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This is to certify that the

thesis entitled

THE EFFECTS OF SUP?DTE CCU-RT DECISIC‘IJ

(J)

UPC'N NEW DEAL LYLETSLATTCN
presented by

Patrick James Daltzn

 

has been accepted towards fulfillment
of the requirements for

ljég‘tStCI‘ Q: 52‘“: degree in B“ Giana:

Major professor

Date liarc}: 10, 12sz

0-169

 

PLACE IN RETURN BOX to remove this checkout from your record.
TO AVOID FINES return on or before date due.
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6/01 c:/CiRC/DateDue.pBS-p.15

 

THE EFFECTS OF SUPREME COURT DECISIONS
UPON NEW DEAL LEGISLATION

BY
PATRICK JAMES DALTON

A THESIS
Submitted to the School of Graduate Studies of Michigan
State College of Agriculture and Applied Science

in partial fulfillment of the reQuiremente
for the degree of

MASTER OF ARTS

Department of History
1953

jflESiS

 

 

 

‘K/ // LEE;
(3)

.)

Sincere appreciation and thanks are extended
to Dr. Madison Kuhn, whose.patience, under-
‘etanding and pertinent suggestions have made
possible the completion of this thesis.

274.154 4.

TABLE OF CONTENTS

I. THE NEH DEAL WAS CHALLENGED BY ADVERSE
DECISIONS C O C O O O O O O O C O O O O O D

II. TWO CASES THREATENED AND DESTROYED N.I.R.A . .

A. The Panama Case Began the Fragmentation
of the N.I.R.A. and Contributed to
More Careful Delegation of
Legislative Power . . . . . . . . .

B. The Schechter Case Stimulated Immediate.
Defensive Legislation . . . . . . . . .

l. The A.A.A. was fortified against
possible Judicial assault . . . .

3. Powers in the Cuffey-Snyder Bitu-
ndnous Coal Law were carefully
delegated but private bodies
exercised them . . . . . . . .

III. PRIVATE AGENCIES EXERCISED VASTLY REDUCED
LEGISLATIVE POWERS AFTER THE CARTER CASE . .

IV. THE FARM MORTGAGE MORATORIUH CASE ACCOMP-
LISHED A REDUCTION BY TWO YEARS IN THE
MORATORIUM PERIOD OF THE NEW LAW . . . . .

V. SUITS TO COLLECT GOLD OR ITS EQUIVALENT 'ERE
PROHIBITED AS A RESULT OF THE GOLD
CLAUSE CASES . O O O O O O O O O O O O O 0

VI. FRUSTRATION OF THE RAILROAD RETIREMENT EFFORT
UNDER THE COMMERCE POWER LED TO TEE BROADE'
NING OF THE GENERAL IELFARE POWER . . . . .

VII. THE BUTLER CASE EXPANDED AND ESTABLISHED THE
INDEPENDENCE OF THE GENERAL WELFARE POWER .

A. The Opinion Destroyed the Law and Had
Implications for the Spending Power . .

B. The Base of the New Agricultural Law
Has Changed to Conservation . . . . . .

. 8

. 15

21

. 33

35'

39
4?
47

'52

C. Windfall Taxes Minimized the Loss due
to Refunding Illegal Collections . . .

D. The Passage of the Marketing Features

Rounded Out Agricultural Legislation .

VIII. PROPOSED LEGISLATION TO PACK THE COURT IS

PASSED AS IMPROVED LEGISLATION . .

IX A CHANGED COURT . . . . . . . . . .
X. SUMMARY . . . . . . . . . . . . . .
XI. BIBLIOGRAPHICAL ESSAY . . . . . . .

55
57

61
so
75
so'

I. THE NEW DEAL WAS CHALLENGED
BY ADVERSE DECISIONS

The United States Supreme Court, in a series
of decisions in 1935 and 1936, invalidated key units
of the New Deal program. An immediate consequence
was the effort of Congress to revise its laws to
conform to the wishes of the Court. Those revisions
compose the core of this study. In 1937 President
Roosevelt, having selected the alternative of re-
vising the Court, failed to obtain passage of the
coercive items. Before the culmination of this
episode the Court began a revision of its interpre-
tation of the Constitution. Thus the struggle ended

in peace without crushing defeat for either side.

 

The call for a "New DealI had been brought

 

 

on by the severe depression, which engulfed the

 

United States after 1989, creating widespread social
and economic suffering among the great masses of
people. Approximately 15 million gainful workers
were unemployed as a result of the curtailment of
production coincident with bank failures and bank-
ruptcies. There was a great clamor for relief, es-

pecially in the great industrial centers. Those who

_ 2
were fortunate enough to have a job often earned
little because many worked only a short week or
supported jobless dependents. Men and women walked
the streets looking for work or stood in bread lines.
There was increasing distress among the farming popu-
lation due to the declining prices of agricultural
commodities. Farm and home mortgages were.being
2 foreclosed, wiping out the savings of many years.

To many it became increasingly apparent that
individuals and local agencies could not cope success-
fully with this national problem. President Roose-
velt had promised a solution and the people, having
elected him, expected him to assume legislative as
well as executive leadership. Faced with the task
of reviving business and reducing unemployment, the
President and Congress presented the nation in 1933
with the vast program which has been known as the 'New
Deal". They planned to provide relief to the victims
of the depression by direct grants, by emergency em-.
ployment through public works, by preventing the fore-
closure of homes and farms through the operations of
the Home Owners Loan Corporation and the Frazier-
Lemke Farm Mortgage Act. lith the passage of such
measures as the Agricultural Adjustment Act, Social

Security Act, and the Tennessee Valley Authority Act,

the administration sought to achieve, among otheg
things, a revival of business activity, re-employ-
ment, an increase in the purchasing power of the
farmer and laborer, and the provision of social se-
curity for the masses.

All of these New Deal laws were destined sooner
or later to come under Supreme Court scrutiny. Some
of them, including President Roosevelt's favorite
measures, failed to meet the approval of this branch
of the government. The Supreme Court, accustomed
to passing judgment on past precedent, could not at
first conceive, it appears, how this sudden deluge
of laws, growing out of present need, could be ac-
comodated logically within the established Constitu-
tional system. Therefore, it invalidated them. In
haste and over-anxiety to please, Congress had follow-
ed obediently the Executive. Now, when these con-
spicuous branches of the government no longer 'checked'
upon each other, the Supreme Court emerged from its
relative obscurity and checked on the other two.

No period of such conflict and portent had ever
been experienced in the history of the Supreme Court.
Between 1900 and 1983, forty minor negative decisions
were handed down and between 1923 and 1935 there had

4

been none. Again, since 1936 there have been no ad-
verse decisions. 0n the other hand, during the short
two years of 1935 andl936 were coalesced nine of the
most destructive decisions ever rendered. These had
the effect of destroying or threatening with destruc-
tion the most important of the New Deal measures.
Occurances of such magnitude could not fail to elicit
‘bitter criticism which became strong enough that the
President dared to propose a "Court Packing' measure
to Congress. But before that point was reached, the-
Congress made repeated efforts to modify legislation
to meet the objections of the Court. In time the
-Court changed its interpretation of various clauses
of the Constitution after legislation had been im-
proved and harmony was restored among the three branches

of the Government.

II. TWO CASES THREATENED AND
DESTROYED N.I.R.A.

The Schechter case provided the primary shock
to the New Deal because it invalidated the whole
National Industrial Recovery Act. This adverse de—
cision came not without warning for the Panama case,
which invalidated the 'oil clauses' of the same

act, warned of the blow to come.

A. The Panama Case Began the Fragmentation
of the N.I.R.A. and Contributed to
More Careful Delegation of
Legislative Power

The Panama Case of January 7, 1935,1 forwarned
that definite defects. of the N.I.R.A. needed to be
improved. President Roosevelt characterized it in
the following words:

The first major case which sought to break
down our attempts to cure the abuses and in-
equalities and instabilities which had thrown
our economic system out of joint involved the
provisions of the National Industrial Recovery
Act, which conferred on the President the

power to prohibit the transportation in inter-
state commerce of petroleum which had been pro-
duced in excess of the quantity permitted by
the respective State laws.3

7- ,_ ——‘_—

1 Panama Refining 92, 23 Ryan, 893 U.S. 388, 1935.

d 3 Fra§k%:n D. Roosevelt, Pgblig_Pa ers and Ad-
resses 9__ anklin D. Roosevelt IV Ed. y Sam—51
I. Rosennmn, (New York: Random Hausé, 1938) p. 7.

6
The Court's Opinion in the case stated that

Congress had not done three things requisite to a
legal delegation of powers (1) it had not stated
the purpose or declared why it had passed the law
or what the law had attempted to accomplish, so
that there would be some measure or 'standard' by
which to guage whether the President were using the
delegated legislative power to accomplish legitimate
purposes of the government; (8) any prohibition by
Presidential proclamation of the transportation of
oil in interstate commerce, which was the legislative
power delegated in the law, did not have to measure
up to any purpose or be in accordance with any speci-
fications laid down by Congress, precedent to his
exercise of the delegated power; (3) it had not re-
quired any finding of fact by the President upon
which to predicate his prohibition of oil in inter-
state commerce.

The Court feared that, if this law were upheld,
a precedent would be set by which

instead of performing its law-making function,

the Congress could at will and as to such sub-

jects as it chooses, transfer that function to
the President or to an administrative body.3

v—

3 893 U.S. 388.

7
The Court's Objection to an illegal delegation of

legislative power had a two pronged effect upon the
legislation passed in its wake.

The first of these, the effect upon the dele-
gation of legislative power was an accessory to the
effect of the Schechter case. In the great bulk of
the literature written about this issue, the two
cases are Quoted, and in decisions of subordinate
courts, both were relied on as precedent if the
issue of delegation of legislative power were in-
volved. As far as this issue is concerned, there
was little difference between the two cases in kind
of effect; but there was a difference in the amount
of effect achieved. In the Schechter case, four
months later, the annihilation seems to be complete,
while in the Panama, it took the effect of a warning.
In fact it was only a warning and an unheeded warn-
ing at that; for no amendments to improve the act
in this respect were passed until after the later
decision was forthcoming.

In fact, Chief Justice Hughes in the Panama
case had hinted that the Court had never been "regard-
ed as denying to Congress'I the ability or opportunity
to delegate to the proper 'selected instrumentalities'

the power to make “subordinate rules“ if such were

8
"within the prescribed limits and the determination

of facts“ to which the policy would apply.‘ This
futile attempt to signify to Congress the defect
in the whole N.I.R.A. was concurred in by all the
Justices except Justice Cardozo. By the time of
the Schechter case he, too, would be persuaded to
join the majority. Later the identical language
of this warning was repeated in the Schechter case
with unanimous concurrence.

