John A. Fliter

An aspect of constitutional history I didn’t know much about. There was a period when the Contract Clause—forbidding states from “impairing” the obligations of contracts—was used to strike down a lot of state legislation, including attempts to provided debtors some relief during the country’s recurrent financial crises. Since one key reason the Contract Clause is in the Constitution was to stop pro-debtor, anti-creditor state policies, that would seem to make sense, but in 1937, the Supreme Court approved a short-term moratorium on foreclosures allowing people to stay on their properties as long as they petitioned the court for it and paid a court-ordered amount during the process. The Court, 5-4, ruled that emergencies justified the use of the police power to limit the mortgage contract. I have to admit, I’m not sure I would have voted that way given the history of the provision, though I am attracted to the other distinctions that limited the scope of the Contract Clause—first, the state’s ability to change the legality of any contract provision prospectively, though not retroactively, and second, the state’s ability to change remedies, even if it couldn’t change rights (this second principle was also part of the defense of the Minnesota moratorium law). And I do see why the Contract Clause probably shouldn’t be taken as literally as Hugo Black would have taken it—otherwise, if private parties had contracted between themselves to supply a ton of heroin each month for two hundred years starting in 1800, the government couldn’t have made heroin illegal until 2000. But once you concede that, figuring out the limits is indeed difficult, as we get into the morass of the government’s police power. The book includes a survey of Contract Clause history to the present day, a detailed history of Minnesota politics focusing on the power of progressive/populist farmers, and a detailed account of the various legal arguments at issue. Here’s an incredible fact about the Depression: “Net cash income per Minnesota farm fell from $1,640 in 1918 to a low of $87 in 1932.”… (meer)