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Published online by Cambridge University Press: 01 August 2014
“Liberty of contract” is an honorable phrase. It is not too much to say that contractual freedom is generally regarded as the crowning glory of Anglo-American law in general and of the American constitutional system in particular. Belief in a pre-civil state of nature may have been cast into the discard, but not so the belief in natural law in the sense of ideal law, in natural rights as rights superior—if not anterior—to civil rights, and in freedom of contract as one of the greatest of the natural rights secured by natural law. There is well-nigh universal approbation of the philosophy implicit in Sir Henry Maine's famous conclusion that “the movement of the progressive societies has hitherto been a movement from Status to Contract,” and there is general satisfaction that certain American constitutional provisions preclude any retrograde movement in the future. In particular, there is rejoicing that the due process clauses of the Fifth and Fourteenth Amendments insure to the American workman his natural freedom of contract against any insidious attempt to relegate him to a servile status. In spite of an occasional voice crying in the wilderness, it is still heretical to suggest that constitutional contractual liberty amounts to a guarantee that economic pressure may be exerted by the rich upon the poor, by the employer upon the employee. The hypothesis deserves further examination. It will be profitable to ascertain how far the use of economic pressure has been deemed natural in English law and philosophy, and then to observe the extent to which it is recognized in American constitutional law as a natural right superior to any legislative enactment.
1 SirMaine, Henry S., Ancient Law, c.v., last par., p. 165Google Scholar in the tenth edition.
2 An outstanding discussion of contractual liberty is that of Roscoe, Dean Pound in his article entitled “Liberty of Contract,” 18 Yale Law Journal 454 (1909)Google Scholar. Dean Pound's exhaustive presentation anticipates much of the present article, but his examination of Supreme Court decisions is necessarily restricted to those rendered before 1909.
3 First published in 1690.
4 The True End of Civil Government, s. 140.
5 Ibid., s. 6.
6 Ibid., s. 87.
7 Ibid., s. 131.
8 “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” Declaration of Independence, par. 2.
9 Locke was probably influenced by the very similar doctrine of Aristotle expressed in The Politics, bk. I, chaps. 9-10.
10 The True End of Civil Government, ss. 30, 31.
11 Ibid., s. 46.
12 “And thus came in the use of money; some lasting thing that men might keep without spoiling, and that, by mutual consent, men would take in exchange for the truly useful but perishable supports of life.” Ibid., s. 47.
13 “But since gold and silver, being little useful to the life of man, in proportion to food, raiment, and carriage, has its value only from the consent of men …. it is plain that the consent of men have agreed to a disproportionate and unequal possession of the earth …. they having, by consent, found out and agreed in a way how a man may, rightfully and without injury, possess more than he himself can make use of by receiving gold and silver.” Ibid., s. 50.
14 Bentham is mentioned by name in the course of Mr. Justice Holmes' opinion in Otis and Gassman v. Parker, 187 U.S. 606, 609 (1903).
15 “A great multitude of people are continually talking of the Law of Nature; and then they go on giving you their sentiments about what is right and what is wrong: and these sentiments, you are to understand, are so many chapters and sections of the Law of Nature.” Principles of Morals and Legislation, c. II, s. XIV, n. 6. In Works, I, p. 9Google Scholar.
16 Anarchical Fallacies: being an Examination of the Declaration of Rights Issued During the French Revolution. Article II. In Works, II, pp. 500–501Google Scholar.
17 Leviathan, c. XV, par. 2, p. 74 in Everyman edition.
18 Ibid., c. XIV, eighth par. from end, p. 72 in Everyman edition.
19 “To acknowledge that any one promise may be void, is to acknowledge that if any other is binding, it is not merely because it is a promise. That circumstance, then, whatever it be, on which the validity of a promise depends; that circumstance, I say, and not the promise itself, must, it is plain, be the cause of the obligation which a promise is apt in general to carry with it. … Now this other principle that still recurs upon us, what other can it be than the principle of UTILITY?” A Fragment on Government, ss. XLVI, XLVIII. In Works, I, p. 271Google Scholar.
20 The cases in which the law ought not to sanction exchanges and in which consent in the disposal of services is annulled are listed under the following heads: 1. Undue concealment. 2. Fraud. 3. Undue coercion. 4. Subornation. 5. Erroneous supposition of legal obligation. 6. Erroneous supposition of value. 7. Interdiction-infancy-madness. 8. Things liable to become hurtful by the exchange. 9. Want of right on the part of the collator. Principles of the Civil Code, pt. II, c. II, s. 2; and pt. II, c. V, s. 3. In Works, I, pp. 331 and 341Google Scholar.
21 Ibid,., pt. I, c. VII, par. 1; pt. I, c. X, s. 4; and pt. I, c. XI, par. 4. In Works, I, pp. 307, 310, and 311–312Google Scholar.