The other effect of the Panama decision had to
do with the breaking up of New Deal legislation
into smaller units. On February 88, immediately
after this decision, the Petroleum Act was passed.
This act supplanted only the oil provisions of the
N.I.R.A. and was the first step in the breaking up
of that mammoth law into its separate segments.
This breaking up process remained dormant, however,
until after the Schechter case.

B. The Schechter Case Stimulated immediate
defensive legislation

The Schechter decision which in 1935 invalidated
much of the National Industrial Recovery Act of 1933

resulted in two immediate modifications in Congres-

4 lb . ‘

9
sional legislation. The Court's objection to the
delegation of legislative power led to revisions
in the 1933 version of the Agricultural Adjustment
Act and to particular legalities in the Cuffey-Sny-
der Bituminous Coal Act passed during the ensuing
sumner. The Court's objection to regulation of what
it considered intrastate commerce was later reversed
in the National Labor Relations Act case and had no
momentous effects upon legislation.

The National Industrial Recovery Act provided
that codes of fair competition were to be drawn up
by code officials, and after being approved by the
President, became binding upon all members of the
industry. .Code-making thus became a method of fur-
thering monOpolistic business practices by the trade
associations. One such code was drawn up in New
York regulating the business establishments which
dealt in live poultry. It had been approved by the.
President.

The Schechter brothers had violated this code
by paying wages below the prescribed minimum and
by selling chickens in less than 'run-of—thescoop'
lots. These violations, and others, were contrary
to specific provisions which had been drawn up by
the code members and approved by the President to

10

be valid law for the regulation of this industry
under the N.I.R.A. The corporation had the case
brought before the Supreme Court on the ground that
their practices had not directly affected inter-
state commerce and that the codes were not consti-
tutional because they had been determined by the
President and not by Congress. This placed in ques-
tion the validity of the poultry code and the au-
thority of the code-making body, thus testing the
constitutionality of the N.I.R.A. The Supreme Court
in the.Schechter decision declared the N.I.R.A. to
be unconstitutional on the basis of twomain legal
principles: one, that it was an unconstitutional
delegation of legislative power; and two, that the
business of the Schechter Poultry Corporation was
not interstate commerce and therefore could not
be regulated by Congress.5

To consider the‘Question of interstate commerce
first, the Schechter Corporation had contended that
the poultry was no longer in interstate commerce
when it was sold in New York City and therefore be-

yond Congressional regulation, but the government

 

r ._—

5 A.L.A. Schechter Poultry Corporation et a1.
1. Unit-3F stat—es“, 3'9? v.3. 495, 1935. ' "" ""

ll
argued that there was an “indirect“ effect upon
interstate commerce which justified the regulation.
Voicing the unequivocal Opinion of the Court, Chief
Justice Hughes insisted that a 'well established'
distinction existed between direct and indirect
effects, even though the distinction could be deter-
mined only in individual cases. Not to recognize
this distinct ion would be to admit Federal authority
to "embrace all the activities of the people.‘ Con—
sequently, a distinction would have to be made be-
tween direct and indirect effects. A large number ~
of cases interpreting the interstate commerce power
under the Sherman Anti-Trust Law were analyzed.

From these the Court deduced that such a line of
distinction could be drawn. The Schechter actions,
it explained, had only indirect effects on inter-
state comnerce because the poultry was being sold
within New York State and would not leave the State.
Many legal as well as lay observers considered the
Question thereby settled. Chile the decision was
praised and critized by both opinions, it did so
limit the use Of the interstate commerce clause as
to cause President Roosevelt and his New Dealers to
fight for a reversal. They were successful, and

in less than two years, the Court reOOgnized the

power of Congress to regulate activities having even

13

an indirect effect on interstate commerce. In up-
holding the National Labor Relations Act on April
18, 193?, the Court saplained that the effect of
an activity upon the general 'streamI of commerce
as it flowed from state to state is the factor which
should determine whether such activity should be
regulated or not.6o Thus this basis of the Schechter
decision, unlike that pertaining to the delegated
power, was reversed when the Court was “converted.“
Although the opinion in as far as it referred
to interstate commerce left no lasting imprint upon
legislation; in as far as it referred to the dele-
gation of legislative power it left effects which
were definite and profound. In writing the majority
Opinion of the Court, Chief Justice Charles'Evans~
Hughes said, “Congress cannot delegate legislative
power to the President to exercise an unfettered
discretion to make whatever laws he thinks may be
needed . . . .‘7 After eXplaining in decisive terms
that no limit except the purposes of the law had
been established to guide the use of the delegated

6 National Labor Relations Board v. Jones and
Laughlin SteeIC Corporation, 301 U. S. l, 1937.

7 395 U.s. 495, 1935.

13
legislative power, he recognized the 'broad dele-
gation“ of power and concluded that ' . . . the dis-
retion of the President . .'. is virtually unfet-
tered."8

This language naturally reflects upon the word-
ing of the law itself. Section 10 (a) is typical.
Here, the President was authorized

. . . to prescribe-such rules and regulations

as may be necessary to carry out the purposes

of this title, and fees for licenses and for

filing codes of fair competition and agree-

ments.9 '
Again Section 4(b) illustrates the character of all
the clauses delegating legislative power. In this
section, the authority to license businesses was
granted whenever he should “find it essential' if
the President should “find” that activities.ccntrary
to the purposes of the title were being practiced.lo
Other power granting clauses in the act follow the
same pattern. Other than the President's own dis-
cretion, the only significant limit on his authority
under this act is that it had to be used to accom-
plish the purposes of the act, namely, to rehabili-

tate industry, to relieve unemployment, eliminate

 

8 Ibid.

9 48 Stat. 195, Sec. 10 (a).
10 Ibid. Sec. 4 (b).

14
unfair trade practices, obtain united action of ”

labor and management and otherwise provide for the
general welfare.

All the above refers to the manner in which
legislative power was delegated, but at the same
time, there were,in this opinion, words which in-
dicate that another factor probably contributed to
the aversion of the Court to this law. In I'one
fell swoopII the Opinion said it attempted to regu-
late *a host of different trades and industries.“
Along with the other issues in the case it is like-
wise true that this law attempted "extending the
President's discretion to all the varieties of laws
which he may deem to be beneficial." All in one
unit, this I'eweeping delegation of power. attempted
to regulate the “vast array of comswrcial and in-
dustrial activities throughout the country." It is
necessary to the understanding of this law to realize
that nearly all parts of the destroyed N.I.R.A. were
later revived, rephrased and repassed as separate
pieces of valid legislation.

In a subsequent case, 1,3, Carter 1. Carter
Qg§;_gg,,11 the Court found the delegation particu-

larly obnoxious in a third way and for that referred

-—.

v—

11 g,!. Carter 1. Carter Coal 99,, 898 0.8. 338, 1936.

 

-

 

, 15
back to the Schechter case as precedent. In the,
Schechter case it was induired whether "trade or in-
dustrial associations or groups" could be "consti-
tuted" as "legislative bodies" to enact the laws
they deem wise." In answer it was averred that
"such a delegation . . . is unknown to our law."
These enactments, "binding equally those who assent
and those who do not assent," were "obviously" not
constitutional.13 Ihile this anomally received only
incidental reference in the Schechter Opinion it
did contribute further to the decision to declare
the N.I.R.At unconstitutional and ultimately to vast-
ly reduce the reliance on this legislative device.

Three aspects of the delegation of power stand
outt first, the-technique or the manner of delegation
of legislative power to a non-legislative agency;
second, the volume of the power so delegated in one
unit; third, the delegation to private or semi-private
agencies. These were all apparent in the Schechter
case, in addition to the bearing upon the interstate

commerce power.

1. MA-AoA. m fortified against possible
Indigig; assault. The effect of the Schechter deci-

¥

13 895 U.S. 495, 1935.

16
sion upon the A.A.A. was immediate. At the time
that the N.I.R.A. was declared unconstitutional cer-
tain amendments to the Agricultural Adjustment Act
were under consideration in Congress. In the Senate
several amendments had been accepted in committee,
amendments designed to improve the workings of the
Act. By May 37th these had gone through committee
and been referred back to the Senate. Then came
the announcement that the National Industrial Reco-
very Aot was unconstitutional. The bill was then
immediately sent back to the committee and further
amended. "Practically all the changes made after
, the bill went back to the committee were made to
put it in line with the decision in the N.R.A~ case:
said Chairman William B. Bankhead.13

These amendments fall under the two general.
classifications Of (1) marketing agreements, and
(3) processing taxes. All Of these amendments, how-
ever, Of either classification, bear quite distinct-
1y upon the question of the delegation of legislative
authority.

The powers of the Secretary Of Agriculture to

make marketing agreements were now more minutely

 

13 Congressional Record, LXXIX, p. 11031.

l7
specified. Instead Of simply delegating authority

to the Secretary of Agriculture to reduce crOps, pay
rentals and advance sums on stored produce,l4 he

was now directed in detail, rather than authorized,
to make investigations Of fact, proclaim findings, and
"hold one or more hearings and give due notice and
Opportunity for interested parties to be heard."15
Not only were the details of these powers carefully
set out, but in answer tO the charge that it gave

the Secretary arbitrary power over the farmer, the
power of initiating the agreements was left with
local groups of farmers themselvest "The only way
the powers which this confers can be brought into
play is by the action Of the producers themselves
through the marketing agreements" said L. C. Hatch.16
The word "licenses" was changed to "orders" in giving
the Secretary power to make marketing agreements;

and the Secretary could now issue orders to proces-
sors to "cease and desist" selling produce on the

interstate market.17

14 48 Stat. 31.
15 49 Stat. 750.

