7.2.4 Southwest Legal History (1870-1900): Beginnings of the Regulatory State

Granger Laws and Railroad Commissions

  • After the Civil War, American railroads began a new round of construction and began merging into powerful regional and national rail systems.  Shippers and passengers in almost all regions, including the Southwest, complained about high and often discriminatory charges.  In the early 1870s, several Midwestern states enacted “Granger laws” creating railroad regulatory commissions in response to these complaints.  The commissions’ powers varied:  some were authorized to limit freight and passenger rates, others were merely allowed to collect statistics and report to the legislature. 
  • The Southwest was slow to follow.  Powerful railroad networks, including the Central Pacific and Southern Pacific in California and the Missouri, Kansas and Texas (Katy) Railroad in Texas, built much of the region’s rail system during this period and played a central role in state politics, particularly in California.  Residents of the Southwest were no happier about discriminatory rates and other perceived abuses than other Americans, but California did not create a railroad commission or attempt rate regulation until authorizing provisions were placed in its 1879 constitution, and Texas did not do so until 1891.  By that time the U.S. Supreme Court and other state supreme courts had made clear that railroad regulation, including reasonable rate regulation, was constitutional; thus, the new laws were not subject to serious challenge in either California or Texas.      

The rise of substantive due process

  • The establishment of railroad commissions in Southwest states opened the door to an ever-expanding body of laws and agencies designed to address the many problems that followed in the wake of industrialization.  After 1890, Southwestern legislatures began to enact pure-food and public health laws; laws regulating physicians, pharmacists and other professions; laws for conservation of fish, game and soil; and laws regulating labor-management relations, unfair business practices and workplace safety.  The stream of laws grew steadily to the end of the century; it peaked in Texas somewhat earlier (1905-1915) than it did in New Mexico, Arizona and California (1910-1920). 
  • Southwestern businesses frequently challenged reform laws as unconstitutional.  They usually argued that the laws violated one or more of the following legal doctrines, collectively known as “substantive due process”: 
    • Due process and freedom of contract,, because the laws deprived them of their property and contract rights to conduct their business and make bargains with others on terms of their own choosing.
    • Equal protection, because the laws unfairly singled out their businesses for regulation and thus discriminated against them.
    • The delegation doctrine:  only legislatures could create regulations, and they could not let agencies do the job for them. 
  • In the 1890s, the U.S. Supreme Court and many American state courts began examining regulatory laws critically.  The courts upheld most laws but struck down enough that reformers complained they were improperly interfering with necessary social change.  Some reformers even argued that courts should not be allowed to examine reform laws at all. 

The battle over substantive due process begins in the Southwest

Johnson v. Goodyear Mining Co. – California, 1899 (59 P. 304)

  • Many substantive-due-process cases, involved laws affecting workplace conditions.  Some Southwestern jurists were sympathetic to the “free labor doctrine” that working conditions, even safety conditions, should be strictly a matter of negotiation between employer and employee, with no legislative interference; others were sensitive to the increasing disparity of bargaining power in an age when large companies were coming to dominate the American economy.  In the Southwest, the balance between the competing views shifted back and forth throughout the era.
  • In Johnson, an early case, California’s justices vigorously defended the free-labor point of view in striking down an 1897 law requiring companies to pay their workers at least once a month; they argued that the law, far from protecting workers, patronized them. 
 1.  Historic American Buildings Survey Southern Pacific Railroad Coll. Photographs of 1869 Oakland Point Pier - Before Construction of Long Wharf - Southern Pacific Mole & Pier, Seventh Street, Oakland, Alameda County, CA
 Southern Pacific Railroad terminal, Oakland, California (circa 1870) - courtesy Library of Congress

 2.  Historic American Buildings Survey Roger Sturtevant, Photographer Mar. 29, 1934 VIEW FROM SOUTH-WEST - Old Mine, Sierra City, Sierra County, CA
 Old mine, Sierra County, California - courtesy National Historic Building Survey and Library of Congress
“The corporation and the laborer are prohibited from making any contract whereby wages are to become due for a longer period than one month as a period of employment, or by which the laborer is to be paid in anything except money or negotiable checks.  The working man of intelligence is treated as an imbecile.”  - Justice _, in Johnson