Munn v. State of Illinois was the leading late nineteenth century precedent discussing the scope of state police powers under the federal constitution. State police powers are the powers states enjoy to regulate for the health, safety, welfare and morals of the community. During the late nineteenth century many political movements, concerned with increasing inequalities, demanded that states adopt more comprehensive regulations of private property. Prominent law professors and industrialists challenged the resulting legislation as unprecedented and unconstitutional violations of property rights.
Munn rose in the Midwest, where political movements such as the Patrons of Husbandry (often known as “the Grange”) successfully convinced state legislatures to pass laws helping small farmers. The particular law at issue in Munn was an Illinois statute that regulated the prices grain elevators storing wheat could charge farmers. Proponents of the law insisted that this was a routine exercise of state police powers that would promote the welfare of farmers by ensuring that they made a profit on wheat transported to markets throughout the country. Opponents insisted that telling a business what prices they could charge violated the due process clause of the Fourteenth Amendment.
The Supreme Court by a 7-2 vote declared the Illinois statute constitutional. Chief Justice Morrison Waite’s majority opinion maintained that the regulation of grain elevators was consistent with longstanding practice at the time the Fourteenth Amendment was adopted, that “statutes regulating the use, or even the price of the use, of private property” did not “depriv[e] an owner of his property without due process of law.” Waite’s opinion relied heavily on a common law doctrine permitting regulation of property “affected with a public interest.” He explained, “when . . . one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good.” Justice Stephen Field dissented. He insisted that grain elevators were not “affected with a public interest” because they served the economic interests of their owners rather than the good of the public. “The public has no greater interest in the use of buildings for the storage of grain,” he wrote, “than it has in the use of buildings for the residence of families.”
For the next fifty years, the constitutional status of price regulations turned on the meaning and application of the phrase “affected with a public interest.” Many Supreme Court decisions, without overruling Munn, insisted that a business affected with a public interest had to have a distinctive public character. Ordinary businesses, such as a bakery or a carpentry shop, did not have that character. For this reason, the justices tended to declare unconstitutional legislation regulating the prices such enterprises could charge. During the New Deal, the justices began interpreting “affected with a public interest” more broadly. Justice Owen Roberts in Nebbia v. New York (1934) declared, “there is no closed class or category of businesses affected with a public interest. . . . “The phrase ‘affected with a public interest’ can, in the nature of things, mean no more than that an industry, for adequate reason, is subject to control for the public good.” Robert’s interpretation of Munn remains good law today. If a legislature concludes that regulating a business will serve the interest of the community, then that business is “affected with a public interest.” As important, the Supreme Court will defer to a legislative conclusion that regulating a business serves the public interest unless that conclusion is irrational. For this reason, for all practical purposes a legislative conclusion that regulating a business will serve the public interest settles the constitutionality of that regulation (unless the regulation violates some other provision of the Constitution, such as the First Amendment).