16 Congressional Record, LXXIX, p. 11157.
17 49 Stat. 750.

18

Not only were the processing taxes of the law
buttressed against threats implied from the Schechter
decision, but it was retroactively amended in an
attempt to make the past exercises of authority im-
mune from attack. Lest the Court impound any of the
processing tax, nine hundred milliOn dollars already
collected under the act were declared to have been
constitutionally collected.18 Any suits to collect
refunds of already paid processing taxes were like-
wise prohibited, "without remedy."19 Even the future
Constitutional fate of the law the Committee on FOres-
try and Agriculture sought to pro-determine by pro-
hibiting suits to enjoin collection. Said William
H. King:

This bill not only seeks to strengthen the legal

status of the processing taxes, but also would

bar equity suits for the recovery of such taxes

which it is claimed were unlawfully assessed.30

That this was all done in order to remove grounds
for a Supreme Court annulment Of the law because it
unconstitutionally delegated legislative power to

.the Secretary of Agriculture is shown by many state-

ments. Ellison D. Smith, chairman of the committee

 

18 Ibid.

19 Congressional Record, LXXIX, 11088.
30 Ibid.

19
to which the bill was.referred stated to the press
at the time the above amendments were added, "The
A.A.A. amendment Act seeks to plug every lOOphole
against the charge of undue delegation of power by
Congress . . . ."31

As far as any effect on these amendments Of the
interstate comnerce reference in the Schechter case
is concerned, there is almost no mention in any
source. Even the Butler case.diemissed it shortly.
It could, Justice Roberts said, "be put aside as
irrelevant," since the "stated purpose is the control
of agriculture, a purely local activity" and since
the brief of the defense did not "attempt to uphold
the validity of the act on the basis of the commerce
clause."88
While many changes had been made in the wording

of the act, there is good reason to feel that in
fact the Secretary of Agriculture exercised almost
as much unconstitutional legislative power as he
did before the amendments. Exchanging the term "or-
ders" for that Of "licenses" was the only substantial

change in the section granting this power and left
the Secretary as much in control as previously. The

wording Of the act permitted the iniation Of bene-

_ A

81 News item in the New York Times, 10:1, August
37, l935.
as United States y_. Butler, 697, 9.9. 1, 1936.-

30
fit payments at the same time that a processing tax

was levied notwithstanding repeated specifications
that "due notice" must be given and "one or more
hearings" conducted before levies could be increased
or acreage reduced.83 This superficiality was not
erased by

. . . spelling out his single act Of decision;

as first a mathematical calculation; second a

determination as an executive to spend money --

chiefly to be raised by taxes resulting from

his determination; and third the incident Of

a tax which goes into being only when he makes

his decision to spend it.83
All in all, to call it caulking legislation would
be Quite prOper, since it seemed to aim only at
plugging the leaks to save the act from Supreme
Court assult.

Nevertheless, though the changes were perhaps
more apparent than real, the Supreme COurt did not
subsequently Object to the A.A.At on the grounds
of the delegation of power. In the Butler case Of
1936 the A.A.A. was censured for permitting the
Secretary Of Agriculture to exercise a power reserved1

to the states but not for exercising legislative

power. Here the Schechter decision resulted in

 

33 48 Stat. 31.

84 Editorial in the American Bar Association
Journal, 33:63, January}, 1936.

81
eliminating a vulnerable spot in the structure of
one New Deal law. Thus the provisions about mar-
keting agreements and processing taxes in as far
as they pertained to delegation Of legislative autho-
rity were special amendments passed which modified
A.A.A. in response to the Schechter decision.

8. Powers ip.phg_0uffey-Snyder Bituminous gggl_
Lag;wer§_carefully delegated pgt_private bodies
exercised them. The effect of the Schechter Opinion
upon the Guffey-Snyder Bituminous Coal Law, passed
to fill the gap Opened by destruction of the N.I.R.A.
coal codes, can be Observed in four aspects: the
separation of the N.I.R.A. into its component parts;
the delegation Of legislative power in such a care-
fully controlled way that there was no controversy
as to approval by the Supreme Court; the inclusion,
as in N.I.R.A., Of the practice of delegating this
legislative power to bodies Of citizens who were
not salaried Officials Of the United States Govern-
ment; and a specific statement Of the relevance to
interst ate commerce.

The Guffey-Snyder coal law repeated the essence
of the coal provisions of N.I.R.A. In this way it
was like the National Labor Relations Act and less

well known laws which repeated particular provisions

88
with necessary modifications. This was a continua-
tion of the process, begun after the Panama decision,
Of the breaking up of the all-inclusive effort to
regulate the bulk of the American economy under one
ponderous law.

That legislative power in the Guffey-Snyder
Bituminous Coal Stabilization Act was carefully dele-
gated is borne out by a comparison of the two laws
and the Schechter Opinion. Over and over in the
N.I.R.A. the reQuirement of notice and hearing was
made, but it was usually emasculated by some such
phrase as that in Section 3(d); "as he shall specify."3§
Rather than directing that the President do some-
thing, it was stated that he "may" do it. One can
justifiably conclude that there was, beneath the
guise Of the law, the tacit intention to leave the
President's hand quite free to act as he would.
lhen one turns to the Cuffey-Snyder Law of 193586 in
comparison, one finds more specific limits set to the

Executive's authority.

 

85 48 Stat. l95.
86 49 Stat. 991.

83

Many provisions such as the following examples
in the two acts exhibit this distinction between con-
trolled and unlimited delegations Of legislative
authority. The statement that the Comndssion shall
have "the power and duty of hearing evidence and
finding of facts upon which its orders and action
may be predicated"37 is very different from the
statement that the President "may" hold hearings and
make findings of facts. It is significant that the
Commission had the "duty" as well as the power to do
so in the later law. Many distinctions between one
clause and another can be found, but these examples
are sufficient to illustrate the.many similar differences
between the two acts.

The efforts of Henry Iarrum, and other draughts-
men Of the law, to circumscribe delegated powers care-
fully were vindicated in the Opinion of the Court,
notwithstanding that it was declared unconstitutional.
Justice Sutherland, delivering the majority Opinion
in the Carter case, while flaying without reservation
the delegation to code authorities, apparently found
nothing about the manner of delegation itself to

 

37 Ibid.

84
criticise. The minority Opinion, written by Justice

Cardozo, flatly stated that " . . . there has been
no excessive delegation of legislative power." He
found that "the standards established by this act
are quitejilefinite. as. others that have had the ap-
proval of this Court.I88 He did not mention code
authorities.

The delegation of legislative power to code
bodies Of a semi-private nature, while such was dis-
countenanced in Schechter and criticised in Congress,
was not thereby successfully excluded from the Guffey-
Snyder law.

Technically, in the N.I.R.A., the law delegated
this power to the President. Even though trade asso-
ciations wrote the codes, he approved them and they
became valid by virtue Of his approval. His power
Of approval was not merely a matter of agreement or
or disagreement: he could ". . . impose conditions,
provide exceptions as the president, in his discre-
tion deems necessary."39 In this way the exact
phrasing of the law delegated the law-making ele-
ments of this power to the President.

 

38 398 U.S. 838, 1936.
89 48 Stat. 195, Sec. 3(a).

85
The technicality of the law leaving the appro-

val Of codes to the discretion of the President,
did not however win the approval Of the Court and
it pointed out that this language went further than
merely conferring privileges or immunities but in-
volved the coercive power of the state. Both "those
who assent and those who do not assent" are equally
bound "under the Obligation Of positive lam";o

' During the course of the summer of 1935 as the
embryo coal law was debated in Congress, the N.I.R.A.
and the Schechter case were frequently mentioned.
NO other constitutional matter in the course of these
debates was referred to as recurrently as the im-
plications which that case had for the code bodies
being built into the Guffey-Snyder law. In speaking
Of code authorities, William King said:

As a matter Of fact the philOSOphy of this bill

is that which was written in NIRA; indeed many

of its provisions are more Obnoxious to personal

and individual rights than those found in N.R.A.31
Associating code authority with price fixing power,
Senator William E. Borah said:

. . . let not those who own the natural resources

fix the prices, but let the government of the

United States itself fix the prices . . . I say

to those who are urging price fixing by private

interests y are drivin toward overnment
pr ice fixings)?“ . g g

30 295 U.S. 495, 1935.

31 Congressional Record,LXXIX, p. 14073.
33 Ibid. p. 14073. A

86
More clearly for the layman, but no more sincerely

intended were the pertinent words of Tom Connolly
of Texas who dissented from the 'theory of the N.I.R.A.I
that the Federal government should

delegate its legislative power to a group of

any particular industry and allow that industry

in and of itself to constitute a law making

body and . . . superimpcse upon the minority . . .

the burdens and the.rules and the regulations

adopted by the majority.33

Defying or misunderstanding these criticisms,

Congrese delegated to each District Board, whose
members served without compensation, the power to
"establish minimum prices.' It further specified
that each one had "full authority“ to classify coals
with regard to their Quality, sources and destina-
tions 'as it may deem necessary and prOper.' In
regard to labor the District Boards could fix "maxi-
mum hours of labor.'34 The Guffey-Snyder Act, like
the revised A.A.A., reflected in many sections the
influence of the Schechter decision but it persisted
in delegating legislative powers to private business
groups despite the denunciation in Schechter. The
‘vulnerability of the Cuffey-Snyder Act in this res-
pect was demonstrated in the Carter case a few months

later.

 

33 Ibid., p. 14066.
34 49 Stat. 991.

37

The third perceivable effect of the Schechter
decision upon the Guffey-Snyder law is upon its
interpretation of interstate commerce. It may be
recalled that Chief Justice Hughes' opinion stated,
'There is a necessary and well established distinc-
tion between direct and indirect effects.'§5 That,
is, Congress may regulate commerce within a state
if it directly affects interstate commerce. That
it was so understood in Congress is indicated by
speeches such as that of Senator Samuel B. Hill,
in which he stated, "The Court holds that if it
directly affects and burdens comnsrce, it comes
within that regulatory power.'36 The Cuffey-Snyder
law clearly stated this as a foundation: I'. . . that
all production of bituminous coal and distribution
. . . directly affect its interstate commerce and
render regulation . . . imperative.'37 Congress at-
tempted by this statement to establish the purpose
and constitutionality of the law which followed. It
was hoped that this would help to elicit more favo-
rable action by the Court. .

 

35 895 U.S. 495, 1935.

36 Congressional Record, LXXIX, p. 13443.
37 49.8tat. 991. ‘ '

28

We have herein considered as the effects of the
Schechter decision upon the Cuffey-Snyder Coal law;
first, the enactment of a separate law for the coal
industry; second, the more careful delegation of
legislative power in the form of restraints to such
power; third, the inclusion of code bodies as in
the parent law in the absence of an outright pro-
hibition in the decision; and fourth, the specifica-
tion that the coal industry directly affects inter-
state commerce. '

The futile warning in the Panama case was fol-
lowed up in Schechter and stimulated vigorous efforts
to safeguard the A.A.A. and to provide the miners
with a substitute for the N.I.R.A. coal codes. In
the case of &.A.A. most of the protective amendments
nmdified marketing agreements and processing taxes,
meanwhile accomplishing little in the_way of positive
improvement. In the case of the Guffey-Snyder Coal
Law, a well constructed law was the product, never-
theless having the fatal flaw of delegating power
to code authorities, in the absence of a specific
statement of invalidity of this feature in the Schechter

68.88 s

III. PRIVATE AGENCIES EXERCISED VASTLY
REDUCED LEGISLATIVE POWERS
AFTER THE CARTER CASE

The major effect of the Carter Opinion of May 18,
193638 upon legislation was the discontinuance of
the practice of delegating legislative authority to
non-official bodies. This had been an inherent part
of the N.I.R.A. The Schechter opinion had unspec- I
tacularly recognized this feature and it had been
continued in the Guffey-Snyder law. In that law,
Congress had given extensive powers to District
Boards which represented the coal producers. These
Boards,and the legislative powers conferred upon
them, were the casualty of the Supreme Court pen in
the Carter decision.

