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Photo of Swift & Co.'s Omaha operations at the turn of the 20th century.
In Swift & Co. v. U. S., the Court decided that Congress could regulate local business activities that fell within the "stream of commerce" between states. Above, Swift & Co.'s Omaha operations at the turn of the 20th century.

Reproduction courtesy of the Omaha Historical Society
Swift & Co. v. U.S. (1905)

In Swift & Co. v. United States (1905), the Supreme Court ruled that Congress could constitutionally prohibit local business practices as a means to regulate interstate commerce because those practices, when combined together, were within "the stream of commerce" between the states. The case began when the U.S. government sought to enforce the Sherman Antitrust Act of 1890 against various local meat dealers. The Sherman Act, a federal law passed by Congress in the late 19th century, bars trade monopolies in the United States. A response to the rise of colossal corporations in the Gilded Age, the act was designed to limit the wealth concentrations of big business, encourage American entrepreneurship, and protect small businessmen and consumers. It provided that "every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States ... is hereby declared to be illegal."

The government filed a case against Swift & Co. and various other meat dealers around the country, claiming that together they had violated the Sherman Act. The dealers were in the business of buying butchered livestock in one state and selling fresh meat to retailers or agents in different states. Together, the dealers comprised 60 percent of the meat dealer business in the United States. They were charged with conspiring to restrain trade by fixing the prices at which they would buy and sell meat and fixing uniform shipping charges. A trial court found the dealers guilty and issued an "injunction" (or legal order to stop) that barred further price fixing among them. The dealers appealed to the U.S. Supreme Court, claiming that the government lacked power under the Constitution to regulate their business activities. The Supreme Court reviewed the case in 1905.

The Court, in a decision written by Justice Oliver Wendell Holmes, ruled that the Sherman Act was constitutional and an injunction could be enforced against the dealers. The dealers claimed that their business activities fell outside of what Congress could legally regulate. The Sherman Act itself is only legal, they claimed, because the Constitution's Commerce Clause allows Congress to regulate "interstate commerce." Yet since Gibbons v. Ogden (1824), the Court had interpreted "interstate commerce" to mean only the buying, selling, and transport of goods between states. The defendants argued their business activities were, by contrast, local in nature and thus beyond the powers of Congress to regulate.

The Court disagreed. Stated Justice Holmes, "When cattle are sent for sale from a place in one State with the expectation that they will end their transit, after purchase in another, and when in effect they do so ... and when this is a typical, constantly recurring course, the current thus existing is a current of commerce among the States, and the purchase of the cattle is part and incident of such commerce." In other words, the defendants' activities, though local in isolation, were an integral part of the "stream of interstate commerce" when viewed together. Thus, the federal government was within its Commerce Clause powers to shut down the defendants' local activities under the Sherman Act. The injunction against Swift and the other defendants was affirmed.

Swift & Co. v. United States liberalized the Court's previous, narrower interpretation of the Commerce Clause in United States v. E. C. Knight (1895). In Knight, the Court held that commercial activities inherently local in nature, such as manufacturing in a factory, fell outside of "interstate commerce" and could not be regulated by Congress even if such activities compromised interstate trade. The Swift decision ruled that local activities can be considered within "interstate commerce" if together they lie within the "stream of interstate commerce." The holdings of both Knight and Swift were replaced, however, in N.L.R.B. v. Jones & Laughlin Steel Corp. (1937), which ruled that a local commercial activity considered in isolation may still constitute "interstate commerce" if that activity has a "close and substantial relationship" to interstate commerce.

Alex McBride is a third year law student at Tulane Law School in New Orleans. He is articles editor on the TULANE LAW REVIEW and the 2005 recipient of the Ray Forrester Award in Constitutional Law. In 2007, Alex will be clerking with Judge Susan Braden on the United States Court of Federal Claims in Washington.

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