When studying Congress’ authority and responsibilities in Section 8 of Article I of our Constitution, one of the shortest clauses has become one of the most complicated and litigated in American history.
Clause III, known as the Commerce Clause, gives Congress the power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” For such a short sentence, it has caused a lot of debate.
First things first, before the rest of the clause can be understood, the Supreme Court had to define “commerce.” While the word might suggest simply buying and selling goods, Chief Justice John Marshall gave it a much broader meaning in Gibbons v. Ogden (1824).
The dispute arose when New York granted Aaron Ogden an exclusive license to operate steamboats in its waters, effectively giving him a monopoly. Thomas Gibbons, however, operated a competing steamboat route between New York and New Jersey under a federal license issued by Congress.
Part of Ogden’s argument was that he simply transported people and goods, which he claimed did not fall under “commerce” since he was not buying or selling. Marshall disagreed. He broadly defined commerce as all commercial interaction between states, including the movement or navigation of people or goods across state lines.
Marshall still saw commerce in a narrow scope, and later cases supported him that manufacturing was not always commerce. In Kidd v. Pearson (1888), Iowa outlawed the manufacturing of alcohol, but J.S. Kidd argued the state did not have that power under the Commerce Clause. The Court disagreed, holding that manufacturing happens before commerce begins and is therefore under state control, not federal authority. The Court reaffirmed this idea in Carter v. Carter Coal Co. (1936), ruling that mining was also a local activity outside federal reach.
Later, however, in the 20th century, there was a major shift that changed the meaning of commerce. In NLRB v. Jones & Laughlin Steel Corp. (1937), the Court upheld a federal law protecting workers’ rights to unionize. It ruled that even though manufacturing is a local activity, it can be regulated by Congress if it has a “substantial effect” on interstate commerce. Because labor disputes at a large steel company could disrupt the national flow of goods, Congress had the authority to regulate them.
Similar cases followed. In Mulford v. Smith (1939), the Court ruled that even though farming is a local activity, it can be regulated when it is part of a broader system that substantially affects interstate commerce. In Sunshine Anthracite Coal Co. v. Adkins (1940), the Court upheld federal regulation of coal due to its connection to interstate commerce. In American Medical Association v. United States (1943), the Court went even further, ruling that the activities of a nonprofit health organization could still count as interstate commerce because they were part of trade and could affect the national market.
So, although early Supreme Court decisions applied Congress’ commerce power narrowly — excluding areas like manufacturing, mining, insurance, and certain services — the Court later expanded its interpretation. By the mid-20th century, it recognized a wide range of activities as interstate commerce, including news transmission, insurance, and even local activities closely connected to interstate movement. Today, “commerce” under our Constitution encompasses the movement of people, goods, services, and information across state lines, as well as related communications and transactions forming part of an integrated national economy.
As for “regulate … among the several States,” this also was defined in Gibbons v. Ogden. In that case, Ogden had a monopoly granted by the State of New York while Gibbons received his license from Congress, creating a direct conflict between state and federal authority over interstate activity. Chief Justice Marshall declared that the Constitution gives Congress — not the states — the power to regulate interstate commerce, so Gibbons’ federal license overruled New York’s monopoly.
While Marshall explained that Congress could regulate commerce between states, but not activities that happen entirely within one state and don’t affect others, this understanding also changed over time just like the definition of commerce. In Swift & Co. v. United States (1905), the Court held that Congress could regulate local business activities if they are part of a larger “stream of commerce” that crosses state lines. Even though some steps (like meat processing) occurred within one state, they were part of a continuous interstate system. Because of this, federal antitrust laws could apply, further expanding Congress’ power.
So, while the Commerce Clause is a short clause, it is one of the most important because it defines the balance of power between the federal government and the states and shapes how the national economy is regulated. It also demonstrates the growth of federal authority that picked up during the Progressive movement and into the New Deal.
James Finck is a professor of American history at the University of Science and Arts of Oklahoma. He can be reached at james.finck@swoknews.com. Thanks to the Southwest Ledger and the Lawton Constitution for sharing his column.
