Monopolies and the constitution: a history of crony capitalism. (2024)

1. A BRIEF HISTORY: HOW MONOPOLIES CAME TO BE HATED A. The English Experience with Monopolies 1. Darcy v. Allen 2. The Statute of Monopolies B. Colonial AmericaII. MONOPOLIES IN THE UNITED STATES A. At the Founding B. Monopolies and the Original Federal Constitution C. The Fourteenth Amendment: A Ban on Class-Based Legislation D. Economic Liberty Cases: Slaughter-House, Lochner, & the New Deal Cases E. "Private" Monopolies and Federal Antitrust LawIII. MONOPOLIES AND STATE CONSTITUTIONAL LAW A. A Tradition Rooted in Jacksonian Democracy and Changes in Corporate Law B. The Adoption of Antimonopoly Provisions 1. Provisions Adopted at the Founding 2. The Middle to Late Nineteenth Century 3. The Progressive Era C. The Application of State Antimonopoly Provisions 1. Challenging Licensing Requirements 2. Striking Down Taxes that Benefit Preferred Industries 3. Challenging Monopolies for Doing Business with the Government 4. Combating Price Controls D. Why Have So Few States Adopted Antimonopoly Provisions?CONCLUSION

Government-conferred monopolies granted by English kings and queensplagued England in the late sixteenth and early seventeenth centuries,leading to both The Case of Monopolies and the parliamentary Statute ofMonopolies. Although today the word "monopoly" generally isused to refer to the private accumulation of economic power, this is notthe meaning that was originally attached to the term. The originalmeaning of the word "monopoly" was an exclusive grant of powerfrom the government--in the form of a "license" or"patent" -- to work in a particular trade or to sell aspecific good. The word "monopoly" comes from the Greek roots"mono," meaning "single" or "one," and"polein," meaning "to sell." (1) The Greek word"monopolion" referred to an exclusive legal right of saleissued by the government. (2) Sir Edward co*ke defined monopolies in theearly seventeenth century as being

 [Institution[s], or allowance[s] by the King by his [g]rant, [c]ommission, or otherwise to any person or persons, bodies politick or corporate, of or for the sole buying, selling, making, working, or using of any thing, whereby any person or persons, bodies politick or corporate, are sought to be restrained of any freedom[] or liberty that they had before, or hind[e]red in their lawful trade. (3)

Samuel Johnson's dictionaries from the eighteenth centurylikewise defined a monopoly as "[t]he exclusive privilege ofselling any thing." (4)

The 1828 first edition of Noah Webster's An AmericanDictionary of the English Language defined a "monopoly" asbeing:

 The sole power of vending any species of goods, obtained either by engrossing the articles in market by purchase, or by a license from the government confirming this privilege. Thus the East India Company in Great Britain has a monopoly of the trade to the East Indies, granted to them by charter. Monopolies by individuals obtained by engrossing, are an offense prohibited by law. But a man has by natural right the exclusive power of vending his own produce or manufactures, and to retain that exclusive right is not a monopoly within the meaning of law. (5)

The American colonists thus shared English concerns that exclusivemonopoly privileges issued by the government could impose enormous costson the general public, and especially on consumers. (6) George Mason,Thomas Jefferson, and several Antifederalists argued in favor ofincluding an antimonopoly clause in the federal Constitution. (7)Although no such clause was added at the federal level constitutionaldrafters in two states recognized the danger of monopolies andprohibited government-granted monopolies in their state constitutions,(8) More states added antimonopoly clauses to their constitutions in thefirst one hundred years after the federal Constitution was adopted. (9)Others prohibited monopolies using different language, including clausesthat forbade the giving of exclusive privileges to one class of citizensover another, or clauses that forbade the abridging of the privileges orimmunities of citizens. (10) The Framers of the Fourteenth Amendment tothe federal Constitution shared this concern with what they called"class legislation," a concern that led four United StatesSupreme Court Justices to say that state-granted monopolies wereunconstitutional in an important dissent in the Slaughter-House Cases.(11)

This objection to government-granted monopolies and to forms ofcaste or class legislation is not merely a part of this country'shistory; it is also relevant today. In a 2011 Washington Post opinionpiece, George Will describes a legal challenge to the constitutionalityof a monopoly granted by the state of Washington to a ferry boatcompany. (12) The ferry boat company has a legal monopoly on boatservice to a town that can otherwise only be reached by plane. (13) Thechallengers to the Washington state law creating the monopoly areresidents of that remote town who wish to open a competing boat serviceto provide an easier way to access their town. (14) But the problem ofgovernment-conferred monopolies is not unique to one town in the stateof Washington, because it is now routine in many states for thegovernment to require licenses for various industries, often for thepurpose of bestowing economic favors. (15) Licensing requirements ofthis kind sometimes take the form of a complete prohibition (as is thecase in Washington), but they may also take the form of barriers toentry that prevent or reduce competition. Many local and stategovernments license businesses for no legitimate health or safetyreason. For example, tourist guides, funeral attendants, and floristsare all sometimes required to be licensed professionals despite theevident lack of a legitimate public health or safety reason for suchlaws. (16)

Local public schools provide another example of agovernment-sponsored monopoly provider of public services. Like mostmonopoly providers, many public schools provide poor service to theirconsumers (parents and children) while diverting monopoly rents in theform of bloated salaries and benefits to the providers of education(bureaucrats and teachers' unions). (17) Polls suggest that mostAmericans feel strong pressure to send their children to public schoolsbecause they are taxed to pay for public schools even if they ultimatelychoose to send their children to private schools or to home-school them.(18) The public school monopoly is especially objectionable because itinterferes with parents' control over raising and educating theirown children. (19) Since the New Deal, the Supreme Court has applied thevery deferential rational basis test when reviewing theconstitutionality of federal and state economic regulations, includingthose that grant monopoly status. (20) Such laws are rarely challengedand even more rarely struck down. This is a mistake. The post-New Dealcase law on economic liberties, epitomized by Williamson v. Lee OpticalCo., (21) is wrongly decided, and the right to be free from classlegislation, monopolies, and grants of special privilege is deeplyrooted in this nation's history and traditions. (22) We thereforethink this right is embodied in the Fourteenth Amendment to the U.S.Constitution and that it can only be trumped by just laws enacted forthe good of the whole people. (23) We think George Will is right when hedenounces government licensing schemes because they "lack[]constitutional warrant and repudiate[] the nation's foundationalphilosophy" and because they require entrepreneurs to"approach government on bended knee to beg it to confer upon them aright--the right to compete." (24)

As John Tomasi argues in his new book, Free Market Fairness,economic liberties are just as important to freedom as are all of theother liberties embraced by modern liberals. (25) This Article helps tospell out the legal underpinnings and history of the economic libertiesthat Tomasi identifies; its analysis and Tomasi's are mutuallyreinforcing. Tomasi defends economic liberty from the perspective ofpolitical philosophy to which we seek here to add the perspective ofhistory and law.

