the states to regulate the use of property was derived from
both common law principles and the police power. The common law doctrine of
public necessity and nuisance both subordinated the rights of property owners
to the interests of the general community. Under the public necessity doctrine,
for instance, it was lawful to destroy buildings to prevent the spread of fire
or pestilence. (pp. 59-60)
The
states still retain such discretionary “police power” to this day. For
example, gambling, alcohol sales and/or consumption, the advertising of certain
professional services, and prostitution are the subjects of restrictions or
outright bans. Today, state “police powers” more or less follow
federal and national trends. For example, outgoing Virginia governor Tim Kaine,
a Democrat (and now a U.S. senator), signed a state law that banned smoking in
all Virginia restaurants and private business establishments, including private
clubs and bars, at the behest of a tenacious anti-smoking lobby. Violation of
the law carries heavy financial penalties for both establishments and
individuals, and not to the exclusion of arrest. The banning of smoking in
private venues such as restaurants, bars, parks, and clubs represented a
“taking” without compensation to property owners.
 Many states, notably Kansas, are technically
“dry” states, but allow “local jurisdictions” or counties to
permit the sale and/or consumption of alcohol as long as they establish liquor
boards and issue licenses to sell liquor “by the glass,” in bulk, or
to manufacture and sell alcohol, or to serve it in restaurants or bars. Such
laws also provide for state or local inspections of premises or production. Many
states also have granted themselves exclusive monopolies to sell
“hard” liquor; in Virginia, on the other hand, “soft”
liquor, such as beer and wines, is regularly sold in supermarkets with the only
restriction being sales to state-defined minors (many also contain age
restrictions on sales of tobacco to minors).
Prostitution
is illegal in some Nevada counties (e.g., in Clark County, which includes Las
Vegas), and tolerated in others without outright prohibition, sanction,
ordinance, or licensing, and brothels exist in those localities more or less on
local sufferance. The Las Vegas telephone directory, on the other hand, carries
numerous ads advertising “escort/dating services,” a euphemism for
prostitution agencies.
Ely
writes about state regulatory powers:
A more potent source of
regulatory authority was the general legislative power retained by the states.
The bounds of such legislative capacity was [sic] described by the awkward phrase “police power.” The
scope of the police power proved incapable of precise delineation, but it
traditionally included the authority to protect public safety, health, and
morals by appropriate laws. State legislatures relied on the police power as a
basis for regulating economic activity in their jurisdiction, restrained only
by congressional control of interstate commerce and the property clauses of
federal and state constitutions. The exercise of state police power frequently
raised constitutional issues. (p. 60)
In
many states before the Civil War, especially the southern states, but also
including many northern states, slaves were treated as rightless property but
used in population apportionment calculations to ensure representation in
Congress. Ferocious arguments roiled on whether or not to count a slave as a
whole person, or a fraction of one for purposes of property taxation, census
taking and apportionment ends. Ely notes that slaves were regarded as the
property of whoever bought, owned or sold them:
Slave property was also
increasingly regulated in the years before the Civil War. Slaves were a form of
personal property and represented a major source of wealth in the antebellum
South. Owners were not legally at liberty to treat their slaves as they saw
fit. Southern lawmakers recognized that slaves were human beings and enacted
legislation that outlawed the killing or maiming of slaves by their master.
Fearing the growth of a free black population, states passed statutes
restricting the right of masters to free their slaves. Such laws deprived the
owners of the right to dispose of their slave property. (p. 61)
In
colonial Virginia, a planter or slave owner was not permitted to free his
slaves en masse, but only one at a
time, and this was possible only if he could get a bill introduced in the
General Assembly and have his burgess shepherd it through the committee, debating,
and voting process. If the bill survived that process, it was sent to the
Governor’s Council, where the formalities were repeated. Finally, if the bill
was approved by the Council, it had to be signed by a Crown-appointed royal governor,
who also had veto powers. After the Revolution, this practice carried over into
state laws by default or in defiance of a proposed federal ban on the
importation of slaves to take place in 1808.
However,
the Gates of Vienna
blog site found this interesting tidbit:
The importation of slaves into
Virginia was made illegal by [Governor] Patrick Henry in 1778, a petition by
the House of Burgesses having been rejected in 1772 by King George:
“Resolved, that an humble address
be prepared to be presented to his Majesty, to express the high opinion we
entertain of his benevolent intentions towards his subjects in the colonies,
and that we are thereby induced to ask his paternal assistance in averting a
calamity of a most alarming nature; that the importation of negroes from Africa
has long been considered as, a trade of great inhumanity, and under its present
encouragement may endanger the existence of his American dominions; that
self-preservation, therefore, urges us to implore him to remove all restraints
on his Governors from passing acts of Assembly which are intended to check this
pernicious commerce”.
