Monopolies and the Constitution: A History of Crony Capitalism
Calabresi, Steven G., Leibowitz, Larissa C., Harvard Journal of Law & Public Policy
III. MONOPOLIES AND STATE CONSTITUTIONAL LAW
Though the federal Constitution does not have an explicit antimonopoly provision, such provisions are included in nineteen state constitutions today. (516) Only two states had antimonopoly provisions at the Founding. (517) By 1868, five states included antimonopoly provisions, and several others included prohibitions on the granting of exclusive privileges or immunities. (518) Provisions were also added in state constitutions after 1868, including in the Progressive Era. (519) Some of the more recently added provisions appear to be primarily, or even exclusively, concerned with prohibiting private monopolies; (520) however, many states use similar language to that found in the provisions between the time of the Founding and 1868, when a ban on monopoly meant only a ban on a government grant of privilege. (521)
Some of the state constitutional provisions banning monopoly are broadly worded to prohibit any unequal grant of privileges or immunities to certain citizens or classes of citizens. (522) Others, however, are more narrowly worded and prohibit only the grant of monopolies or of exclusive privileges. We will focus here on the narrower state provisions, which expressly ban monopolies and exclusive privileges.
This Part discusses the roots of the state constitutional tradition of bans on monopolies, which derives in part from the Jacksonian aversion to monopolies and grants of special privilege discussed below. (523) We then discuss the adoption of state constitutional provisions in three distinct periods: (1) at the Founding, (524) (2) during the nineteenth century, (525) and (3) during the progressive era. (526) Next, we will discuss the interpretation of these state constitutional provisions in state courts during the twentieth century and the influence of federal constitutional law and treatment of economic liberty cases on state court decisions. (527) Finally, this section concludes by discussing potential reasons not all states have included provisions prohibiting monopolies and grants of special privilege today. (528)
A. A Tradition Rooted in Jacksonian Democracy and Changes in Corporate Law
State constitutional prohibitions on monopolies and the granting of exclusive privileges are closely tied to the States' traditional prohibition of partial and special laws which developed during the antebellum era, (529) as discussed in Part II.C above. During this period, state courts routinely struck down laws granting special benefits or imposed special burdens on persons or classes of people. (530) Prohibitions on partial or special laws in some form were included in nearly every state constitution during the first half of the nineteenth century. (531) This state constitutional tradition was closely tied to the Jacksonian conception of democracy.
A central tenet of Jacksonian democracy was that the state should not establish monopolies or grant special privileges to particular individuals or classes of people. (532) President Jackson opposed the second Bank of the United States in part because it had monopoly powers. Jackson argued that "'great evils to our country and institutions ... might flow from such a concentration of power in the hands of a few men irresponsible to the people.'" (533) One of Jackson's journalists wrote that "'[a]ll Bank charters, all laws conferring special privileges, with all acts of incorporations [sic], for purposes of private gain, are monopolies, inasmuch as they are calculated to enhance the power of wealth, produce inequalities among the people, and subvert liberty."' (534) Another wrote, "'To have the land scattered over with incorporated companies, is to have a class of privileged, if not titled, nobility.'" (535)
However, President Jackson's opposition to corporations in the 1820s and 1830s should not be viewed by modern readers as an opposition to corporations as they exist today. …