Part I of this Article discusses the history of government-licensedmonopolies in seventeenth century England and the landmark eventslimiting the King's power to grant monopolies-The Case ofMonopolies and Statute of Monopolies. Part I also discusses the spreadof the English concern with government grants of monopoly to theAmerican colonies and the role trade monopolies played in buildingsupport for the American Revolution in colonial America. Part IIdiscusses the effort by some of the Framers of the U.S. Constitution toinclude an antimonopoly clause therein, an effort that ultimatelyfailed. Part II then shows how antimonopoly ideas infused themselvesinto the Supreme Court's early Contracts Clause case law and thecentral role they played in the emergence of the Fourteenth Amendment asa ban on class-based or caste-based legislation. Part II finallydiscusses the connection between the various federal antitrust laws andgovernment-granted monopolies. Part III discusses the adoption ofantimonopoly clauses in state constitutions, beginning at the Foundingand continuing through the early twentieth century. Part III alsoconsiders the move toward general laws governing incorporation and awayfrom special legislative charter grants and surveys how the monopolyconcept came to reflect a concern with private economic power in somestates, as well as the application of state antimonopoly provisions. TheArticle concludes with a few parting words about the decline in concernfor the protection of economic liberty in modern American constitutionallaw.

I. A BRIEF HISTORY: HOW MONOPOLIES CAME TO BE HATED

A. The English Experience with Monopolies The English hatred ofmonopolies dates back to the reigns of Queen Elizabeth I and King JamesI. Two principal events-one coming from the common law courts and theother coming from Parliament--highlight the strong disapproval ofgovernment monopolies that existed in early seventeenth century England.The first event is the case of Darcy v. Allen commonly known as The Caseof Monopolies, which was decided in 1603. (26) In this case, a commonlaw court reviewed a royal grant of trade privileges and struck down thegrant as being void under the common law. (27) The second key event isthe passage in 1624 of the Statute of Monopolies, (28) which was theresult of years of pressure by the House of Commons to prohibit the Kingor Queen from granting the same kinds of monopoly privileges as thosethat had been struck down in Darcy. These two events characterize aperiod when intellectuals and lawyers began to truly recognize therights of Englishmen to work for a living and to compete with each otherwithout interference from government grants of special economicprivilege. (29)

1. Darcy v. Allen

During Queen Elizabeth's very long reign she oftentimes foundherself in need of more money than Parliament had allotted for her use.As a result, she sometimes tried to supplement her subsidy fromParliament by selling royal monopolies. (30) Some in Parliamentcriticized this practice because of the burden it imposed on subjects inaddition to their preexisting tax burden. (31) A royal grant of monopolyprivileges meant that subjects suffered a loss of jobs: Some people wereshut out of their trades, and consumers were forced to pay higher pricesbecause legal monopolies allowed producers to drive up the price ofgoods. For example, in a speech at Parliament in 1571, Robert Bellargued for reform of the royal monopoly system on that grounds that"by Licences a few only were enriched, and the multitudeimpoverished." (32) As Adam Smith later described in The Wealth ofNations, the punishment for violating grants of monopoly privileges wassometimes severe:

 Like the laws of Draco, these laws may be said to be all written in blood.... [T]he exporter of sheep, lambs or rams, was for the first offence to forfeit all his goods for ever, to suffer a year's imprisonment, and then to have his left hand cut off in a market town upon a market day, to be there nailed up; and for the second offence to be adjudged a felon, and to suffer death accordingly. (33)

Queen Elizabeth's response to complaints about the monopoliesshe was granting was, at first, entirely dismissive: "We are to letyou understand, her Majesty's pleasure in that behalf that herPrerogative Royall may not be called in question for the valliditie ofthe letters patents." (34) But opposition to exclusive tradeprivileges reappeared in 1597 when Parliament petitioned Queen ElizabethI to stop the practice of granting royal monopolies. (35) Parliamentgently requested "her Highness['s] most gracious care andfavour, in the repressing of sundry inconveniences and abuses practicedby Monopolies and Patents of priviledge." (36) In addition, at theend of the ninth parliament, the Speaker raised the issue of monopoliesin his closing speech--a

bold move given that such speeches were customarily ceremonial innature, not substantive, and that they typically included thepresentation of Parliament's subsidy to the Queen. (37) Inresponse, Queen Elizabeth asked Parliament to let her continue thepractice, thus seeming to acknowledge that Parliament possessed theability to regulate her prerogative power to grant monopolies--a clearweakening of her earlier position:

 [H]er Majesty hoped that her dutiful and loving Subjects would not take away her Prerogative, which is the chiefest Flower in her Garden, and the principal and head Pearl in her Crown and Diadem; but that they will rather leave that to her Disposition. And as her Majesty hath proceeded to Trial of them already, so she promiseth to continue, that they shall all be examined, to abide the Trial and true Touchstone of the Law. (38)

However, it became clear that Queen Elizabeth had no intention ofcarrying out her promise to regulate the distribution and functioning ofroyal monopolies, despite her apparent recognition of Parliament'spower in this area. (39) Accordingly, in 1601 the topic of royal powerto grant monopolies was again heavily debated in Parliament, and a draftbill to outlaw royal monopolies was introduced. (40) But before adecision was made with regard to the draft bill, Queen Elizabeth offeredParliament a compromise. Traditionally, cases regarding royal monopoliescould only be heard by the Court of Star Chamber, a fortress of royalpower in which the common law of England did not apply. Queen Elizabethproposed as a compromise both to cancel some of the least popularmonopolies she had granted and, more importantly, to allow new casesinvolving the legality of monopolies to be heard in common law courts.(41)

This compromise paved the way for the famous 1603 case of Darcy v.Allen, often called The Case of Monopolies. (42) Interestingly, Darcydid not involve a challenge to the legality of royal monopolies, butrather was brought by a monopoly-holder to protect his privilege. Thesuit was brought in 1602 by Edward Darcy, who claimed that Thomas Allenhad infringed on his monopoly right (through a royal patent granted byQueen Elizabeth) to produce, import, and sell all trading cards inEngland. (43) The court ruled for Allen, finding that Darcy's royalpatent was void. (44) There was no written judicial opinion of the case,(45) and the extant records suggest that the justices explained littleof the reasoning supporting their judgment in open court. (46) However,Sir Edward co*ke, the most famous lawyer of his day, did write up areport on Darcy v. Allen. (47) co*ke's report has been soinfluential that, with regard to Darcy's meaning in the common lawtoday, it effectively can be treated as the official opinion in thecase. (48) Interestingly, co*ke represented Darcy in the case, as co*kewas the Attorney General and was bound to defend the legality of themonopoly that was being challenged there. (49) co*ke's report, whichwas written an entire twelve years after the case was decided, (50)describes the common law court's rationale as a strong statementabout the importance of open and free trade. It states that the courtstruck down the royal monopoly because allowing people to work in theirrespective trades was not only beneficial for them, but was alsonecessary for the well-being of the whole country:

 All trades ... which prevent idleness ... and exercise men and youth in labour, for the maintenance of themselves and their families, and for the increase of their substance, to serve the Queen when occasion shall require, are profitable for the commonwealth, and therefore the grant to the plaintiff to have the sole making of them is against the common law, and the benefit and liberty of the subject. (51)

And the financial benefits of the royal monopoly were considerable,co*ke's report suggests that the case was as much a statement aboutthe negative consequences of exclusive trade privileges as it was aboutthe individual right to economic liberty. In fact, it was critical tohave the freedom to pursue one's livelihood--"[E]veryman's trade maintains his life, and therefore he ought not to bedeprived or dispossessed of it, no more than of his life." (52)

co*ke's report also discusses the many problems withmonopolies, particularly the ways monopolies diminish wealth. First,monopolies serve only the interests of those who are granted themonopoly:

 The sole trade of any mechanical artifice, or any other monopoly, is not only a damage and prejudice to those who exercise the same trade, but also to all other subjects, for the end of all these monopolies is for the private gain of the patentees; and although provisions and cautions be added to moderate them, yet ... it is mere folly to think that there is any measure in mischief or wickedness. (53)

More specifically, co*ke discusses the undesirable effects trade ofprivileges on people who wish to enter a trade but who are prohibitedfrom doing so because of the exclusive right to practice the trade thata royal monopoly furnishes on another:

 [This leads] to the impoverishment of divers artificers and others, who before, by the labour of their hands in their art or trade, had maintained themselves and their families, who now will of necessity be constrained to live in idleness and beggary. (54)

Further, but perhaps secondarily in co*ke's mind and for othersduring the era, monopolies hurt the entire public because monopolieslead to higher prices and poorer quality goods and services:

 [T]he price of the same commodity will be raised, for he who has the sole selling of any commodity, may and will make the price as he pleases.... [A]fter the monopoly [has been] granted, the commodity is not so good and merchantable as it was before: for the patentee having the sole trade, regards only his private benefit, and not the common wealth. (55)

It is important to note that co*ke's report in The Case ofMonopolies has been challenged by some scholars who accuse co*ke ofexaggerating the free trade stance of the common law. (56) The primaryevidence that co*ke's report of the case was indeed an exaggerationis the continued practice of kings and queens to issue monopoly royalpatents for many years after Darcy. Queen Elizabeth died the year Darcywas decided, whereupon King James I took the throne. James I was notnearly as well-liked in Parliament as Queen Elizabeth had been, whichdid not bode well for his ability to receive subsidies. (57) UnlikeQueen Elizabeth, King James I pursued an aggressive and costly foreignpolicy, and he failed to exercise fiscal conservatism in his personalfinances. (58) Because of King James I's extensive militaryengagements, his inability to control spending, and his poorrelationship with Parliament, the new king found himself increasinglyusing his powers to issue royal patents as a means to raise money. (59)

Because King James I continued to issue royal monopoly tradeprivileges, the House of Commons again pushed for adoption of a law toprohibit the King from granting monopolies. (60) Although King Jamesresisted, some signs of change began to appear. For example, in 1610,King James issued his Book of Bounty, in which he stated that exclusivetrade privileges were contrary to the common law and his own policies,that he intended to discontinue the privileges, and that he promised notto entertain any new suitors regarding monopolies. (61)

Despite the Book of Bounty, however, James continued to issuemonopolies. For example, in 1614 Sir Edward co*ke, who was by then theLord Chief Justice of England struck down a guild incorporated under aroyal charter. (62) The King's actions apparently came as nosurprise to Parliament. As one member of Parliament quipped, "Yet,as in a Garden, clean weeded, Weeds next Year; so here, by new Patents,Proclamations." (63) As a result, King James's relationshipwith Parliament continued to worsen, and the King dissolved Parliamentwhenever there was a disagreement. (64) Not surprisingly, Parliamentdecided in 1614 to discontinue King James's subsidy untilresolutions regarding the granting of monopolies and impositions werereached. (65)

These events after Darcy v. Allen raise a question about what weshould make of Sir Edward co*ke's report of the famous case. Atleast one scholar argues that at the time co*ke published his report ofDarcy v. Allen in 1615, his view on the royal patent power was no longeras controversial, and perhaps his views on the court's rationaleevolved as a result of events in the twelve years between the case andhis published report. (66) Further, even if co*ke's report of Darcyv. Allen did exaggerate the common law's embrace of free tradeprinciples (which cannot be known for sure as there is no officialpublished opinion), it has been described as "exceptionallydurable" and has been cited as good law for centuries in bothEngland and the United States, including in some modern case law. (67)Sir Edward co*ke's views on monopolies were also not unique tohim--similar arguments were made at the same time, and even earlier, inthe House of Commons. As previously mentioned, a few decades earlier,Robert Bell argued against granting monopolies in Parliament, statingthat "by Licences a few only were enriched, and the multitudeimpoverished." (68) Even if co*ke's report of the case itselfwas an exaggeration, co*ke's rationale and reasoning became theaccepted rule of the common law. As will be discussed below, it was SirEdward co*ke's report of The Case of Monopolies--and no otherreport--that influenced some of the Founding Fathers, theAntifederalists, and the American state governments when they adopted oramended their own constitutions. Thus, even if co*ke's views wereidiosyncratic or wrong about the law of England, the Framers of theUnited States Constitution took them as true. Founding-generationAmericans might very well have believed there was an ancient Englishright to be free of monopolies.

2. The Statute of Monopolies

By 1614, the relationship between the King and Parliament hadsignificantly deteriorated, an important precursor to the assertions ofParliamentary authority that helped lead to the English Civil War in the1640's. (69) King James I abused the royal prerogative anddissolved his first two Parliaments, leading Parliament to refuse togive King James a royal subsidy. (70) Without such a subsidy, the Kingwas forced to find other sources of revenue, turning in large part tothe granting of monopoly trade privileges. In the process, however, theentire system of the granting of such privileges broke down:

 The ... system was regulatory chaos.... Patents were granted, routinely revoked ... and re-issued to someone else. Eventually, revocation became so common that patents being issued included language permitting revocation by vote of the Privy Council. Increasingly desperate for revenue, James granted broad supervisory control over whole industries and with it broad powers to search and arrest in-fringers. These powers were predictably subject to frequent and profound abuse by the patentees, who were commonly unpopular favorites of James ... further fomenting public scorn for both the monopolies and the monopolists. The administrative mechanism for controlling the patents having broken down, their use was completely unmanaged. The patents were economically burdensome and politically unpopular, but their use was so poorly administered that James received very little of the economic rents they generated. (71)

King James I called his third Parliament in 1621, a point at whichthe issue of royally granted monopolies was prominent on the agenda inthe House of Commons. (72) The increased attention to the issue wasattributed in part to a severe economic depression at that time, eventhough the monopolies themselves did not appear to be the primary causeof the depression. (73) The House of Commons established a Committee ofGrievances, with Sir Edward co*ke, by then a Member of Parliament, aschairman. (74) co*ke had been fired as Lord Chief Justice of England byKing James for his unwillingness to decide legal cases as the Kingwished. (75) He entered Parliament as a foe to the King, and, by 1621was an outspoken critic of royally granted monopolies. A draft billbanning monopolies was quickly reported in Parliament. (76) However, thebill did not pass the House of Lords at that time, in part because ofconcern among the Lords that the bill would overly constrain the royalprerogative. (77) In an effort to appease the House of Commons, KingJames issued yet another proclamation cancelling some patents andsubmitting others to common law courts. (78) He also later established acommittee by royal proclamation to hear and address grievances regardingmonopolies. (79)

Between 1621 and 1624, debate over foreign policy consumed much ofParliament's time. (80) However, eventually a bill, which becamethe Statute of Monopolies passed the House of Commons with language thatwas largely the same as that in the 1621 bill. (81) When the billreached the House of Lords, the Lords proposed a number of exceptions tothe general prohibition on monopolies, such as for the granting ofpatents and for the chartering of corporations. (82) Sir Edward co*ke didnot ultimately object to the exception for chartering corporations,because he did not think the Statute of Monopolies applied to them. (83)Further, Parliament wanted to maintain full employment, which the guilds(also exempted from the Statute of Monopolies) and corporations wereboth thought to have an interest in protecting. (84) The guilds exertedan enormous amount of political power at this time. (85) As a result,during the same term that Parliament passed the Statute of Monopolies,it also passed a seemingly conflicting statute, which permitted onlyfree members of the Cheesemongers and Tallow-chandlers guilds topurchase cheese and butter for resale in London. (86) For the Statute ofMonopolies to pass the House of Lords, it also was necessary to alterthe act to include exceptions for glassmaking and for alum mines. (87)

