Economic Due Process and the Takings Clause

Before the Civil War, the only constitutional restrictions on the power of the states to regulate economic activity were those found in Article I, Section 10, which prohibits the states from emitting bills of credit, making anything but gold or silver a tender in payment of debts, and passing ex post facto laws or laws impairing obligations of contracts. With the adoption of the Fourteenth Amendment in 1868, this situation changed. As briefly pointed out in Chapter 11 of this Volume, this amendment, especially through its Due Process Clause, supplied the Supreme Court with a potent weapon for invalidating state efforts at economic regulation and for protecting vested property rights. In the early part of the twentieth century, the Court wielded the Due Process Clause to strike down state laws that, in its estimation, arbitrarily, unreasonably, and capriciously interfered with the rights of life, liberty, and property. 1 During this period, various justices used the clause to justify substantive reviews of governmental actions, scrutinizing not only how, procedurally, the government acted, but also what, substantively, the government did.