Can we thank the disputed 1876 presidential election between Rutherford B. Hayes and Samuel Tilden for the modern administrative state? Not directly, but in 1877, when the election and the somewhat forgotten case of Munn v. Illinois were decided, both proved pivotal to establishing Congress’s current power to regulate commerce “affected with a public interest.” Many argue the Progressive era or NLRB v. Jones and Laughlin Steel (1937) gave birth to the modern regulatory environment. However, the legal genesis might trace back decades earlier.

In Limiting Federal Regulation, Paul Ballonoff tracks the rise of congressional power back to Munn, in which the U.S. Supreme Court ruled that government can regulate prices without infringing on sellers’ property rights. Examining the rise in federal power through the lens of the patent clause, he blends a wealth of historical and some contemporary examples to argue that had the Supreme Court ruled in favor of Munn instead of the state, “we might today be free of much of the regulatory burden of modern government.” His arguments are historical and legal in nature, and provide an important understanding of when and how government veered toward frequent intervention.

Opening for Congress / As Ballonoff notes, Munn dealt with state, not federal, power—Illinois wanted to set a maximum price on what agricultural storage and transport firms could charge for their services. It was somewhat understood that states had a general patent power to promote science and commerce through copyright, but there was plenty of dispute arising from Congress’s general regulatory power. The decision in Munn held that the operation of a grain elevator constituted business “affected with a public interest.” Thus, states had general power to regulate this activity. This case gave rise to modern utility regulation.

The book traces the decision in Munn to Congress usurping federal power without explicit constitutional authority. Shortly after the decision, Congress created the Interstate Commerce Commission via the 1887 Interstate Commerce Act. Ballonoff concludes that the lack of general patent power and the limitations of the “general welfare” and “necessary and proper” clauses preclude much of Congress’s power to regulate commerce and, by extension, the almost countless regulatory agencies that sprung up through congressional delegation. Munn provided a way around that lack of authority.

Although much of the book is a historical and legal review of expansive federal and state power, Ballonoff takes care to incorporate some contemporary examples, including the U.S. Environmental Protection Agency’s “Clean Power Plan” and the Affordable Care Act. He views the former as an unconstitutional usurpation because “Congress can neither create rewards nor immunities for the promotion of commerce and the manufacture of electricity.” Likewise, he views state involvement in health care and the 10th Amendment as firm bars against increased federal regulation of health care.

Compromise of 1877 / Libertarians and conservatives who have studied constitutional law might find little to disagree with in this book. Many make the argument that much of the administrative state is unconstitutional or at least should not have been delegated in the first instance.

These arguments aren’t novel, but the historical approach Ballonoff takes does offer a new perspective on this debate. Nascent constitutional scholars are often taught about the “Switch in Time that Saved Nine,” when the Supreme Court, under pressure from President Franklin D. Roosevelt’s court packing plan, succumbed and began allowing New Deal legislation to pass constitutional muster. However, Ballonoff makes the point that the roots of modern congressional power trace back to the regulation of grain elevators in Illinois, long before the New Deal, and to the strange juxtaposition of the Hayes-Tilden presidential battle.

Of the latter, Tilden, a Democrat from New York, bested Hayes, a Republican from Ohio, by 3% the popular vote, thanks in part to Southern Democrats’ suppression of Republican voters. However, Hayes appeared to have the upper hand in the Electoral College. The so-called Compromise of 1877, an unwritten agreement between the two political parties, permitted Hayes to take the Electoral College victory in return for the withdrawal of federal troops from Florida, Louisiana, and South Carolina, where they protected Republican state governments and voters. The result was a Hayes presidency in exchange for the departure of white Republicans and disenfranchisement of black Republicans in the South.

Interestingly, Munn and the election were intertwined. At the time, Supreme Court Justice David Davis, viewed as a non-ideological independent, was appointed to a 15-member Electoral Commission to settle the election. Shortly before, Davis cast a vote in favor of state power in Munn. As the commission pursued a compromise, the Illinois legislature selected him to serve in the U.S. Senate. The independent Davis then resigned his Supreme Court commission and Republicans selected one of their own to fill the seat, helping to pave the way for the 1877 Compromise.

Learning from past mistakes / The new Trump administration has vowed to prune the U.S. regulatory state. The history Ballonoff outlines in this book and the failed attempts at regulatory reform should help to inform the current debate.

In general, never trust regulators to implement reform aimed at curbing federal regulation. If regulatory modernization is to succeed, there must be either carrots or sticks to nudge the administrative state toward “regulatory management” over the bureaucratic status quo. Sticks could take the form of heightened judicial review of agency actions, or the diminution of pay for officials, or lower agency budgets. Carrots, as Hoover Institution scholar Adam White has outlined, could grant agencies more deference for carrying out regulatory reform proposals and no deference for trying to avoid it.

Whatever the approach Congress and the administration take, they will have ample historical examples to guide them toward a solution that could prove far more durable than the patchwork mess that continues to produce 80 major regulations annually.