The District Boards were established by the
Guffey-Snyder Law of August 34, 1935. The United
States was divided into twenty-three bituminous dis-
tricts. Each district was to have a board composed
of three to seventeen members holding two year terms.
One member was to be selected by the labor organi-
zation representing the preponderant number of em-
ployees in the districts; one-half of the remaining

membership was to be chosen by a majority of the pro-

W

as 898 U.S. 338, 1936.

._v v—wi f 7‘.

vv—vfi —

30
ducers and the other half by the producers voting

on a tonnage basis. The District Boards were to
fix prices; and, in conjunction with one-half of the
union membership, establish minimum wages and maxi-
mum hours. These were subject to revision by the
Bituminous Coal Commission. A Bituminous Coal Com-
mission was instituted whose duty was to I'formulate
into working agreementsI the prices 'established"
by the District Boards. It also had this power over
the Boards' determinations as to organizations, mar-
keting, and fair methods of competition.39

It was these bodies to which legislative power
had been delegated in Iits most obnoxious form" for
it was "not even delegation to an official body pre-
sumptively disinterested, but to private persons . . . .'
The fixing of prices and wages, which were to be
decided by two-thirds of the producers was 'power
conferred upon the majority"to regulate the affairs
of the minority“ whose interests often are "adverse“
to each other.40

A comparison of the two Cuffey Coal laws of
1935 and 1937, especially in the light of the avowed
congressional purposes, demonstrates the effects of
the Carter decision on the Cuffey-Vinson Bituminous
Coal Conservation Act of 193?.

39 49 Stat.991.
40 898 U.S. 238, 1935.

31
The most significant group of changes stated

that the District Boards, whose members were selec-
ted by management and labor, would “propose“ minimum
prices, not 'establish' them as in the 1935 version.
The Commission charged with administering the act
in 1935 was directed to “formulate" these establish-
ed prices “into working agreements.'41 Now the
federal commission could “promulgate“ these'prOposed
prices" as its own decision, if it so chose.43

In several places in the act the former authority
of the boards was left out or cut down. Now, only
the Commission could issue subpoenas and have them
backed up by the Circuit Court: only the Commission
could require reports and inspect the records of the
members.43 Attitudes of Congressmen had crystalized
in the meantime and agreement on modifications seemed
to be general. _The attitude of Vinson is typical
of those expressing themselves. Referring to the
Carter and Schechter decisions he said, 'Ie have en-
deavored to meet the Court decisions.“ 'Instead of
authorizing these boards to fix the prices'I they
only 'prOpose prices, leaving them to be "established"

41 49 Stat. 991.
43 50 Stat. 73.
43 49 Stat. 991.

33
by the Bituminous Coal Commission. The latter being
an official agency of the government could validly
have the authority delegated to it to promulgate
or to 'fix prices.‘44
That the Boards now had power only to prOpose
prices and that the Comndssion would promulgate

such is attributable directly to the Carter decision.

 

44_Congressional Record, LXXIX, p. 9731.

IV. THE FARM MORTGAGE MORATORIUM CASE ACCOMPLISHED
A REDUCTION BY TWO YEARS IN THE
MORATORIUM PERIOD OF
THE NEW LAW

In May, 1935, the Supreme Court invalidated the
Frazier-Lemke Act but Congress was able, through a
slight modification, to make it acceptable to the-
Court. The purpose of this act, an amendment to the
National Bankruptcy Act, was to extend relief to
farmers faced with foreclosure of mortgages on their
farms. Under the act, a farmer could declare bank-
rupmcy and buy the prOperty on deferred payments of
up to fifteen per cent the first five years and the
balance within six years or require the.bankruptcy
court to "stay all proceedings for five years" pro-
viding he paid an annual "reasonable" rental to be
distributed to the creditors.45 The constitutionality
of this act was tested in the Supreme Court in the
case of the pguisville.Joiggl§199§_L§pg_§§gk_ggpr
m 1. Radford45 on May 37, 1935.

The crux of the issue was whether or not the
suspension of payments to the creditor, except for
the "reasonable" rental was of long enough duration

to be construed as taking his "rights in specific

45 48 Stat. 1389.

.3 Louisville Joint Stock Land Bank Co. v..Rad-
ford, 29"5"U".""’""s. 555m, 1935‘“. "' ’ "" "' """

34
property" "without compensation." If the "public

interest" requires the taking of individual mort-
gages, the Court said, then the-"burden of relief"
must be "borne by the public" through the power of“
eminent domain?7 Since the law had taken this pro-
perty without compensation it violated "due process"
of law and was held void. ‘
The sponsors of the Frazier-Lemke law rewrote
it to meet the objections of the Court, and the
new Frazier-Lenka Farm Mortgage Act was passed and
signed on August 39, 1935. The act was essentially
the same except that the waiting period was changed
from five years to three years. That the new law
yielded only two years in deference to the Supreme
Court cpinion may seem unimportant but apparently
the members of the Court were ready to admit that
farm foreclosures had become so malignant as to
now amount to a major social problem.. On March 39,
1937, the Court declared unanimously that the two
year modification was enough to meet the limitations
of due process.

w

47 Ibid.

V. SUITS TO COLLECT GOLD OR ITS EQUIVALENT
WERE PROHIBITED AS A RESULT OF
THE GOLD CLAUSE CASES

The decisions on the Gold Clause created pres-
sure which resulted in a law preventing suits to
recover more than face value on the Government's
gold promises.

A vital phase of the Recovery Pregram was the
new monetary policy of the Administration. By regu-
lating the value of money, it was believed that
commodity prices could be raised and aid lent to the
rehabilitation of industry and agriculture. On June
5, 1933, gold clauses were abolished in contracts
on the ground that they obstructed the monetary po-
licy of Congress. On Oct. 83, 1933, in his fourth
Fireside Chat to the nation, President Roosevelt
explained that the dollar was "altogether too great-
ly influenced by the accidents of international.
trade" and insisted that the nation must therefOre
"take firmly in its own hands "the matter of the
gold value of the dollar."The continued recovery of

our commodity prices" was declared to be the goal.48

 

4:: F. D. Roosevelt, Public Papers . . . , Vol.11,
p e O '

36

An element disturbing to this policy was the
Government's own and others'promises to pay in gold.
These promises permitted the holders to lay claim
first of all to the sum due in devaluated dollars.‘
They guaranteed, further, if substantiated by the
Court, that besides this face value, holders could
additionally collect the difference between the
former dollar and the devaluated dollar. Meanwhile,
holders of other promises collected only devaluated
dollars; so it was felt that this approached the
condition which can be called profiteering.

Accordingly, a rider was attached to the A.A.A.,
presently to be passed, which in the pursuit of the
monetary policy abolished private and governmental
promises to pay in gold.

The abolition of the gold clauses raised two
Constitutional Questions: one, could Congress validly
abrogate the gold clauses in existing private con-
tracts; and two, could it abrogate the clauses in
the government's own bonds and gold certificates
by which payment in gold was guaranteed. In regard
to the first question, the validity of the action
was upheld in two decisions by the Supreme Court,
February 18, 1935.49 Holders of private gold clause

 

49 Norman 1: B.&O. R.R. $2,, 394 0.8. 340, 1935.

37
contracts stood to be "unjustly enriched,"50 butthe

Court decided that because the holders suffered no
injury, they could not collect in excess of the face
value of devaluated dollars on the contracts in
question. Regarding the second question, even though
the Court decided that the provision of the law
overruling the gold obligation of the Liberty bond
was unconstitutional, damages could not be collected
because the plaintiff could not show actual loss.51
The case answering the latter question was de-
cided somewhat adversely to the interests of the
government. It is therefore to be expected that
this is the case which would have reverberations in
following legislation. It opened the possibility
of much litigation on the part of all holders of
United States' promises to pay in gold who thought
they could show damages sustained. lith the President
Congress complied, and on August 37, 1935, at the end
of the session, in the rush to finish the A.A.A.
amendments, the Guffey-Snyder Coal Law, and the new
Frazier-Lemke Farm Mortgage Moratorium Act, among
other things, before the Congressional recess, it

passed the legislation reQuested by him as Public

 

50 Robert H. Jackson, The Struggle For Judicial
Supremacy (New York: Alfred Knopf, 1949.5, p.99.

51 Perry,z. U.S., 394 U.S. 330, 1935.

38
Resolution No. 63.53 It prohibited suits for "any

gold or silver" or upon "any claim or Demand" by

"any such coin or currency" which would arise out

of "any surrender, requisition, seizure, or ac-

quisition" by the Government of "any gold or silver."
In this way, the gold clause decisions facili-

tated the passage of a law establishing the immunity

of the Government from certain kinds of suits, thus

contributing a mite to the power of government over

its citizens.

 

53 dongressiona;_Record, LXXIX, p. 13633.

VI. FRUSTRATION OF THE RAILROAD RETIREMENT
EFFORT UNDER THE COMMERCE POWER LED
TO THE BROADENING OF THE
GENERAL WELFARE POWER

The effects of the Railroad Retirement nggi
1, Alpgn_Railroad 92,53 upon legislation can be
traced through first, the expedient of dividing of
Ithat. act into its revenue and spending parts and
passing as two laws, and second, the increasing re-
cOgnition and broadening of the general welfare
power.

The Railroad Retirement Act54 aimed at pensioning
railroad employees at age 64 or after 30 years of
service. Compulsory payments by the railroads were
to be.paid into a common pool, incorporated in the
United States Treasury, and disbursements to reci—
pients were to be made from this pool. The cpinion
of the Court stated, "Thus the Act denies due process
by taking property of one and bestowing it upon
another."55 ‘The cpinion also refused accomodation

to the law*within the interstate commerce power.

 

5:5 295 0.9. 330, 1935.
54 49 Stat. 1293.
55 295 0.9. 330, 1955.

40
On August 39, 1935, Congress met the objection

by separating the compulsory payments from the pen-
sions in aspirate laws. The expedient resulted from
conversations between President Roosevelt, Attorney
General Homer Cumndngs, and Sam Rayburn who was
Chairman of the House Interstate and Foreign Commerce
Committee.55 The Carriers Taxing Act provided for
levies upon the railroads which became a part of
the general funds of the United States Treasury.
It was a simple revenue measure, the money to be
"paid into the Treasury as internal revenue" and
not particularly earmarked for pensions.57 The
Railroad Retirement Act provided pensions for rail-
road employees under the Constitutional power of
Congress to provide for the general welfare. It
was assumed that this separation of function would
satisfy the Court. Its acceptability to the Court
was never indicated, however, because it was super-
seded by new legislation which was based upon volun-
tary agreements between the railroads and paid by
them directly to their employees.

The second legislative effect of the Railroad
Retirement Act decision was the impetus given to a

*

p 32% F. D. Roosevelt, Public Papers . . . , Vol.IV,

"57 49 Stat. 974.

