Posted in Financial

Lochner Era Revistited??

I was wondering when someone would make the connection between what is happening today and what happened back at the turn of the 20th century. Well, Robert Reich did just that in his article “The Wealthy Have Pulled America Back to the 19th Century”.

The late 19th century into the 20th century became known as the Lochner Era. It derived its name from the case of Lochner v. New York, 198 U.S. 45 (1905). During the Lochner Era which spanned approximately 40 years, several federal and state statutes that had been passed beginning in the 1890s to protect the working class were invalidated by the U.S. Supreme Court.

One such statute was passed in New York limiting the number of hours that a baker could work per week to 60 hours. Lochner, an owner of a bakery, violated the New York statute on two occasions. After the second conviction, Lochner appealed arguing that the statute violated the substantive due process principal under the Fourteenth Amendment by interfering with his right to freely contract. The U.S. Supreme Court agreed. Justice Rufus Peckham wrote the opinion for the court and stated that an individual’s “general right to make a contract in relation to his business” was protected under the Fourteenth Amendment.  The Lochner decision was and still is a very controversial decision.

In his article, Robert Reich quotes a Forbes magazine writer who wrote that jobs exist only “when both employer and employee are happy with the deal being made.” Sound like Lochner? It seems Robert Reich thinks so too when he states:

Much the same argument was voiced in the late nineteenth century over alleged “freedom of contract.” Any deal between employees and workers was assumed to be fine if both sides voluntarily agreed to it.

It was an era when many workers were “happy” to toil twelve-hour days in sweat shops for lack of any better alternative.

It was also a time of great wealth for a few and squalor for many. And of corruption, as the lackeys of robber barons deposited sacks of cash on the desks of pliant legislators.

You can read more of what Robert Reich says here.

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