22 Ibid., pt. I, c. VII, par. 1. In Works, I, p. 307Google Scholar.
23 Ibid., pt. I, c. IX, par. 2. In Works, I, p. 309Google Scholar.
24 Principles of Political Economy, bk. V, c. X, s. 2, p. 928 in the edition edited by W. J. Ashley.
25 Ibid., bk. V, c. XI, s. 9, p. 955 in Ashley's edition.
26 Ibid., bk. V, c. XI, s. 12, p. 963 in Ashley's edition.
27 Ibid.
28 On Liberty, c. I, p. 75 in Everyman edition. Cf. Political Economy, bk. v, c. X, s. 5, p. 939 in Ashley's edition.
29 Principles of Political Economy, bk. IV, c. VII.
30 Ibid., bk. II, cc. IX and X.
31 See, for example, On Liberty, c. V, pp. 150-151 in Everyman edition.
32 This essay is cited by counsel in the argument of Mugler v. Kansas, 125 U.S. 623 (1887). On Liberty was first published in 1859, whereas Principles of Political Economy was first published in 1848.
33 On Liberty, c. I, pp. 72-73 in Everyman edition.
34 Ibid., c. I, p. 74 in Everyman edition.
35 “The rules which obtain among themselves appear to them self-evident and self-justifying. This all but universal illusion is one of the examples of the magical influence of custom, which is not only, as the proverb says, a second nature, but is continually mistaken for the first.” Ibid., c. I, p. 69 in Everyman edition.
36 First published in 1850.
37 First published in 1891.
38 Social Statics, c. VI, s. 1. This formula is found with only a slight verbal change in Justice, c. VI, s. 27.
39 “Rights, truly so called, originate from the laws of life as carried on in the associated state. The social arrangements cannot create them, but can simply conform to them or not conform to them.” Justice, c. XXII, s. 98. Cf. Social Statics, c. XVIII, s. 1.
40 “Furthermore, the right of exchange may be asserted as a direct deduction from the law of equal freedom. For of the two who voluntarily make an exchange, neither assumes greater liberty of action than the other, and fellow men are uninterfered with—remain possessed of just as much liberty of action as before.” Justice, c. XV, s. 69.
41 Of course with the right of free exchange goes the right of free contract; a postponement, now understood, now specified, in the completion of an exchange, serving to turn the one into the other.” Ibid., s. 70.
42 “The system must be that of contract or that of status—that in which the individual is left to do the best he can by his spontaneous efforts and get success or failure according to his efficiency, and that in which he has his appointed place, works under coercive rule, and has his appointed share of food, clothing, and shelter.” From Freedom to Bondage, par. 7. In Man versus the State, p. 156 in the American critical edition edited by Truxton Beale. In illustrating his point, Spencer seems to admit that the condition of the enlisted soldier in the English army is not pure status. Ibid., par. 9, p. 157. This surely undermines his absolute antithesis.
43 From Freedom to Bondage is the title of the essay from which the preceding quotation is made. See preceding note.
44 The New Toryism, fifth par. from the end. In Man versus the State, p. 26 in the American critical edition.
45 Lochner v. New York, 198 U.S. 45, 75 (1905).
46 Knoxville Iron Co. v. Harbison, 183 U.S. 13 (1901); Dayton Coal and Iron Co. v. Barton, 183 U.S. 23 (1901); Keokee Coke Co. v. Taylor, 234 U.S. 224 (1914).
47 McLean v. Arkansas, 211 U.S. 539 (1909); Bail and River Coal Co. v. Ohio Industrial Commission, 236 U.S. 338 (1915).
48 Patterson v. The Eudora, 190 U.S. 169 (1903).
49 St. Louis, I. M. & S. Railway Co. v. Paul, 173 U.S. 404 (1899); Erie Railway Co. v. Williams, 233 U.S. 685 (1914); Strathearn S.S. Co. v. Dillon, 252 U.S. 348 (1920).
50 Muller v. Oregon, 208 U.S. 412 (1908); Riley v. Massachusetts, 232 U.S. 671 (1914); Hawley v. Walker, 232 U.S. 718 (1914); Miller v. Wilson, 236 U.S. 373 (1915); Bosley v. McLaughlin, 236 U.S. 385 (1915).
51 Holden v. Hardy, 169 U.S. 366 (1898).
52 Bunting v. Oregon, 243 U.S. 426 (1917).
53 Chicago, B. & Q. Railroad Co. v. McGuire, 219 U.S. 549 (1911); Second Employers' Liability Cases, 223 U.S. 1 (1912).
54 New York Central Railroad Co. v. White, 243 U.S. 188 (1917); Mountain Timber Co. v. Washington, 243 U.S. 219 (1917).
55 Wilson v. New, 243 U.S. 332 (1917).
56 The interesting labor legislation case of Truax v. Corrigan, 257 U.S. 312 (1921), involves issues of property and equal protection but is not concerned with liberty of contract.