41
broader use of the general welfare clause. This

was manifest through the course of the Social Securi-
ty Law, the Second Railroad Retirement Act, and the
Soil Conservation and Domestic Allotment Act. The
Congress of course could not interpret it more broad-
ly; but it could hope for a broader interpretation
by the: Supreme Court and build its laws accordingly.
This is exactly what it did in regard to the general
welfare.power and this was evident in 1935 and 1936,
especially in the three laws enumerated.

The first major legislation passed following
this decision was the Social Security Act.58 This
law provided for financial aid for the blind, the
aged, and other needy groups, and for dependent
children. It encouraged state governments to pass
unemployment insurance laws by allowing credit‘up
to ninety per cent against the uniform naticndwide
tax upon employers for contributions made to approved
state compensation plans. It pledged the Federal
government to match the pensions paid by a state to
needy persons over sixty-five years of age, provided
that the federal government's share did not exceed
fifteen dollars a month. An Old Age Reserve Fund,

was created in the U.S. Treasury, out of which old-

58 49 Stat. 630/

43
age annuities ranging from ten dollars to 388.50

per month, were to be paid to workers upon retire-
ment. Another fund, sustained by payroll taxes,
provided for unemployment insurance in certain de-
signated occupations. Finally, the act provided
for grants to the states for maternal and child
health services; for welfare work with delinquent,
homeless, and dependent children; and for medical,
surgical and corrective services to crippled child-
ren. In addition, several million dollars annual-
ly was provided to help the states expand their
public health activities.

To conceive of this law as an implementation
of the general welfare power would require a broader
understanding of that clause than had heretofore
obtained. The Constitution does not mention the
specific welfare of giving pensions to the aged or
to the unemployed. These had to be justified.under
a broader power which included many welfares. Here-
tofore only those powers otherwise enumerated were
included in what the general welfare was understood
to be. Now Congress tried in two ways to prepare
for a broader interpretation of that power by, (1) ex-
plaining a constitutional basis for the law in its

statement of purpose, and by (3) broader use of

43

Federal aid to states as a furtherance of general
welfare. The purpose was specifically described
as "an act to provide for the general welfare . . .
by enabling the states to make more adequate pro-
vision [fcr these groups} . . . 3 to raise revenue . ”'59

The second way in which the nullification of
the Railroad Retirement Act contributed to broaden-
ing of the general welfare was by invoking the power
in the Social Security Act of granting aids to states
for broader general welfare purposes than those for
which it had formerly been used. The apprehension
created by that decision was expressed by Chief
Justice Hughes in the dissenting opinion, that it
denied ' . . . to Congress, the power to pass any
compulsory pension act for railroad employees.‘ 50
The shock of the destruction of social security for
railroad employees to the hatching Social Security
Law caused some casting about for a Constitutional
basis for it.

To use the technique of granting aids to states
was a very inviting solution for this problem because
it had been used very successfully for many years.

Functions which were originally considered primarily

59 Ibid.
60 395 U.S. 330, 1935.

44
of stats welfare had been, since the time of Andrew
Jackson, accomplished by the Federal government
through the granting of road building funds, educa-
tional aids and other side in lands and money which
had encouraged states to carry out-national purposes
through their own powers. Since the formation of the
Republic these had been passed on by the Supreme
Court only once, in 1933.51 There the question had
been whether or not a taxpayer could maintain suit
under the due process guarantee against an appro-
priation for the general welfare. It had been ans-
wered that there was '. . . no precedent sustaining
the right to maintain suits like this . . . .'
Since the time of this decision educational and high-
way grants had increased tremendously.

Now, shortly before the passage of the Social
Security Law, the Railroad Retirement decision de-
finitely excluded the possibility of social security
on the basis of interstate commerce as explained in
the words of Justice Roberts, ' . . . the fostering
of a contented mind on the part of an employee by
legislation of this type" is "obviously outside the
orbit of Congressional power."68 It was natural to
turn to this increasingly important source of

_

61 Massachusetts_!, Mellon, 868 U.S. 447, 1933.
as 295 U.S. 330, 1935. H

45

Federal power to find a solid base for a law which
obviously promoted the general welfare. ConseQuent-
ly, all benefits of the act except old-age pensions
were made payable by the states who were recipients
of grants-in-aid for this purpose. This, of course,
was an extended use of the general welfare power.

Both specific mention of the general welfare
in the purpose of the law and the use of Federal
aid to states for the purposes of social security
were lines along which the general welfare power was
broadened in the Social Security Act.

The Soil Conservation and Domestic Allotment
Act is the third in this series of incubating general
welfare laws. Because that law was affected more
immediately and more significantly by the Butler
case than by the Railroad Retirement decision, it is
more appropriate to discuss it in that connection.
Suffice it here to point out that the general wel-
fare was the stated purpose of the act and that it
used broadened grants-in-aid to States to accomplish
general welfare purposes as did the Social Security
Law.

One effect of the Railroad Retirement Act de-

cision was to accomplish the division of the law

46

into its two aspects before passage. Another effect
was the broadening of the general welfare power
through the series of Social Security Act, second
Railroad Retirement Act, and the Soil Conservation
and Domestic Allotment Act. The general welfare

power was to be further broadened by the Butler de-

0 isione

VII. THE BUTLER CASE EXPANDED AND ESTABLISHED
THE INDEPENDENCE OF THE GENERAL
WELFARE POWER

In declaring the AtA.A. of 1933 unconstitution-
al, the Butler case helped to effect the passage of
two laws to fill the nation's agricultural needs-
the Soil Conservation and Domestic Allotment Act of
February 39, 1936 and the A.A.A. of 1938-and it
resulted in a provision in the Rewenue Act of 1936
to minimize the loss from taxes refunded in accor-
dance with its decision. In the Butler decision,
the criticisms of the minority plus the concessions
of the majority contributed towards understandings
which ultimately made a broader interpretation of
the General Welfare clause possible.

A. The Opinion Destroyed the Law and
Had Implications for the
Spending Power.

The Agricultural Adjustment Law as it stood on
the Statute books before January 6, 1936 intended
to’do an equal service for agriculture as the N.I.R.A.
had intended for other industry! through the coopera-
tion of farmers to regulate their affairs in such
a way as to make their endeavors profitable and bring
back prosperity to the nation. Processing taxes
levied on the first processors of farm products would

finance benefit payments to raise farmers' standards

48

of living and, it was expected, would be passed on
to the consumer and thus be borne by the; nation.

The cpinion declared this law to be unconstitu-
tional in.four ways. The expenditure was unconsti-
tutional because: (1) it was being used to accomp-
lish a Federal purpose never delegated to the Feds-
ral government; (3) it was used to transgress state
powers; (3) it coerced states into compliance. The
processing tax was unconstitutional because (4) it
took property from one class and gave it to another
in violation of 'due process of law.‘

First, the Court denunced the expenditure of
tax money when it was for a federal purpose which
was originally unconstitutional. In doing so the
Supreme Court disregarded the maxim that it will not
review the constitutionality of Federal apprcpria-
tions. In the unaminous cpinion in the Massachusetts
1. Mellon case in 1983,63 Justice Sutherland had
written that the purposes to which federal expendi-
tures are to be put present no issue for judgment.
The Administration had relied on this precedent in
formulating the emergency basis for the A.A.A. of
1983 on the general welfare spending power. When it

63 362 U.S. 447, 1923.

49
came before the Court on January6, 1936, Justice
Roberts attempted to distinguish this case from the
previous case of gassachueetts g, ggllgn. The Massa-
chusetts case he interpreted to mean that as a tax-
payer a plaintiff may not challenge the validity of
expenditures because they "will deplete the public
funds and thus increase the burden of future taxa-
tion.‘ He compares that in the Butler case the
plaintiff resists not because it will deplete the
Treasury but rather only I'as a step in an unauthori-
sed plan.“ ”This circumstance clearly distinguishes
the case,‘ he asserted.64 Even though the.majcrity
decided that the Agricultural Adjustment.Act of 1933
was not constitutional, Roberts, with the concurrence
of five other justices, surprisingly conceded that
“the power of Congress to authorize expenditures of
public moneys for public purposes is not limited by
direct grants of legislative power found in the
Constitution.'55

Second, the conclusion was reached that the
regulation was unconstitutional because it trans-
greseed state powers. The majority opinion said it
was '. . . means to an unconstitutional end." The
issue was joined when Justice Stone's dissent ans-

wered that the action so induced was "a permissable

64 United States In Butler, 397 U.S. l, 1936.
65 Ibid.

50
means to a legitimate end." This deadlock demands
to be resolved. The explanation lies in the fact
that the majority saw the power of the states over
agriculture as clear and definite: since it had
not been delegated to Congress it still resided in
the states; while the minority saw this view of
state power as a "contradiction" to I'the power to
spend for the national welfareI as it rejected the
power to "impose conditions reasonably adapted to
the attainment of the end. . . .I66 The reasonably
adapted conditions here referred to were the pro-
cessing taxes and benefit payments which the majority
declared invalid because they infringed upon the
residual powers belonging to states.

Justice Stone in the dissent, concurred in by
Justices Cardozo and Brandeis, objected to this ar-
gument by citing a long list of federal expenditures
for schools, roads, vocational rehabilitation, the
practice of teaching the science of agriculture in
State universities, ,herein conditions must be met
to qualify for the funds, and questioned if these
functions must also meet disaster under the principle

now set forth by the majority. The pertinency cf

66 Ibid.

51

this answer was shortly vindicated in the passage
of the Soil Conservation and Domestic Allotment Act
which carried the line of legislative reasoning in
this direction to a further development.67
Third, the spending under this statute was un-
constitutional because it contained the element of
'coercion' in a subject over which Congress had no
authority in the first instance. To the government's
contention that it was I'voluntary" because no far-
mer was forced to comply, Justice Roberts answered,
“the price of such refusal is the loss of benefits.‘
“Purchasing“ of such compliance was thus interpreted
as "economic coercion.‘ Justice Stone's answer to
this assertion was, I'Threat of loss, not hope of
gain, is the essence of economic coercion."68
Fourth, the processing taxes were an essential

part of the A.A.A.. In the cpinion, the-levy was
declared to "lack the quality of a true tax"69 be- _
cause it took the prcperty of one class and bestowed
it upon another "without compensation.‘ This aspect
merits only passing attention here as it was sterile
of legislative effects.

67 Infra. p.52.

68 397 U.S. l, 1936.

69 897 U.S. 110, 1936.

58
Having considered the decision in these four major

aspects which pertain to the expenditure and the
processing tax, it is now fitting to consider the
effects of the Butler decision upon legislation.
B. The Base of the New Agricultural Law
[as Changed to Conservation

The effect of the Butler decision upon the Soil
Conservation and Domestic Allotment Act was to broaden
the usage of the general welfare power in three as-
pects. The first of these was to make soil conser- '
vation the major purpose of the act; the second
was to extend the device of making grants to states
for purposes of the general welfare to include soil
conservation and crop adjustment payments as not
done heretofore; and the third aspect was the mat-
ching of all this into a long range plan for the
nation's farmers.