Guilds were not necessarily monopolies per se. Historically, guildshad been fraternal associations, which in this context were joinedtogether by a shared craft or trade. (88) However, by obtaining patentsor charters within the city in which they operated, the guilds oftengained monopoly control over their respective crafts or trades. (89)Because English guilds held more sway with Parliament than with theCrown, the guilds sought support from Parliament to protect them fromthe royally granted monopolies, which sometimes conflicted with theircontrol of a particular market. (90)

The Statute of Monopolies, as amended by the House of Lords andapproved by the House of Commons in 1624, is strongly worded and broadin scope, reaching all types of royally granted monopolies. AsChancellor of New York James Kent later described the law, it was the'"Magna Charta of British Industry,' because it'contained a noble principle, and secured to every subjectunlimited freedom of action, provided he did no injury to others, norviolated statute law." (91) In Section One it provides that:

 [A]ll monopolies and all commissions, grants, licences, charters and letters patents heretofore made or granted, or hereafter to be made or granted to any person or persons, bodies olitic or corporate whatsoever, of or for the sole buying, selling, making, working or using of any thing within this realm or the dominion of Wales, or of any other monopolies, or of power, liberty or faculty, to dispense with any others, or to give licence or toleration to do, use, or exercise any thing against the tenor or purport of any law or statute ... and all proclamations, inhibitions, restraints, warrants of assistance, and all other matters and things whatsoever, any way tending to the instituting, erecting, strengthening, furthering, or countenancing of the same or any of them, are altogether contrary to the laws of this realm, and so are and shall be utterly void and of none effect, and in no wise to be put in u[s]e or execution. (92)

Section Two makes it clear that litigation involving monopolies wassubject to trial in the common law courts. (93) Section Six of theStatute contains exceptions for invention patents, which were subject toa time limit:

 [A]ny declaration before mentioned shall not extend to any letters patents and grants of privilege for the term of fourteen years or under, hereafter to be made, of the sole working or making of any manner of new manufactures within this realm to the true and first inventor and inventors of such manufactures, which others at the time of making such letters patents and grants shall not use. (94)

Interestingly, Section Seven exempts grants of monopoly privilegesby Parliament:

 [T]his act or anything therein contained shall not in any wise extend or be prejudicial to any grant or privilege, power, or authority whatsoever heretofore made, granted, allowed, or confirmed by any act of parliament now in force, so long as the same shall so continue in force. (95)

As previously mentioned, Sections Nine through Fourteen provideexceptions for corporations and specific patents. (96)

King James's response to Parliament's passage of theStatute of Monopolies was predictably negative:

 Touching my Patents in general, I am grieved that you have called them in and condemned them upon so short examination. I confess I might have passed some upon false suggestion and wrong information, but you are not to recall them before they be examined by the judges.... Therefore I advise you to be careful, that you have a good ground before you call for your patents, that you do not defraud patentees.... I say to you when you judge of patents, hear patiently, say not presently, it is against the law, for patents are not to be judged unlawful by you. (97)

Thus, again King James questioned Parliament's authority toenact the statute, although he "begrudgingly" assented to it.(98) However, given King James's views, it is perhaps unsurprisingthat despite the statute's sweeping language, monopoly royal tradeprivileges continued to be granted well past King James I's reign(which ended with his death in 1625) and through the reign of KingCharles I. (99)

Parliament continued to complain and protest against royalmonopolies after the adoption of the Statute of Monopolies. For example,monopolies were one of the main issues that confronted the LongParliament, which lasted from 1640 to 1648, (100) and one of the mostfamous statements criticizing royal monopolies was made at this time:

 They are a nest of wasps--a swarm of vermin which have overcrept the land. Like the frogs of Egypt they have gotten possession of our dwellings, and we have scarce a room free from them. They sup in our cup; they dip in our dish; they sit by our fire. We find them in the dye-fat, wash-bowl, and powdering-tub. They share with the butler in his box. They will not bait us a pin. We may not buy our clothes without their brokage. These are the leeches that have sucked the commonwealth so hard that it is almost hectical. (101)

Eventually, Parliament successfully cancelled some monopolies and,in 1691 abolished the Court of Star Chamber, the primary court that hadenforced and protected the royally granted monopoly privileges. (102)The Statute of Monopolies came eventually to be seen as a declaration byParliament of its authority to legislate against royally grantedmonopolies and as expressing Parliament's strong support for thecommon law courts. (103) Indeed, Parliament's exercise of power inopposing royal monopolies eventually led to the exertions ofparliamentary power that culminated in the English Civil War and theGlorious Revolution of 1688, which took place just decades later. (104)The adoption of the English Bill of Rights of 1689, which ended theking's claim that he could ignore or alter statutory law, confirmedfor all time Parliament's power to bind the King by makingstatutory law. (105)

In some sense the struggle over the Statute of Monopolies was asmuch a struggle over political power as it was a statement about freetrade, as Section Seven of the Statute made monopolies issued by thecrown illegal, but permitted such monopolies when issued by Parliament.(106) King James I may only have assented to the Statute of Monopoliesbecause England was then at war with Spain, making the King more willingto concede power to Parliament to ensure funding for the impending war.(107) In any event, the Statute received the royal assent and so itbecame part of the supreme law of England.

The debate over monopolies should also be viewed in light of theefforts during the late 1620s of King James I's son, King CharlesI, to tax Englishmen without parliamentary approval. (108) King CharlesI's preferred way of doing so was to arrest wealthy individuals andthen say he would only release them in exchange for a forced loan. (109)Outraged, Sir Edward co*ke led Parliament in forcing Charles I to signthe Petition of Right, which "protested martial law, billeting,arbitrary taxation, and arbitrary imprisonment." (110) The beliefof colonial Americans that they could not be taxed by an Englishparliament in which they were not represented in part dates back toParliament's successful efforts in the 1620s to stop monopolies andto prevent the King from taxing his subjects without Parliament'sconsent. (111)

Although the Statute of Monopolies was a tremendous accomplishmentfrom a constitutional perspective, it had some serious shortcomingsbecause of its various exceptions and its reservation to Parliament ofthe power to grant monopolies. Why did the Statute pass in the form inwhich it did? First, members of Parliament had to make compromises forthe sake of political expediency as part of the lawmaking process, whichnecessitated the inclusion of exceptions for politically powerfulspecial interest groups, such as the various guilds. (112) In addition,the guilds who were leading advocates of the Statute of Monopoliesbecause of the power it took away from the Crown, exerted a hugeinfluence on the drafting of the Statute. (113) The guilds obviously didnot support the Statute of Monopolies because it stood for free trade,but rather because the Statute would help them economically byprotecting the guilds from royal monopolists. (114) Second, thetheoretical underpinnings for the benefits of free trade had not yetbeen expounded by Adam Smith and other modern economists: England wasdominated by mercantilism at the time the Statute of Monopolies wasenacted. (115) Adam Smith's The Wealth of Nations--the fundamentalwork in classical economics--was not published until 1776, over 150years after the Statute. (116) Britain's free trade era did notbegin until the mid-nineteenth century.