57 Lochner v. New York, 198 U.S. 45 (1905).
58 Adair v. United States, 208 U.S. 161 (1908); Coppage v. Kansas, 236 U.S. 1 (1915).
59 Wolff Packing Co. v. Kansas Court of Industrial Relations, 262 U.S. 522 (1923); Wolff Packing Co. v. Kansas Court of Industrial Relations, 267 U.S. 552 (1925).
60 Adkins v. Children's Hospital, 261 U.S. 525 (1923); Murphy v. Sardell, 269 U.S. 530 (1925).
61 Adkins v. Children's Hospital, 261 U.S. 525, 546 (1923). Cf. Wolff Packing Co. v. Kansas Court of Industrial Relations, 262 U.S. 522, 534 (1923).
62 Miller v. Wilson, 236 U.S. 373, 380 (1915). Substantially the same formula appears in Mr. Justice Hughes' opinion in Chicago, B. & Q. Railroad v. McGuire, 219 U.S. 549, 567 (1911). In Bunting v. Oregon, 243 U.S. 426 (1917), there is no explicit formula, but this is another of the few cases in which the Supreme Court has seemed to lay the burden of proof on those attacking the contested labor legislation.
63 McLean v. Arkansas, 211 U.S. 539, 550 (1909).
64 St. Louis, I. M. & S. Railway Co. v. Paul, 173 U.S. 404, 409 (1899); Erie Railway Co. v. Williams, 233 U.S. 685, 700-701 (1914).
65 Patterson v. The Eudora, 190 U.S. 169, 175 (1903).
66 Second Employers' Liability Cases, 223 U.S. 1, 52 (1912).
67 See supra, p. 340, and note 33.
68 Muller v. Oregon, 208 U.S. 412, 422 (1908). This point probably never occurred to Mill, who disapproved labor legislation affecting women. See supra, p. 339, and note 25.
69 New York Central Railroad Co. v. White, 243 U.S. 188, 206-207 (1917).
70 169 U.S. 366 (1898).
71 Ibid., 397.
72 Knoxville Iron Co. v. Harbison, 183 U.S. 13, 20-21 (1901).
73 Muller v. Oregon, 208 U.S. 412, 422 (1908).
74 243 U.S. 322 (1917).
75 Ibid., 347-348, 350-351.
76 Ibid., 353.
77 Ibid., 387.
78 See supra, p. 344, and note 61.
79 Allgeyer v. Louisiana, 165 U.S. 578 (1897).
80 Ibid., 590.
81 Ibid., 591.
82 198 U.S. 45 (1905).
83 Ibid., 61.
84 Ibid.
85 Ibid., 75. See supra, p. 343, and note 45.
86 208 U.S. 161 (1908).
87 Ibid., 175.
88 236 U.S. 1 (1915).
89 “But, aside from this matter of pecuniary interest, there is nothing to show that Hodges was subjected to the least pressure or influence, or that he was not a free agent, in all respects competent, and at liberty to choose what was best from the standpoint of his own interests.” Ibid., 8-9.
90 Ibid., 17-18.
91 For an instance of insistence upon inalienable rights, see the concurring opinion of Mr. Justice Bradley in Butchers' Union Co. v. Crescent City Co., 111 U.S. 746, 762 (1884). In spite of the justice's surprising reliance upon the Declaration of Independence, this concurring opinion is cited with approval in Allgeyer v. Louisiana, 165 U.S. 578, 589-590 (1897), and this in turn is used to support the condemnation of an hours-of-labor law in Lochner v. New York, 198 U.S. 45, 53 (1905).
92 Wolff Packing Co. v. Kansas Court of Industrial Relations, 262 U.S. 522 (1923); Wolff Packing Co. v. Kansas Court of Industrial Relations, 267 U.S. 552 (1925).
93 267 U.S. 552, 567. Cf. 262 U.S. 522, 539.
94 262 U.S. 522, 544.
95 267 U.S. 552, 569.
96 262 U.S. 522, 540. Cf. 267 U.S. 552, 563-564.
97 261 U.S. 525 (1923).
98 Ibid., 553-554.
99 Ibid., 569. In Chief Justice Taft's dissenting opinion the same point is made in the words, “In absolute freedom of contract the one term is as important as the other, for both enter equally into the consideration given and received, a restriction as to the one is not any greater in essence than the other, and is of the same kind. One is the multiplier and the other the multiplicand.” Ibid., 564.
100 Ibid., 570.
101 The opinion refers to “the inexorable law that no one can continue indefinitely to take out more than he puts in without ultimately exhausting the supply.” Ibid., 557.
102 For an interesting discussion of this problem of the exchange level and of the larger problem of the relation of economic pressure to law, see ProfessorHale's, Robert L. article, “Coercion and Distribution in a Supposedly Non-Coercive State,” in 38 Political Science Quarterly 470 (1923)CrossRefGoogle Scholar.
103 261 U.S. 525, 558.
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