This law was based directly upon soil conser-
vation. The agricultural law destroyed by the But-
‘ ler decision had been for the purpose of bringing
the prices of agricultural produce to 'parity' with.
other comnndities.70 The Soil Conservation and
Domestic Allotment Act could "curb production some-

what by means which at the same time deal with

 

7O 48 Stat. 31.

53
another agricultural problem": the reduction of

craps and payment of benefit checks to farmers.71
Now, however, this was only an indirect effect, the
direct purpose stated, being, ". . . to promote the
conservation and profitable use of land resources

. . . ."73 This made soil conservation the major
and prices of farm products minor purposes of the
act.

Grants to states were now to be the medium by
which new general welfare purposes were to be ac-
complished. In the Railroad Retirement case, this
process had been started.73 The Social Security
law was now functioning through payments of grants-
in-aid to states. The general welfare clause was
a promising source of power. Justice Roberts in the
Butler decision had declared the control of production _
in agriculture to be "regulation of a subject rs-
served to the states."74 The Report of the House
Committee on Agriculture on the Soil Conservation
law observed, "The Supreme Court recognized in the
Butler Case that Congress could spend public moneys for
the general welfare."75 Now; upon writing the law,

71 Henry A. lallace, "The Next Four Years in
Agriculture," New Republic, 89:133, Dec.3, 1936.

73 49 Stat. 1148.
73 Supra. p. 43.
74 397 U.S. l, 1936.

75 Vital Speeches- lseRR.

54
the purpose further stated that "Federal aid to

states for such purposes" was to be one of the means
by which Conservation was to be achieved.76 For
planting soil building crops; for plowing or drainage
to prevent erosion and for other soil conserving
practices states were now given grants from which
to make benefit payments to complying farmers.

The change to the basis of conservation in the
Soil Conservation Act of necessity demanded plan-
ning over a longer cycle than for only crap control
payments as in the act of 1933. This likewise ex-
tended the use of the general welfare power. Upon
signing the act, President Roosevelt had indicated
his understanding that the Butler case ". . . had
the effect of hastening this transition from the
emergency phase to the long time phase which had
been planned."77' The act which he then signed ex-
pressed as part of its purpose, ". . . providing for
a permanent policy . . . ."78

In analyzing the Soil Conservation and Domestic
Allotment Act for the effects of the Butler decision,

consideration has been given to first, the change

76 49 Stat. 1148.

77 F.D. Roosevelt, Public Papers.
78 49 Stat. 1148.

O O ’

Vol.1V,P.437.

55
to the basis of soil conservation; second, the use

of the device of grants-in-aid to states for making
expenditures for the purpose; third, the innaugura-
tion of a long-term policy. In the case of this
law, the effect of the Butler decision was to great-
ly enhance the importance of the general welfare
power in each of these aspects. How suitably the
constitutional issues in this law had been handled
was indicated by the House Committee-on Agriculture.
in its-report of approval, wherein it was observed
that Justice Roberts" statement had "reocgnized"
that "Congress could expend public moneys for the
General Welfare" and that "a more necessary or ap-
propriate field . . . can hardly be imagined"79 for
promoting the general welfare.
C. Windfall Taxes Minimized the Loss due
to refunding illegal collections

After the Butler case, and an associated case,
had declared the processing taxes unconstitutional
and subject to refund, the Administration sought
to minimize the disaster to the nation's budget that
would result upon the refunding of such taxes.

To finance the program of crOp reduction, the

A.A.A. had imposed a processing tax on the first

79 Vital Spgeches, 15:86.

56
domestic processor of the products covered by the

act. The Court declared that the taxes regulated
agricultural production- a right reserved to the
states and that these taxes were beyond the scope

of congressional authority because the levies im-
posed were nct really taxes, since they were exacted
for the benefit of a particular group, rather than
for the general welfare.

Immediately there was a demand for the refund
of almost a billion dollars in taxes which had been
collected. Before the way was cleared for this, how-
ever, it was necessary that the amendments passed '
after the Schechter case be invalidated. It will
be recalled that one of the amendments forbade suits
to obtain a refund of taxes collected under the act.
In the unaminous decision, Richert gigs Mills, gag, v.
Fontenot, the Court ordered the. refunding of the
processing taxes, saying that the amendments of Au-
gust 34, 1935, did "not cure the infirmities of the
original act."80 The repayment of this colossal
sum was thus made necessary. .

The inclusion in the Revenue Act of June 22,
1936 of a provision to lessen the impact on the

national economy of the refunding of these taxes

 

SO Richert Rice Mills Inc. v. Fonpgpot S97
mam-’15, 36‘". m "'"" " ’

57
was effected as a result of the Butler case. The

Administration, determined that the processors should
not profit by refunds of processing taxes, included
the provision imposing an eighty per cent "windfall"
tax on all processing taxes recovered from the govern-
ment. The refund was only to the extent that the
processors actually bore the burden of taxation.
They had to prove that they had not shifted the bur-
den of the tax by passing it on to their customers
through an increase in price. The constitutionality
of this provision of a "windfall" tax was affirmed
by the 8 to 1 decision handed down by the Supreme
Court on May 17, 1937.81

D. The Passage of the Marketing features

rounded out agricultural Legislation

The Soil Conservation and Domestic Allotment
Act was followed by the A.A.A. of 1938, a more in-
clusive compulsory control act based on the effect
of agricultural production upon interstate commerce
and spending for the general welfare. The purpose
of the act is stated in part:

. . . To regulate interstate and foreign commer-

celbf specific producttho the extent necessary

to provide an orderly adequate and balanced flow

of such commoditie , in interstate and foreign
commerce . . . .8

 

81 Annigtgp_u1g, Q9, 1, Davis, 301 U.S. 337, 1937.
as 53 Stat. 31. u

58

Fearing that since.the Supreme Court had de-
cided against so many New Deal laws because they
attempted to regulate intrastate matters, the Ad-
ministration wisely waited until the Court indicated-
its willingness to accept a broader concept of inter-
state commerce clause before passing the law. The
affirmative decision in the N.L.RuAt case in 1937
showed this willingness. Here it was decided that
the "flow" of interstate commerce was not the only
locus of transactions which could be regulated, but
Congress can control activities ". . . if they have
such a close and substantial relation to interstate
commerce that their control is essential or appro-
priate to protect that commerce from burdens and
obstructions."83

This language.gave the lawmakers courage to go
ahead with further legislation, and accordingly
new production and marketing provisions were added
to the Soil Conservation and Domestic Allotment Act.
Significantly, as above Quoted, the 1938 act declared

as its purpose, among other things, to regulate com-

meroee

83 301 U.S. 1, 1937.

59

Several differences from the earlier A.A.A.
were noticeable. The objectionableproceesing taxes
so oritized by the Court were deleted from this
later act. Likewise, it contained no production
Quotas which obviously, since the Butler case, could
not be brought in under the intrarstate commerce
power. Instead, a farmer could now produce all he
wanted, but could only sell on the market his Quoted
share of the comnmdity. These minor changes, however,
were in addition to basing the law on the interstate
commerce clause. All these responses to the Butler
decision in both the Soil Conservation and Domestic
Allotment Act and the production and marketing Amend-
ments of 1938,thereto, had the effect of providing
a law which still ultimately brought to the farmer
essentially the same benefits as the former A.A.A.,
but in a legally different form.

From the foregoing analysis, it is necessary to
observe that, while the Butler decision destroyed
the A.A.A. of 1933, it had the very constructive
effect of broadening the interpretation of the "gene-
ral welfare“ clause---a.necessary instrumentality to
the formation of future New Deal legislation. It

also effected the change over from a temporary farm

pragram to a long range permanent one in the form
of the Soil Conservation and Domestic Allotment

Act and the A.A.A. of 1938. Lastly, it created the
necessity for additional legislation to partially
recover funds lost through the refunding of pro-

cessing taxes-collected under the first A.A.A.

VII. PROPOSED LEGISLATION TO PACK THE COURT
IS PASSED AS IMPROVED LEGISLATION

A secondary effect of the adverse court decisions
appeared in the effort of President Roosevelt to re-
organize the Supreme Court in 1937. Although an-
°nounoed as a device to compensate for incompetency of
the aged justices it was in fact prompted at least
in part by a desire to persuade anti New Deal justices
to retire. The prcposal inaugurated a legislative
process which finally accomplished some positively
beneficial reforms. These reforms were the Supreme
Court Retirement Act, providing for the retirement
of aged justices after years of public service, and
the Judicial Procedural Reform Act, pertaining to
the. expediting of justice in the Federal Courts.

The President worked out a court reorganization
plan with Attorney General Homer 8. Cummings.end
Solicitor General Stanley Reed and presented it to
Congress. Many believed that this was done because
the Supreme Court had prevented the carrying out of
his New Deal measures. He began by suggesting that
Congress reorganize the Judiciary "in order that

it . . . may function in accord with modern neces-

63
sities.'34 After dealing with the effects upon

government and private interest of overburdened and
superannuated judges and discussing the infirmities
of age of justices and the need for a 'omstent and
systematic addition of younger blood. to 'vitalize
the courte,'35’the.bill prcposed an increase of one
judge, in all Federal courts, for each incumbent
over seventy years of age who did not retire as the
existing law permitted. It limited new Supreme Court
justiceships to six. Other provisions of the bill
were directed towards making the 'judiciary more
elastic by providing for temporary transfer of . . .
judges to those places where Federal courts are most
in arrears,“ furnishing the Supreme Court I'practical
assistance in supervising the conduct of business

in the lower courts,“ and eliminating '. . . delay
now existing in the determination of constitutional
Questions involving Federal statutes."86 The Presi-
dent claimed that this reorganization would make un-
necessary any fundamental changes in the power of
the courts or in the Constitution for he was.con-

vinced that the negative decisions were dictated by

 

84 F.D. Roosevelt, Public Papers . . .,Vol. VI,
pp. 51-59.

85 Ibid.
86 Ibid.

63

the conservative bias of many of the judges. At a
later date, he explained his attitude at this timet

The reactionary members of the Court had .

apparently determined to remain on the

bench as long as life continued-«for the

sole purpose of blocking any program of

reform.8

This prcposal met with opposition from most of
the Republicans, many of the Democrats, Supreme
Court justices, and the general public. Ex-Presi-
dent Herbert Hoover accused President Roosevelt of
trying to pack the Supreme Court.88 The Democratic
Party split over the issue, with opposition coming
from the Southern Democrats and some liberal Demo-
crats, led by Senator Burtm K. Iheeler. It was a
part of the strategy of the Opposition to defeat the
packing feature by passing the Supreme Court Retire-
ment Act, on March 1, 1937, of which Justice Van
Devanter later took advantage. This did not stop
the President in his efforts to get the reorgani-
zation bill passed. On March 9, in a radio address,
he got to the heart of the problem, saying, 'ls want
a Supreme Court which will do justice under the Con-

stitution—-not over it.-89

 

8? Franklin D. Roosevelt, 'The Fight Goes On,‘
0 lliers' (September 80, 1941) p. 17.