Nonetheless, the negative effects of monopolies were alreadyrecognized by the early seventeenth century, (117) and monopolies werein fact limited in post-Revolutionary England relative to Tudor andearly Stuart rule. (118) The limits set on monopolies both in the commonlaw and in the Statute of Monopolies show an awareness of the costsmonopolies impose. This concern with the evils of monopolies traveledwith Englishmen when they crossed the Atlantic Ocean to settle the NewWorld.

B. Colonial America

The North American colonists generally considered themselvesEnglishmen, and they believed that English statutes and common lawrights and privileges should extend to them as they had applied to theirEnglish ancestors. (119) Their inability to vindicate these same rightsand privileges was one of the many grievances expressed by the colonistsaround the time of the writing of the Declaration of Independence:

 [T]he respective colonies are entitled to the common law of England ... [and] they are entitled to the benefit of such of the English statutes as existed at the time of their colonization; and which they have, by experience, respectively found to be applicable to their several local and other circ*mstances. (120)

In practice, courts would find that English statutes applied to thecolonies only if the statute so specified. (121) As for application ofthe common law to the colonists, matters were complicated by the factthat the colonies' interpretation of the "common law" didnot always correspond to the English interpretation, and, in any event,the common law in the North American colonies varied according to localcirc*mstances. (122) Moreover, although some language in the thirteencolonial charters suggested that the common law of England extended tothe North American colonies, it is unlikely that the King's lawyerswho drafted the charters meant to extend full common law rights to thecolonies. (123)

The Statute of Monopolies did not state explicitly that it extendedto the colonies, so it did not apply, and common law precedents were ofquestionable application as well. (124) As a result, the coloniesenacted their own versions of the Statute of Monopolies both to grantpatents for economic development purposes and to place restrictions onthe issuance of patents. For example, Massachusetts's 1641 Body ofLiberty provided that "[n]o monopolies shall be granted or allowedamongst us, but of such new Inventions that are profitable to theCountrie, and that for a short time." (125) Connecticut passed asimilar law in 1672. (126) Compared to the Statute of Monopolies, theseacts have been described as "mainly declaratory" and the textof these provisions was much less comprehensive. (127) The assembly wasgenerally left to determine on a case-by-case basis whether to grant apatent and under what terms. (128)

It is essential to note that, if it were not for the Crown'sability to grant royal charters, the colonies themselves would not haveexisted. All of the original thirteen colonies were established throughthe grant of royal charters, by which the King established and empoweredtheir respective governments. (129) However, it was the language in thecharters that the colonists relied on as their relationship with Englanddeteriorated. For instance, Virginia's charter of 1611-1612established an assembly to meet four times per year to create laws"[s]o always, as the same be not contrary to our Laws and Statutesof this our Realm of England." (130) Colonial charters weresimilarly written in the other North American colonies. (131)

On this point, it is important to recognize the influence of SirEdward co*ke, who may be thought of as a hero for the colonists,especially the Puritans who settled in Massachusetts and Connecticut.Discussing the colonists' reliance on co*ke for their understandingof the English common law, Theodore Plucknett wrote in a 1927 articlethat the common law was the "palladium of their civilliberties." (132) co*ke proclaimed in Bonham's Case that thecommon law governed parliamentary acts, (133) and the colonistsrepeatedly relied on this declaration to argue that the colonies coulduse common law to oppose British regulations. (134) For example, theMassachusetts Bay Colony relied directly on co*ke when King James IIabrogated its original colonial charter in 1684 and attempted toconsolidate all the New England colonies, along with the colonies of NewYork and New Jersey, in a so-called Dominion of New England. This event"provoked an outspoken claim [of] independence" and Bostonianswere said to "hold forth a law book, & quote the Authority ofthe Lord Cook [sic] to Justifie their setting up for themselves;pleading the possession of 60 years against the right of theCrown." (135) Sir Edward co*ke's name and authority were alsoused by James Otis in Paxton's Case, challenging the writs ofassistance that provided general search warrants, often in customscases. (136) In fact, it is fair to say that Otis's entire argumentin Paxton's Case relied upon co*ke and Bonham's Case! (137)

Another example of the hold that Sir Edward co*ke had on the legalthinking of colonial Americans comes from the controversy over the StampAct of 1765. This Act taxed the colonists without their consent, whichelicited the complaint that the Act "violated 'Magna Carta andthe natural rights of Englishmen, and therefore[,] according to Lordco*ke[,] [was] null and void.'" (138) Samuel Adams expressed asimilar view when he said that "whether Lord co*ke has expresslyasserted it or not, ... an act of parliament made against Magna Chartain violation of its essential parts, is void." (139) As the RoyalGovernor of Massachusetts, Thomas Hutchinson, complained, the coloniststook "advantage of a maxim they find in Lord co*ke that an Act ofParliament against Magna Carta or the peculiar rights of Englishmen isipso facto void." (140) In addition to relying on Bonham'sCase, when John Adams, writing under the pseudonym"Novanglus," asserted in 1774 that Parliament had no authorityover the colonies and that each was a separate realm under the king withits own independent legislature, he started his analysis with anargument from co*ke's Institutes. (141)

Thus, the American colonists, relying in part on co*ke, believedthat all the constitutional protections afforded to Englishmen alsoapplied to them--including the protections conferred by the Statute ofMonopolies (142) and by Darcy v. Allen. (143) For example, William Penn,the founder of the Province of Pennsylvania and a proponent of the ideathat the rights of Englishmen extended to those in the colonies, (144)wrote about the evil of monopolies and the harm they caused. In asection of a 1687 pamphlet called The Excellent Priviledge of Liberty& Property Being the Birth-Right of the Free-Born Subjects ofEngland, William Penn summarized the Statute of Monopolies and Darcy v.Allen, writing: "Generally all Monopolies are against the greatcharter because they are against the Liberty and Freedom of the Subject,and against the Law of the Land." (145) Thus, Thomas Barnes isquite right when he says: "Do not examine too closely the extent towhich Sir Edward co*ke fell in behind Citizen Sam. Scores of others ofour Founding Fathers had no doubt which side Lord co*ke was on, and nonequestioned the magnitude of the aid he gave them." (146)

England's continued practice of issuing monopolies was adirect cause of the American Revolution. England enacted an extensiveset of laws granting English merchants monopolies in colonial trade fora variety of markets--from manufactured goods to all kinds of rawmaterials. (147) Black markets arose in the colonies as a response toEngland's mercantilist trade policy. (148) As a result, the Englishmercantile laws were enforced with great intrusiveness, which in turnhad grave consequences for England's relationship with the Americancolonies. (149) For instance, although the main point of protest inBoston over the Tea Act was taxation without representation, the BostonTea Party was an act against the British government and the East IndiaCompany, which had a monopoly over tea importations to the colonies.(150) The havoc wreaked by the English monopoly system on England'srelationship with the American colonies cannot be overstated:

 [T]he efforts of the English government, backed by English merchants and manufacturers, to deny to the Americans the right to compete in foreign markets and to secure the benefits of foreign competition was one of the most potent causes of the American Revolution. The spirit of monopoly which had permeated English business life for centuries and worked injury in so many ways now wrought irreparable harm to the British Empire by bringing about the loss of invaluable dominions and the irrevocable division of the English people. (151)

Thus, the English experience with monopolies influenced colonialAmerica in two ways. First, some colonies adopted their own versions ofthe Statute of Monopolies, because the English Statute of Monopolies andcommon law were generally thought not to extend to the colonies. (152)Second, England's monopolistic trade laws led to protest by thecolonists and eventually the American Revolution, just as King JamesI's monopolies had so outraged Englishmen in Parliament in the1620s and led to the English Civil War in the 1640s. (153) In bothinstances, complaints were made about taxation without representation,and in both instances monopolies were in part to blame. King George III,like James I, imposed a double burden on his people by both taxing hispeople directly and by indirectly taxing them through the issuance ofroyal monopolies. The colonists were both taxed on imports and subjectedto British control over foreign trade without representation inParliament.