One can only be astounded by the
prescience of the good burghers of Williamsburg. Could they see into the
future? Could they understand the racial melee that would result from slavery?
The inability of the 21st century Virginia to reject Islam because of the
disgraceful but undeserved stigmas of ‘slavery’ and ‘racism’?
It is significant that King
George rejected this 1772 petition. He was making an awful lot of money through
the transportation of slaves; the truth of history is that the State of
Virginia was the first legislature in the world to ban the importation of
slaves.
But
unfortunately could not emancipate existing slaves in Virginia, it being a
slave state. Thomas Jefferson also regretted that the slavery issue would not
be resolved in his lifetime. He
predicted
that there would be a civil war over the issue.
Jefferson wrote that slavery was
like holding “a wolf by the ear, and we can neither hold him, nor safely let
him go.”  He thought that his cherished federal union, the world’s first democratic
experiment, would be destroyed by slavery.  To emancipate slaves on
American soil, Jefferson thought, would result in a large-scale race war that
would be as brutal and deadly as the slave revolt in Haiti in 1791.  But
he also believed that to keep slaves in bondage, with part of America in favor
of abolition and part of America in favor of perpetuating slavery, could only
result in a civil war that would destroy the union.  Jefferson’s latter
prediction was correct: in 1861, the contest over slavery sparked a bloody
civil war and the creation of two nations—Union and Confederacy—in the place of
one.
The
Confederate states seceded from the Union over the federal government’s
interference in states’ rights, one of which they claimed was their sovereignty
over the issue of slavery.
Ely
discusses in this chapter the conflicts and cases reviewed by the Supreme Court
and other federal courts between federal and states’ powers concerning property
rights.
Looking to the precepts of
natural law [i.e., largely Lockean law] rather than any specific clause of the
Constitution, some federal judges adopted the doctrine of vested rights to
protect established property rights from legislative interference. According to
the doctrine of vested rights, property ownership was a fundament right. Laws
that disturbed such rights were void because they violated the general
principles limiting all constitutional governments. Justice William Paterson
articulated this view in the significant circuit court case of VanHorn’s Lessee v. Dorrance (1795).
Observing that “the right of acquiring and possessing property, and having
it protected, is one of the natural, inherent and inalienable rights of
man.” Paterson added, “The preservation of property…is a primary
object of the social compact.” (p. 63)
With
the appointment of John Marshall as chief justice of the Supreme Court in 1801,
Ely writes, the Court embarked, with few lapses, upon a property-rights
preserving course for the next three decades.
…Marshall was sympathetic to
property interests and business enterprises. He distrusted state interference
with economic relationships. To Marshall, property ownership both preserved
individual liberty and encouraged the productive use of resources….The contract
clause
, little debated at the constitutional convention, emerged as the
centerpiece of Marshall Court jurisprudence….In the words of one scholar,
Marshall made the contract clause a “link between capitalism and
constitutionalism.”  (p. 63)
One
of Marshall’s lapses occurred over a taxation issue. He sided with the state’s
right to tax a corporation, in this instance a bank charter document which did
not exempt the bank from state taxation.
Stressing that taxing authority
“is essential to the existence of government,” he rejected the
contention that a tax on the corporation’s capital stock impaired the
obligation of contract. Significantly, Marshall added that the Constitution
“was not intended to furnish the corrective for every abuse of power which
may be committed by the state governments.” This ruling established the
principle that grants of privileges and exemptions to corporations must be
expressly set forth in the charter. (p. 67)
Ely
notes that in the nineteenth century, “the contract clause figured in more
Supreme Court decisions than any other section of the Constitution.”
Marshall’s rulings were not universally popular.
Most of the criticism, however,
emanated from adherents of the states rights political philosophy who were
alarmed at [sic] the alleged
encroachments on state power. There was little hostility to Marshall’s core
belief that the federal courts should safeguard established economic rights.
(pp. 67-68)
The
framers of the Constitution sought to bring order to the chaos that existed because
of Crown laws that regulated commerce and trade between the colonies, aggravated
by colonial legislatures’ own laws. Thus, the “commerce clause
came into more contention between the federal and state governments.
The Commerce Clause refers to Article
1, Section 8, Clause 3 of the U.S. Constitution
, which gives Congress the
power “to regulate commerce with foreign nations, and among the several states,
and with the Indian tribes.”
The Constitution enumerates
certain powers for the federal government; the Tenth
Amendment
 provides that any powers that are not enumerated in the
Constitution are reserved for the states.