88 Herbert Hoover Addresses u on the American
Road-1933-1938, (Scribner, New Tor , l§§§3 p. 150,

89 F.D. Roosevelt, Public Papers ,_,_,,,vo1.v:, p.97,

64
lithout referring to the President's motives
behind the court packing proposal, the Chief Justice,
in a letter to Senator Wheeler, indicated his reaction

to the plan:
An increase in the number of Justices of the
Supreme Court, apart from any question of policy,
which I do not discuss, would not promote the
efficiency of the Court. It is believed that
it would impair that efficiency so long as the
Court acts as a unit. There would be more judges
to hear, more judges to confer, more judges to
discuss more judges to be convinced and to
decide.90
He also added:
It must also be remembered that justices who
have been dealing with such matters for years
have the aid of long and varied experience in
separating the chaff from the wheat.91
The Senator used this letter in presenting his ar-
gument to the Senate Judiciary Committee which
analyzed the bill. In June the Committee returned
an adverse report on the plan.

Several factors or combinations of factors en-
tered into the defeat of the reorganization bill.
First, the need for reform was lessened by the four
affirmative decisions (on the Washington Minimum
Wage case, the second Frazier-Lemke Farm Act, the
National Labor Relations Act, and the Social Security
Act) which were handed down by tn: Court between the

1936 election and the pigeonholing of the bill in

_‘

90 News item in the New York Times,86:l, Nar.33,1937.
91 Ibid.

65

July, 1937. In this election was proven the over-
whelming support of the voters for the New-Deal
program. Immediately thereafter the decisions in-
dicating changed views were evidenced. One might
conclude.from this that Charles E. Hughes and Owen
Roberts read.the.writing on the wall and determined,
even at the sacrifice of traditional concepts, to
save the Court and the nation from disaster. Especial-
ly, it is possible, they may have been interested I
in taking the edge off'any resentment.farmers.amd
laborers felt against the Court by now validating
class legislation beneficial to theme All this
mounting coercion in the spring of 1937 conspired
to detract from the need for the-Reorganization law.

The second factor contributing to the defeat of
the bill also detracted from the causative need for
it. This was the President's opportunity to make
his first appointment to the bench due to the re-
signation in the early summer of the arch-conser-
vative, Iillis Van Devanter. This provided the cove-
ted opportunity of the President's desire, besides
bringing one more liberal, one less conservative,
vote, it was hoped, to the bench. As to Justice Van

Devanter's conscious contribution to lessen the need

for the bill, Robert H. Jackson suggests:

66
What planning preceded it has never been re-

vealed, but it was so perfectly timed as a stra-
tegic move that it seems unlikely to have been
accidental.93

Third, the President's most ardent and influen-
cial backer to the plan, Senator Joseph Robinson,
died. At the time of his death, Senator Robinson
was striving to press through the Senate a modified
plan which would allow the President to appoint
two additional Justices to the Supreme Court instead
of six. Even this attempt was now lost.

Fourth, the.President's indiscretion in empha-
sing the age of the judges as the factor in blocking
reform contributed to this 'lost battle which won
a war.'93 He reflects:

I made one major mistake when I first pre-
sented the plan. I did not place enough emphasis
upon the real mischief--the kind of decisions
which, as a studied policy had been coming down
from the Supreme Court.94

All of these factors, the affirmative decisions,
the election, the strategy of Justices Roberts and
Hughes, Justice Van Devanter's retirement, the death
of Senator Robinson, and the President's failure to
emphasize the 'real mischief; had a bearing upon the

defeat of the Bill to Reorganize the Judicial Branch

of the Government.

k

93 Robert H. Jackson, Th2 Struggle . . . , pp.l9S-3.
93 Roosevelt, Public Papers . . . , V01.VII, p.185.

94 Roosevelt, “The Fight Goes Onf,p. 37.

67
Even though the court-packing bill itself was

set aside, certain beneficial results came from it

in the form of two new laws. The first, the Supreme
Court Retirement Act,95 passed on March 1, 1937,
provided that a justice could retire on full pay,
after years of service, at the age of seventy, main-
taining his judicial status, rather than resign. On
June 3 of that year, at the end of the current session,
Justice Van Devanter retired; his retirement was
followed by that of Justice Sutherland in January,
1938. It is interesting to note that within three
years of the court packing prcposal, President Roose-
velt was able to place on the Supreme Court bench

a majority of six justices.

After the death of Senator Robinson, Vice Presi-
dent John Garner took over the lead of the reform
bill and struck out the President's proposals for
Supreme Court reorganization, leaving only procedural
changes. These changes were incorporated in the
Judiciary Procedural Reform Act, passed on August 34,
1937.96 Instead of single judges of lower courts

issuing injunctions on constitutional grounds, such

 

95 50 Stat. 34.
96 50 Stat. 751.

68
actions were to be tried in courts composed of three

judges, including at least one circuit judge; in-
junctions were to run for only sixty days; and
appeals to the Supreme Court were to be expedited.
The law further specified that judges in the inferior
courts could not pass upon constitutional questions
in litigation between private parties without giving
the Government notice of such impending issues.
Finally, it stated that Federal Courts were required
to notify the Attorney General whenever the consti-
tutionality of an act of Congress was drawn in Ques-
tion, and the Government was allowed to intervene

as a party for the presentation of evidence and ar-
gument on the matter of validity. It is mmportant
to note that this law installed reforms which would
prevent the arising of such a situation as had made
the constitutionality of several acts of Congress
doubtful for as much as two years.

From the foregoing analysis, it can be observed,
that arising out of a need to overcome the Supreme
Court's obstruction to his New Deal prOgram, Presi-
dent Rooeevelt's plan to reorganize the judiciary

led to some needed changes in legislation.

IX. A CHANGED COURT

For two years the Administration and Congress
had been forced to modify legislation to meet Court
objections but in 1937 the Court began to change its
position and thenceforth the "doctoring" of legis-
lation was unnecessary. The changed position of the
Supreme Court was notable in (l) the New York Unem-
ployment case, (8) the Washington Minimum lags case,
(3) the second Frazier-Lemke Law, (4) the National
Labor Relations Act case, and (5) the Social Security
Law case.

The first official sign that the Court would re-
verse itself was on November 33, 1936. On that date,
it handed down what came to be known as the New York
Unemployment Act decision,97 which was in reality an
inconclusive preliminary testing of the Social Security
Law. Split decisions had been common, with the four
more or less consistently voting on the liberal side.
Now, one of the liberals, Justice Harlan Stone, was
absent. The vote, however, showed that there were
still four who were willing to agree that precedent
set in the Railroad Retirement case "is not appli-

 

97 B99 U.S. 515, 1936.

we
cable" and that notwithstanding a contradictory

statement of the minority as to that precedent and

as to the due process limitation, upon taxation, it
"deprives ' no ''employer of his property without

due process of law.'98 Inasmuch as Railroad pensions
had been previously rejected because a contented

mind bore no real relationship to interstate commerce,
one might expect the justices to vote against the
present New York law, passed in pursuit of the national
Social Security Law.

Since there was a tied vote, there was no de-
cision; and since there was no decision, there was
no opinion. The decision and opinion of the New
York court stood unchanged and the record did not
show how each Supreme Court Justice had voted, but
it did raise the question as to whohad switched
sides. That this passive concession to a New Deal
law was not considered to be very much of a gain by
the Administration is shown by the Roosevelt state-
ment:

We do not ask the Courts to call non-existent
powers into being, but we have a right to expect

that conceded powers or those legitimately im-

plied shall 83 made effective instruments for the
common good.

98 Chambgrlain g, Andrews, 371 N.Y. 1, 1936.

p. 62%.! D. Roosevelt, Public Papgrs . . . ,Vol. V,

71
The first victory of the liberals came on march

89, 1937 when the Court upheld the right of the State
of Washington to set minimum wages for women.100
This was a direct reversal of the decision nine
months previous in the New York Minimum lags case,
which had simply followed the Adkins case, invali-
dating a statute to set minimum wages because it do“
prived the employee of his 'freedom of contract.“
In the Washington case, however, ''the health of
women" wasconsidered of superior importance to the
"public interest" as their 'necessitous circumstances“
were exploited by "unscrupulous and overreaching
employers." Here, 'freedom of contract' was explain-
ed to be "a Qualified and not an absolute right.“

On the same date, the second Frazier-Lemke Law
was validated. This, however, was after it had
been rewritten with changes which reflected the
opinion invalidating the former act. But one may
reasonably question whether the reduction of the
moratorium period from five years to three was suf-
ficient to transform unanimous opposition into un-
animous approval. It was, however, the validation
of an important Federal law and was followed closely

‘—

lOO Parrish 1, West Coast Hotel, 398 U.S. 587, 1937.

73

by two more decisions which firmly established two
important New Deal laws.

On April 13, 1937, the National Labor Relations
Act was validated in a.direct reversal of the Court's
previous stand on the comerce clause.101 The vote
was five to four. Hughes and Roberts both voted
with the liberals. This was the first Supreme Court

 

case wherein interstate commerce.was so construed i
as to include labor. It was herein pointed out, “It
is the effect upon commerce, not the source of in-
jury which is the oriterion.'103’ Commerce was con-
sidered as a I'streanm! Influences.effeoting the flow
of this stream adversely was considered as having
the undesired “effect." This was a broadening of the
interstate commerce clause not familar in the Schech-
ter or Carter cases. It was a reversal of the.'dirsct
or indireot'I effects concept which had determined
unoonstitutionality in those cases.

On May 34, 1937, the Social Security Law was vali-
dated.103 Doubt as to the constitutionality of this
law had been in the minds of many since the invali-

dation of a similar measure, the Railroad Retirement

 

101 mEae’ p. 13.
108 301 U.S. l, 1937.
103 301 11.8. 619, 1937.

73
Act.104 In order to obtain a five to four decision,

Justices Hughes and Roberts both had to vote with
the liberals. That the unemployment insurance tax,
provided for in the law, serves the public interest
and does not violate the due process of law was de-
cided.105 The federal tax on employees and employers
for old age pensions was also declared valid as the
right of the federal government to tax for the general
welfare. In this opinion, Mr. Justice Cardozo ex-
plained that the needs filled in the law were I'inter-
woven. . . with the welfare of the nation.‘ The
problem is 'plainly national in area and dimensions,"
and therefore 'only a power that is national' is
competent to satisfy the 'interests.of all.'105 This
was the type of Opinion which the new majority de-
cided to support. I

We have traced through the cases in which this
change in the Court was manifested. There was first
of all the inconclusive validation of Social Security
in the New York Unemployment case. Then the Iashing-
ton Hinimum Wage case validated the setting of mini-
mum wages for women. Next the interstate commerce

104 Supra., p. 39.

105 301 U.S. 619, 193?.