II. MONOPOLIES IN THE UNITED STATES

A. At the Founding

The evils of the English monopolies and their impact on theAmerican colonists guaranteed that the right to be free from monopolieswould merit attention during the drafting and ratifying of the federalConstitution. Several of the Founders themselves, as well as theAntifederalists and the state ratifying conventions, took the positionthat the United States Constitution should have an antimonopoly clause.(154)

George Mason and Thomas Jefferson led the way in urging that thenew U.S. Constitution contain an antimonopoly clause. (155) Mason'sconcern about the evils of monopoly coupled with the grants of power toCongress in the Commerce Clause and the Necessary and Proper Clausepartly explains his refusal to sign the proposed Constitution after thePhiladelphia Convention. (156) Mason was concerned that the CommerceClause and the Necessary and Proper Clause might be used to regulatenavigation in favor of the northern and eastern states by grantingmonopolies in trade:

 By requiring only a Majority to make all commercial and navigation Laws, the five Southern States (whose Produce and Circ*mstances are totally different from that of the eight Northern and Eastern States) will be ruined; for such rigid and premature Regulations may be made, as will enable the Merchants of the Northern and Eastern States not only to demand an exorbitant Freight, but to monopolize the Purchase of the Commodities at their own Price, for many years: to the great Injury of the landed Interest, and Impoverishment of the People: and the Danger is the greater, as the Gain on one Side will be in Proportion to the Loss on the other.... Under their own Construction of the general Clause... the Congress may grant Monopolies in Trade and Commerce.... (157)

George Mason's concern was not exactly far-fetched given thatthe English colonial government had misused its powers over trade inprecisely this way. (158) Indeed, the English abuse of power is similarto the federal government's abuses of power in the nineteenthcentury--after 1861, the newly ascendant Republican Party protectednorthern manufacturing interests to the disadvantage of the South with apolicy of extremely high protectionist tariffs. (159)

Thomas Jefferson also hated monopolies and believed that theyshould be constitutionally banned. (160) In a letter to James Madison,complaining about the lack of a Bill of Rights in the proposedConstitution, Jefferson put the principle of freedom from governmentmonopolies on par with all of the other rights now enshrined in the Billof Rights, such as the freedom of the press and of religion:

 I will now add what I do not like. First the omission of a bill of rights providing clearly and without the aid of sophisms for freedom of religion, freedom of the press, protection against standing armies, restriction against monopolies, the eternal and unremitting force of the habeas corpus laws, and trials by jury.... Let me add that a bill of rights is what the people are entitled to against every government on earth, general or particular, and what no just government should refuse, or rest on inference. (161)

Specifically on the issue of monopolies, Jefferson later wrote:

 [It] is better to ... abolish ... Monopolies, in all cases, than not to do it in any.... [Slaying there shall be no monopolies lessens the incitements to ingenuity ... but the benefit even of limited monopolies is too doubtful to be opposed to that of their general suppression. (162)

In response, Madison argued that monopolies should be allowed inthe limited circ*mstances where they were beneficial, and that it wasthus necessary not to have an outright prohibition against them:

 With regard to Monopolies, they are justly classed among the greatest nuisances in Government. But is it clear that as encouragements to literary works and ingenious discoveries, they are not too valuable to be wholly renounced? Would it not suffice to reserve in all cases a right to the public to abolish the privilege at a price to be specified in the grant of it? (163)

In fact, Madison proposed during the Philadelphia convention togive the federal government the power to grant "charters ofincorporation." (164) However, this proposal was voted downbecause, as Rufus King of Massachusetts argued, it might lead to"mercantile monopolies," as had happened in England before theAmerican Revolution. (165) George Mason also objected to giving Congressthe power to grant charters of incorporation, arguing that this powerwould lead to "monopolies of every sort." (166)

Jefferson refused to give in after reviewing a draft of the Bill ofRights, and he wrote to Madison again saying that he would have liked tohave seen the following provision added to the Bill of Rights:

 Art. 9. Monopolies may be allowed to persons for their own productions in literature and their own inventions in the arts for a term not exceeding--years but for no longer term and for no other purpose. (167)

Jefferson did not say what he meant by the word"monopoly," but Samuel Johnson's dictionary at the timedefined the term as "the exclusive privilege of selling anything." (168)

Interestingly, Jefferson also opposed the creation of the federalPost Office (169)--perhaps the most venerable monopoly in Americanhistory. Jefferson wrote to James Madison that he thought the newlycreated Post Office was "a source of boundless patronage to theexecutive" and would provide

 [J]ob[s] to members of Congress & their friends, and a bottomless abyss of public money. You will begin by only appropriating the surplus of the post office revenues; but the other revenues will soon be called into their aid, and it will be a scene of eternal scramble among the members, who can get the most money wasted in their State; and they will always get most who are meanest. (170)

As will be discussed in more depth below, Jefferson'sopposition to the postal monopoly was shared by Lysander Spooner, theradical political reformer and abolitionist who challenged the federalpostal monopoly in the mid-nineteenth century by creating a directcompetitor, the American Letter Mail Company. (171)

Jefferson was not the only Framer to express concern about theConstitution and grants of monopoly privilege; the Antifederalists alsospoke out about the evils and dangers of monopoly. The most outspoken ofthe Antifederalists on this topic was Agrippa. (172) Looking toEurope's experience with monopolies in trade, Agrippa recognizedthat the main threat to competition in most countries did not come fromthe market, but, rather, from the government itself:

 In most countries of Europe, trade has been confined by exclusive charters. Exclusive companies are, in trade, pretty much like an aristocracy in government, and produce nearly as bad effects.... [I]n the British islands all these circ*mstances together have not prevented them from being injured by the monopolies created there. Individuals have been enriched, but the country at large had been hurt ... because they consequentially defeat the trade of the out-ports, and are also injurious to the general commerce, by enhancing prices and destroying that rivalship which is the great stimulus to industry. (173)

Other Antifederalists voiced the same concerns about monopolies."A Son of Liberty" feared that "monopolies in trade,[would be] granted to the favorites of government, by which the spiritof adventure will be destroyed, and the citizens subjected to theextortion of those companies who will have an exclusive right, toengross the different branches of commerce." (174) The FederalFarmer, likewise wrote that "[a]s monopolies in trade perhaps, canin no case be useful, it might not be amiss to provide expressly againstthem." (175)

Agrippa called for strong restraints on the ability of the federalgovernment to grant monopolies in the new Constitution, recognizing thatthe "unlimited power over trade, domestic as well as foreign, isanother power that will more probably be applied to a bad than to a goodpurpose." (176) Echoing Adam Smith, whose book, The Wealth ofNations, was fittingly first published in 1776, Agrippa argued:

 The freedom that every man, whether his capital is large or small, enjoys of entering into any branch that pleases him, rouses a spirit of industry and exertion, that is friendly to commerce. It prevents that stagnation of business which generally precedes public commotions. Nothing ought to be done to restrain this spirit. (177)

Six states wanted to include provisions banning monopolies andgrants of special privilege in the U.S. Constitution: New Hampshire,Massachusetts, New York, North Carolina, Virginia, and Rhode Island.(178) Massachusetts's proposal on February 6, 1788, was that theConstitution be amended to state "[t]hat Congress erect no companywith exclusive advantages of commerce." (179) New Hampshire andNorth Carolina proposed similar amendments. (180) New York recommended"[t]hat the congress do not grant monopolies or erect any Companywith exclusive Advantages of Commerce." (181) Rhode Island'sbelated ratification of the Constitution in 1790 recommended the samelanguage as New York, although it was too late to have an influence.(182) Virginia's proposal was "[t]hat no man or set of men areentitled to separate or exclusive public emoluments or privileges fromthe community, but in consideration of public services, which not beingdescendible, neither ought the offices of magistrate, legislator, orjudge, or any other public office, to be hereditary." (183) All ofthese proposed antimonopoly amendments to the Constitution came from thestate ratifying conventions, but since the task of writing the federalBill of Rights in response to the requests for amendments from theStates fell to newly elected Congressman James Madison, an antimonopolyclause was omitted from the federal Bill of Rights. (184) Madison wasstubborn, persistent, and successful in keeping an antimonopoly clauseout of the Founders' Constitution! This omission is remarkablesince even Alexander Hamilton, a notorious proponent of a strong centralgovernment and of mercantilism, acknowledged the pressure from theStates for an antimonopoly clause. As Hamilton said regarding theconstitutionality of a national bank:

 It is remarkable that the State conventions, who had proposed amendments in relation to this point, have most, if not all of them, expressed themselves nearly thus: Congress shall not grant monopolies, nor erect any company with exclusive advantages of commerce! Thus, at the same time, expressing their sense, that the power to erect trading companies or corporations was inherent in Congress, and objecting to it no further than as to the grant of exclusive privileges. (185)

Interestingly, only one of the states that sought a federalantimonopoly clause (North Carolina) actually banned monopolies in itsown state constitution. (186) The scarcity of state bans suggests thatthere was greater concern about monopoly abuses at the federal levelthan at the state level. This fact makes some sense when we rememberthat colonial America had been confronted with English monopolies backedby a powerful central government. (187) It must also be noted that, indrafting their own state constitutions, the States focused more on thestructures of state government than on producing state bills of rights.(188) Only seven states had separate state bills of rights at theFounding, while four others included some protection of rights withintheir constitutions. (189)

Of course, no ban on monopolies made its way into the federalConstitution or Bill of Rights. This is probably in large part due toMadison's view that representational government at the federallevel would prevent a repeat of the English experience with monopolies:

 Is there not also infinitely less danger in this abuse in our Governments than in most others? Monopolies are sacrifices of the many to the few. Where the power is in the few it is natural for them to sacrifice the many to their own partialities and corruptions. Where the power as with us is in the many not in the few the danger cannot be very great that the few will be thus favored. It is much more to be dreaded that the few will be unnecessarily sacrificed to the many. (190)

Madison made it clear elsewhere that the right to be free ofmonopolies was of vital importance. (191) He expressed his recognitionof the importance of the right of individuals to earn a living in theirtrade when he proclaimed:

 That is not a just government, nor is property secure under it, where arbitrary restrictions, exemptions, and monopolies deny to part of its citizens that free use of their faculties, and free choice of their occupations, which not only constitute their property in the general sense of the word; but are the means of acquiring property strictly so called. (192)

B. Monopolies and the Original Federal Constitution

There are two provisions in the federal Constitution that relateclosely to the English history with monopolies. First, the Patent andCopyright Clause in Article 1, Section 8 provides that "Congressshall have the Power ... To promote the Progress of Science and usefulArts, by securing for limited Times to Authors and Inventors theexclusive Right to their respective Writings and Discoveries."(193) As discussed above, Thomas Jefferson criticized the inclusion ofthis clause in his correspondence with James Madison. (194) Just as theStatute of Monopolies in 1624 explicitly left some monopolies in place,(195) so too did the Framers of the U.S. Constitution allow formonopolies in the form of copyrights and patents for new writings andinventions so as to promote industry and creativity. (196)

The other provision in the original Constitution that was relevantto the monopoly issue was the Privileges and Immunities Clause ofArticle IV, Section 2, which states that "[t]he Citizens of eachState shall be entitled to all Privileges and Immunities of Citizens inthe several States." (197) Similar privileges and immunitiesclauses had also been included in many of the colonial charters and inthe Articles of Confederation, which was in some respects America'sfirst constitution. (198) It is clear from an early draft of theArticles of Confederation that the "privileges" and"immunities" that the Articles of Confederation protected werethe traditional rights that the American people had always possessed asEnglishmen. This early draft of the Articles provided that "It]heInhabitants of each Colony shall henceforth always have the same Rights,Liberties, Privileges, Immunities and Advantages in the other Colonies,which the said Inhabitants now have...." (199) Of course, thosetraditional rights of Englishmen included the right to be free frommonopolies, (200) so this right was conferred on Americans through theArticles of Confederation, and it informs the original meaning of thePrivileges and Immunities Clause of Article IV.

This interpretation of the Article IV Privileges and Immunitiesclause as banning monopolies was recognized in the years following theadoption of the Federal Constitution. While riding circuit in 1823,Justice Washington explained the meaning of the Privileges andImmunities Clause of Article IV in Corfield v. Coryell. (201) Corfieldinvolved a challenge to a New Jersey law forbidding nonresidents fromgathering oysters and clams. (202) Although Justice Washington upheldthe law, he explained that the Privileges and Immunities Clauseprotected a large number of fundamental rights:

 We feel no hesitation in confining these expressions to those privileges and immunities which are, in their nature, fundamental; which belong, of right, to the citizens of all free governments; and which have, at all times, been enjoyed by the citizens of the several states which compose this Union, from the time of their becoming free, independent, and sovereign. What these fundamental principles are, it would perhaps be more tedious than difficult to enumerate. They may, however, be all comprehended under the following general heads: Protection by the government; the enjoyment of life and liberty, with the right to acquire and possess property of every kind, and to pursue and obtain happiness and safety; subject nevertheless to such restraints as the government may justly prescribe for the general good of the whole. The right of a citizen of one state to pass through, or to reside in any other state, for purposes of trade, agriculture, professional pursuits, or otherwise; to claim the benefit of the writ of habeas corpus; to institute and maintain actions of any kind in the courts of the state; to take, hold and dispose of property, either real or personal; and an exemption from higher taxes or impositions than are paid by the other citizens of the state; may be mentioned as some of the particular privileges and immunities of citizens, which are clearly embraced by the general description of privileges deemed to be fundamental: to which may be added, the elective franchise, as regulated and established by the laws or constitution of the state in which it is to be exercised. These, and many others which might be mentioned, are, strictly speaking, privileges and immunities, and the enjoyment of them by the citizens of each state, in every other state, was manifestly calculated (to use the expressions of the preamble of the corresponding provision in the old articles of confederation) 'the better to secure and perpetuate mutual friendship and intercourse among the people of the different states of the Union.' (203)

Justice Washington's dictum seems to recognize federalconstitutional protection for broad economic rights, including the rightto choose a trade or profession. As we will discuss shortly, JusticeWashington's definition of privileges and immunities stronglyinfluenced the drafters of the Privileges or Immunities Clause of theFourteenth Amendment, (204) and later the Justices of the U.S. SupremeCourt in their landmark decision in the Slaughter-House Cases, (205)which interpreted that clause.

