In U.S. Constitutional law, the “dormant commerce clause” is so called because it forbids individual states from tinkering with even those parts of the national economy that Congress has not regulated—where federal power remains dormant. The name is especially apt because Congress’s commerce power has spent much of the past two centuries snoozing. But the Supreme Court has often stepped in to preserve federal options by striking state efforts to regulate where Congress has yet to act. So even when dormant, the commerce clause has proved formidable. In May 2005, the clause made a dramatic reappearance. In Granholm v. Heald, the Supreme Court struck down laws in Michigan and New York that allowed local wineries to sell directly to customers—including over the Internet—while forcing out-of-state producers to go through local wholesalers. That Michigan and New York would even attempt such discrimination reflects the unique status of alcohol, one of the only goods explicitly under state control by virtue of the Twenty-first Amendment. But holding that the commerce clause trumped the Twenty-first Amendment, wrote Justice Anthony Kennedy, was the only way to end an “ongoing, low-level trade war” among the states, which have raised increasingly convoluted barriers to one another’s products. The decision in Granholm v. Heald suggests a Supreme Court that is prepared to use the dormant commerce clause to protect electronic commerce, a growing sector of the economy threatened by a patchwork of state regulations and the failure of the federal government to take sufficient action on the global front. To understand the potential significance of that decision, it helps to know a little history. The dormant commerce clause originated in the early nineteenth century, in a challenge to inventor Robert Fulton’s monopoly license on steamboat travel throughout New York. Chief Justice John Marshall, writing for a unanimous court, ruled that New York lacked the authority to issue such a license, interpreting Congress’s power to regulate interstate commerce as an implicit ban on most kinds of state regulation. Yet for decades afterward, Congress was content to let those powers lie. Why? Not because the United States didn’t need regulation. Interstate commerce was already robust, and it exploded with the Industrial Revolution. No, the problem lay with one particularly popular component of interstate trade: slaves. The Constitution rested on a series of fragile compromises between slave and nonslave states; the commerce power threatened that balance. Even small stirrings raised the specter of restrictions on the slave trade and the probable collapse of the Union—what Thomas Jefferson called a “fire bell in the night.” There was an acute need for a national economic policy, and that was precisely why Congress refused to create one. So the commerce clause was drugged into a coma, where it remained even after the Civil War. Then came Franklin Roosevelt’s New Deal, an acknowledgment that the federal government’s failure to play an active role in regulating the national economy had led to the Great Depression. The New Deal jolted the commerce clause into high gear, creating the regulatory agencies, commissions, and boards that continue to oversee the United States’ commercial life. Things got quiet again until the 1960s, when Congress finally faced the original source of its lethargy. Though slavery was abolished in 1865, it took lawmakers another hundred years to dismantle the structural vestiges of the system. In the end, the slave states’ worst nightmare came true: The civil rights laws used the commerce clause not only to remove race-based economic obstacles but also to rewrite political, social, and even cultural rules. Which brings us neatly back to Granholm v. Heald, in which the plaintiffs—small out-of-state vineyards and in-state residents who want to buy from them—claimed that state manipulation of the local wine market violated their civil rights. In fact, Granholm is in some sense a throwback to the kind of commercial interference first rejected by Marshall nearly 200 years ago. Just as the early Supreme Court blocked the states from erecting barriers to physical commerce, the Granholm court has shown it is prepared to do the same for the electronic superhighway. As improvements in technology make possible more intricate webs of national and global commerce, local efforts to protect native industries look more and more like what they really are—ham-fisted attempts to legislate a competitive advantage. That was the goal of the true powers behind Michigan’s and New York’s wine laws: local wholesalers who saw the nascent threat of electronic commerce and preferred to face it down in court rather than in the open market. But the dormant commerce clause defeated them. For electronic commerce, that decision could mean a new world of opportunity. A version of this article appeared in the September 2005 issue of Harvard Business Review. What were the effects of New Deal legislation on the role of the federal government?In the short term, New Deal programs helped improve the lives of people suffering from the events of the depression. In the long run, New Deal programs set a precedent for the federal government to play a key role in the economic and social affairs of the nation.
How did New Deal legislation affect the relationship between federal and state governments?How did the new Deal impact the federal government? It expanded the powers of the federal gov't by establishing regulatory bodies & laying the foundation of a social welfare system. In the future the gov't would regulate business & provide social welfare programs to avoid social & economic problems.
What was the major result of the New Deal on the role of the government?The New Deal's greatest legacy was a shift in government philosophy. As a result of the New Deal, Americans came to believe that the federal government has a responsibility to ensure the health of the nation's economy and the welfare of its citizens.
What was the impact of the New Deal?The New Deal represented a significant shift in political and domestic policy in the U.S., with its more lasting changes being increased government control over the economy and money supply; intervention to control prices and agricultural production; the beginning of the federal welfare state, and the rise of trade ...
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