106 301 U.S. 548, 1937.

74
power was determined to extend to labor in productive

industry in the N.L.R.A~ case. 'The Social Security
case broadened general welfare. These cases were
events along the way marking the progress of the

Court in its new role of validating New Deal legis-
lation.

X. SUMMARY

The effects of adverse decisions upon subse-
Quent legislation run through many different laws
after 1934.

After a prior warning in the Panama case, the
Schechter case inaugurated a movement to improve the
A.A.A. and to pass the first Cuffey Coal Law; This
was done with some consideration for delegating legis-
lative power more carefully than had been done in
the N.I.R.A., the predecessor to those laws.

The Frazier-Lemke Law was modified as a result
of the decision in that case by two years in the
waiting period before foreclosure would take place.

The Railroad Retirement case, like the Butler,
contributed to the broadening of the general welfare
power. It occasioned a new Railroad Retirement Act
divided into its two component parts and encouraged
the implementation of the general welfare clause
in the passage of the Soil Conservation and Domestic
Allotment Act.

The Gold Clause decisions instigated a Joint
resolution that private or governmental promises

to pay in gold could not be enforced for more than

the current value of the currency.

 

76
The Carter decision resulted in a new Guffey

Coal law which was modified over the earlier law in
a few ways including that sub-legislation decided
upon would be only recommended by two-thirds of the
miners and promulgated as law by salaried officials
of the government, Operating as a Coal Commission.
This Opinion presaged the N.L.R.A. by indicating
that some other kind of effect than 'direct' could
justify Federal regulation in the interest of inter-
state commerce.

The Butler case can claim greater influence
upon the general welfare clause than any other case.
In fact this was the first time it was ever official-
ly interpreted. This case.instigated the passage of
the Soil Conservation and Domestic Allotment Act and
‘ later the amendments to this act, which tagether
formed the 'A.A.A. of 1938." The former act was
likewise based on the general welfare power largely,
as a result of the Butler case. It also made neces-
sary the "windfall" tax on refunds of money uncon-
stitutionally collected under the A. 11.11. of 1933
and ordered refunded by the Court. I,

Despite efforts by Congress to rewrite laws to
meet objections of the Court, a great handicap was

placed upon efforts of the New Deal Administration

77
to pass legislation deemed necessary to relieve the

depression. The President and other leaders in the
administration determined to discipline the Court.
This resulted in the "Court-packing fight," during
which time the Court started to reverse some of its
objectionable decisions, forestalling the actual
"packing! bill but still not interfering with the
passage of positively beneficial but uncontroversial
improvements in Court organization and procedure,
which grew out of the threat to pack.

The major reversals of this period were those
validating the Social Security and National Labor
Relations Laws. These two cases broadened both the
general welfare and interstate commerce clauses which
tOgether with the expansion of the taxing power were
the three greatest sources of expanding power upon
which the New Deal and an enlarged Federal Govern-
ment thrived.

Thus the Court compromised in more liberal in-
terpretation at the same time that Congress had been
busily engaged in rewriting and revising its unsatis-
factory laws. Out of both these compromises the
'packing' plan was obviated, legislation was modi-

fled to suit the changed judgment of the Court making
possible thereafter the passage of new 'sooial legis-

78

lation.‘ In the meantime, the separation of the
powers and other foundation stones of government
remained intact to permit government under the Con-

stitution to continue.

B IBL IOGRAPH ICAL ESSAY

 

XI. BIBLIOGRATHICAL ESSAY

3.115921 shades

The Supreme Court Reporter, Vols. 893-302,
United §t§§§§ Statutes at Large, Vols. 48, 49, and
50, the anbrgggign§l_fipggrg, Vol 79, and Franklin

' D. Roosevelt, Public £§p§g§,andnddresseg g; franklip,

 

 

Q. Roosevelt, Vols. I‘VII(New York: Random House,l938)
have been indispensable to this study. The latter

is instructive as well as authoritative. The like
cannot be said of all those supposed to be intimately
associated with these developments. Homer 8. Cum-
mings, Selected Papers, Ed. by Carl Brent Swisher,
(New York: Charles Scribner's Sons, 1939) is valuable
for general insight into the workings of political
machinery but surprisingly scanty in specific material
suitable to the purpose in hand. The various writings
of Congressman John Dickinson such as ”Defect of

Power in Constitutional Law," Temple Lag, artgglyg
June, 1955, can be classed with those of John Andrews
as in the American gabcr Legislative Review, June,
1935, "Delegated Labor LegislatiOn unharmed by Recent
Court Decisions." While the latter concerned himself

with labor which was a recipient of special legislation

81
growing out of these decisions, his writings are
useful in showing that the N.L.R.A. was created by
other forces, even though agreeing with the general
pattern of legislation in 1935 and 1936. Both these
writers have been especially prolific on the dele-
gation of legislative powers. A considerable amount
of literature has come from the men who were actively
engaged in the struggle. Scattered articles by
Senator lilliam E. Borah, Senator Burton K. [healer
and other Congressmen have been specifically valuable
but are not plentiful. Statements by the Congressmen
to the press were sometimes pertinent. Henry A.
Wallace, flhglgbggpggigggiggj (New York: Reynal and
Hitchcock, 1936) and other works are barren of Con-
stitutional material but they do present New Deal
agricultural cpinion. Raymond Holey, ;;§§£_§21§g_
Eg§£§,(New York: Harper and Brothers, 1939) is useful
as a critic of the Administration and for interesting
sidelights of Washington life. There is a special
dearth of writings by members of the Supreme Court
bench during or after the critical period. One out-
standing exception is Owen J. Roberts, 1133 9.9.1.2}. and
§hg_Constitution (Cambridge: Harvard University Press,
1951) which offers an excellent analysis of dual

 

83
federalism and is written by a key bench figure.
Franklin D. Roosevelt, “The Fight Goes On,‘ Collier's
(Sept. 13, 1941) is valuable for explanations of the
Court fight in the President' own words.

ng§;.and Constitutiggal_§ggkg.

Edwin S. Corwin, Constitutional Revolutiog, ng,,
(Claremont, Calif.: Claremont Colleges, 1941) explains
with special clarity the critical importance of the
Carter and Butler cases. Robert H. Jackson, ghg_
Struggle Egg.ggdigi§l_8upremacy, (New York: Alfred
Knopf, 1941) is an excellent book, both for eluci-
dation of complexities and as an authority on personal
and political aspects as they appeared to a defen-
ding attorney of government laws. Robert E. Cushman,
Thg_lndependent Rpgglggggy_00mmissions (New York:
Oxford University Press, 1941) is valuable for many
angles which explain developments in the delegation
of legislative power. Charles A. Beard, Publig Pglioy
§gd_ghg_General Welfare (New York: Farrar and Rins-
hart, Inc., 1941) gives a systematic development of
the rapidly expanded general welfare power. Charles
P. Curtis, nggg_ggdg£_thg_Throne, (Boston: Houghton
Nifflin Co., 1947) is unique in presenting an imagi-
native picture 01 *hil Period of Constitutional strife.

 

83 .
C. Herman Pritchett, Thg_Roosevelt ggggg, (New York:
The Macmillan Co., 1937) is excellent in describing
the forces of change in the Court. Samuel J. Konefsky,
Q§_i_e_f_ Justice Q1223 and 1.113 Supreme 993.131 (New York:
The Macmillan Co., 1945) is valuable in presenting
the contribution of the later Chief Justice to changes
in Court interpretations. Samuel Handel, Charles
Evans Hughes ggd_§h§.§up;§mg.ggg££_(New York: King's
Crown Press, 1951) gives great credit to the leader-
ship of the Chief Justice in strategically persuading
the key personalities of the Court.

La1.Periodicals

The American Bar Associatign_Journal of 1935,
1936, and 1937 have been invaluable sources of legal
material. Political Science anrterly gives perspec-
tive which shows the setting of the Supreme Court
Conflict and development in the general pattern of
government. The Temple L§g_ggarterly, Columbia Egg.
Review, Marquette Law Review, X§l§_§§!_Review, and
similar journals of this period provide in their edi-
torials, articles and reports a running commentary

on the debates.

Special Works 93 Particular AspeCts
Edwin G. Nourse, et. al., Three {ears g£_the A.AA.

 

84
(Washington, D.C., The Brookings Institute, 1937)
is a readable and reliable source for agriculture.
R.H. nger, The National Bituminous gg§l_Comnission;
Administjgation _o__i_‘_ m Biguminous $293; _A_c__t_, 1111-1221.
(Baltimore: John Hopkins Press, 1941) Vol. 49, stands
in the same relation to the coal industry. Herbert
C. Hoover, Addresses upon the Americ§%§91933- 1938,
(New York: Charles Scribner‘s Sons, 1938) is an ex-
cellent book for its refreshing readability and as

an out-spoken conservative.

Pomlar Period icalg

Th§_Christian Science Egggggg_has many profound
editorials, reports, and articles pertaining to the
Supreme Court. The Ngg,lgg§_1;ggg_liets the day
to day deve10pments and is useful in tracing the con-
tinuity of developments. Eiisl Speeches and the
Congressional Digest contain many critical articles
which serve to enlighten issues. Fortune, The, nals
g£_§hg_American Academy, gggg_Magazine, and other -
popular periodicals have been used.

General Histories

The best background work on the Supreme Court
is Charles Warren, The Supreme Court ;g_United States

 

85
History. The writer considers the best general history
of this period to be Charles A. and Mary R. Beard,
America ;p_ggdp§§§gg§,(New York: The Macmillan Co.,
1939). For the Roosevelt vieWpoint, Dwight L. Dumond,
Roosevelt_tg’goosevelt is quite stimulating. David
Lawrence, Ngng_Honest Egg, (New York: D. Appleton-
Century Co., 1936) is an excellent little handbook
of general New Deal history which places lucid empha- .
sis upon Constitutional issues. Drew Pearson and
Robert Allen, Nin§_glg_ggg, (Garden City, N.Y. :
Doubleday, Doran, and Co., 1936) is excellent to show
anti-Court viewpoints. Dean Alfange, 1h: Supreme
ggggg and the National.flill, (Garden City, N.Y. : Ki
Doubleday, Doran and Co., 1937) is immaginativefand
stimulating philosophical writing on theLmission in
government of the Court. Amherst College,‘Dept.tofkfi

American Studies, New Deal Rev01ution 9; Evolution,

Problems 3g American Civilization Series, Ed. Edwin

 

a
C. Rozwenc, (New York: Heath, 1949) isAsmall critical

volume reprinting analyses by outstanding historians.

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