The antimonopoly principle was also evident early in our federalconstitutional history in the Supreme Court's Contracts Clause caselaw. Nineteenth-century Contracts Clause cases, like Trustees ofDartmouth College v. Woodward (206) in 1819 and Charles River Bridge v.Warren Bridge (207) in 1837, reflect concerns about monopoly. InWoodward, the Marshall Court held that Dartmouth College'scorporate charter, which was granted by King George III in 1769, was aprivate contract between two parties and was protected by the ContractsClause in Article I, Section 10. (208) Thus, although the state arguedthat the charter was in fact a license to do business that the statecould subsequently alter, (209) the Supreme Court held that the NewHampshire legislature could not alter the corporation's charter bychanging the identity of the corporation's trustees, because doingso impaired a private contract among private individuals. (210) TheWoodward case was thus crucial in empowering private corporations,because once corporations were created, the state could not subsequentlytake away their corporate charter rights. (211) The reasoning of theCourt's opinion applied to for-profit corporations, as well as tonon-profit corporations like Dartmouth College, (212) and made it clearthat while the English government could revoke corporate"monopoly" powers, (213) the State governments in the UnitedStates could not do so without running afoul of the Contracts Clause.(214) This holding greatly empowered U.S. corporations and contributedsubstantially to U.S. economic growth in the nineteenth century. (215)Once corporations were no longer viewed as the monopoly recipients ofspecial governmental grants of privilege, they were able to play a"rapidly growing part in the economy." (216)

In 1837, the Taney Court modified and limited the Woodward decisionin Charles River Bridge v. Warren Bridge. (217) Massachusetts hadcontracted in 1785 with the Charles River Bridge Company to build andmaintain a toll bridge across the Charles River and, in 1792, the statelegislature extended the charter grant to the Charles River BridgeCompany from forty to seventy years. (218) The population in Boston grewextremely rapidly, and in 1828 the state legislature changed its mindabout the seventy-year charter and allowed another company to build acompeting bridge nearby--the Warren Bridge. (219) This new bridge wouldinitially charge a fee but would eventually become free for travelers touse. (220) Once the Warren Bridge became free to use, the value of theCharles River Bridge, its owners alleged, would be destroyed. (221) TheCharles River Bridge Company sued, arguing that the Contracts Clauseprotected its corporate charter monopoly. (222) The company argued thatthe state of Massachusetts could not breach its contract with theCharles River Bridge Company that gave the latter exclusive rights tooperate a toll bridge over the Charles River by allowing another companyto manage a competing free bridge. (223)

Chief Justice Roger B. Taney, a Jacksonian, held that in cases inwhich a corporation has an agreement with the government for exclusivemonopoly-like privileges, the terms of the agreement should be construedas narrowly as possible, because monopolies were disfavored as a matterof both constitutional history and public policy. (224) Chief JusticeTaney held that the charter merely granted the Charles River BridgeCompany the right to build a bridge but not necessarily the exclusiveprivilege of maintaining the only bridge across the river. (225) Thisview would undoubtedly have surprised the original builders of theCharles River Bridge had they known as much back in 1785 when the bridgewas built. Chief Justice Taney was particularly concerned that upholdingthe charter as a grant of exclusive privilege would promote monopoly,which he viewed as contrary to English law and to American law byadoption:

 Borrowing, as we have done, our system of jurisprudence from the English law; and having adopted, in every other case, civil and criminal, its rules for the construction of statutes; is there any thing in our local situation, or in the nature of our political institutions, which should lead us to depart from the principle where corporations are concerned? ... We think not; and it would present a singular spectacle, if, while the courts in England are restraining, within the strictest limits, the spirit of monopoly, and exclusive privileges in nature of monopolies, and confining corporations to the privileges plainly given to them in their charter; the courts of this country should be found enlarging these privileges by implication; and construing a statute more unfavourably to the public, and to the rights of community, than would be done in a like case in an English court of justice. (226)

Chief Justice Taney explained that if the charter given to theCharles River Bridge company were construed broadly as a grant of anexclusive privilege to operate a bridge for seventy years, it wouldbecome difficult for courts to draw a line as to how far that rightshould extend. (227) For example, charters for turnpike roads were by1837 facing competition from charters issued to newly created railroads.(228) If turnpike charters were interpreted broadly by the courts, thenthe holders of turnpike charters might use their old charters to preventtechnological change by challenging the competing railroad charters.(229) As Stanley Kutler explains in his book on the Charles River Bridgecase, the Charles River Bridge Company was viewed as a monopoly"imposed upon the communities because of special legalprivileges." (230) Jacksonians, like Chief Justice Taney, wereardently opposed to government grants of monopoly and special privilegesto the powerful and wealthy (231)--a phenomenon that Americans todaycall "crony capitalism."

Justice Joseph Story, the closest ally of then-deceased ChiefJustice John Marshall, concurred in the decision in the Woodward casebut wrote a scathing dissent in Charles River Bridge. He argued that theCharles River Bridge Company's exclusive privilege should beprotected by the Contracts Clause. (232) Despite his association withthe Democratic-Republican Party, Justice Story was greatly influenced byAlexander Hamilton and Chief Justice John Marshall, and thus believedthat private property rights should be strongly protected and thatcommerce should be promoted. He saw the Charles River Bridge case not asa defeat for crony capitalism, but as a violation of private propertyrights. (233) Justice Story was opposed to Jacksonian democracy becausehe feared that popular majorities would invade the private propertyrights of the wealthy and would hurt private businesses. The tensionbetween the views of Justices Taney and Story--the protection ofcorporate property rights granted by the state versus an aversion tospecial laws and monopoly privileges--helped to shape the debate overthe Fourteenth Amendment in the three decades after the Charles RiverBridge case was decided.

Importantly, the Charles River Bridge case had an "immediateand widespread impact at the state level." (234) As Stanley Kutlernotes in his book about the case, it "opened the floodgates andcourts now directly confronted and denied exaggerated implied claims ofvested rights. The state court reports for the next two decades arereplete with cases implementing the Charles River Bridge doctrine."(235) For example, in Mohawk Bridge Co. v. Utica & Schenectady RailRoad Co., (236) a New York court applied Charles River Bridge'srule of strict construction to hold that a bridge proprietor'scharter did not prohibit competition from a ferry. (237) Similarly, inTuckahoe Canal Co. v. Tuckahoe & James River Rail Road Co., (238)the Supreme Court of Appeals of Virginia held that a canalcompany's charter did not give the canal company an exclusive rightof way, and that a railroad company could construct bridges that wouldcompete with the canal. (239) Fearing the tendency of holders of specialprivileges to claim more exclusive rights than had originally beenintended, the court noted that "monopoly is very ingenious inextending its rights and enlarging its pretensions." (240)