The Commerce Clause has
historically been viewed as both a grant of congressional authority and as a
restriction on states’ powers to regulate. The “dormant” Commerce Clause refers
to the prohibition, implied in the Commerce Clause, against states passing
legislation that discriminates against or excessively burdens interstate
commerce.  The meaning of the word “commerce” is a source
of much of the controversy.  The Constitution does not explicitly define
the word.  Some argue that it refers simply to trade or exchange, while
others claim that the founders intended to describe more
broadly commercial and social intercourse between citizens of different
states. Thus, the interpretation of “commerce” affects the
appropriate dividing line between federal and state power.
Ely
notes that the commerce clause was little used or paid attention to by Congress
in the antebellum period. “Trade between the states increased markedly,
however, the state regulatory legislation inevitably affected the movement of
persons and goods across state lines.” Again, it was an issue of state
“police powers” versus what the Constitution enumerated as a federal
power. In virtually all the cases Ely discusses in this chapter, the Supreme
Court sided with the federal government’s claim to regulate commerce across the
board, and usurped state governments’ presumption of that regulatory
“right.”
Today,
however, the term “regulate” is understood to mean the power of especially
the federal government to micromanage any business, regardless of the state,
and to set and police the prices, conditions, and venues of business enterprises.
Eminent domain, or the state power to confiscate
or seize property (usually land) for state projects such as roads, dams, canals,
lighthouses, and fortifications, and even private railroads also received little
attention at the convention and afterward. Ely writes:
Unlike the contract clause and
the commerce power, the use of eminent domain to take private property did not
receive much attention from the federal courts before the Civil War. The Constitution
makes no direct reference to the power of eminent domain, but the Fifth
Amendment requires that private property be taken only for “public
use” and on payment of “just compensation.” Eighteenth-century
judicial thinking was heavily influenced by natural law doctrine. (p. 76)
Often,
particularly in the south, Ely writes, the state government did not directly
seize land or property, but granted a private company the right and power to do
so, if the state had a vested interest in “public improvements” that
would benefit a state’s economy. Victims of eminent domain had little chance of
winning a lawsuit, because state courts usually upheld any eminent domain
arrangement, and federal courts as a rule danced around the issue.
The
most recent and memorable instance of the Supreme Court addressing a state’s
power of eminent domain was the Court’s siding in 2005 with the state of Connecticut
in Kelo v. City of New London. According
to the New York Times in a 2009 story, “Pfizer to
Leave City That Won Land-Use Case
,” the City of New London reached a
deal with the giant pharmaceutical company, Pfizer, to develop some land in the
city to erect a “multi-use” mall. The city condemned perfectly
habitable homes under eminent domain:
Economic development officials in
Connecticut used that plan — and a package of financial incentives — to lure
Pfizer to build a headquarters for its research division on 26 acres nearby.
With an agreement that it would pay just one-fifth of its property taxes for
the first 10 years, Pfizer spent $294 million on a 750,000-square-foot complex
that opened in 2001….
Ms. Kelo lived in a small pink
house in the Fort Trumbull section that was square in the sights of city and
state officials who wanted to revitalize the area. The city had created the New London
Development Corporation
to buy up the nine-acre neighborhood and find a
developer to replace it with an “urban village” that would draw shoppers and
tourists to the area….
In a 5-to-4 decision,
the high court ruled that it was permissible to take private property and turn
it over to developers as part of a plan to bolster the local economy.
Conservative justices, including Clarence Thomas, dissented.
Justice Thomas called New London’s plan “a costly urban-renewal project whose
stated purpose is a vague promise of new jobs and increased tax revenue, but
which is also suspiciously agreeable to the Pfizer Corporation.”
But
Pfizer changed its mind. It left New London, and left behind the flattened,
ploughed land that was once dotted with private homes. Fox News on March 20th
reported on the land in “Seized
property sits vacant nine years after landmark Kelo eminent domain case
.”
In all cases cited by Ely, the decision endorsing the power of eminent domain
was based on altruistic premises such as the “public good” or to
boost the “local” or state economy.
Part Three of this review will move on the
post-Civil War “Gilded Age and the Challenge of Industrialization.” This
era saw the beginning of the disintegration of any protection of property rights.
The
Guardian of Every Other Right: A Constitutional History of Property Rights
, by James W. Ely, Jr .. New
York: Oxford University Press, 2007. 216 pp.
*From
“For the New Intellectual,” in For
the New Intellectual
: The Philosophy of Ayn Rand
, by Ayn Rand. New
York: Signet, 1963. 224 pp.  p. 25.