CHAPTER 14
THE GREAT SURRENDER
AND THE
RECONSTRUCTED SUPREME COURT
"I do not charge the Judges with willful and ill-intentioned error; but honest error must be arrested, where its toleration leads to public ruin. As for the safety of society, we commit honest maniacs to Bedlam, so judges should be withdrawn from their bench, whose erroneous biases are leading us to dissolution. It may, indeed, injure them in fame or in fortune; but it saves the Republic, which is the first and supreme law." Thomas Jefferson.
Looking back to the 1933 Term, to gain a fair perspective on the Supreme Court's surrender at the 1936 Term, one finds there a tendency to sustain legislation framed to alleviate critical economic conditions. In Home Building & Loan Association v. Braisdell,Footnote1 decided January 8, 1934, the Court sustained the Minnesota Moratorium Act and thus approved reasonable state legislation designed to give certain debtors an extension of time for payment of their obligations. Then on March 5, 1934, in Nebbia v. New York,Footnote2 the power of New York to regulate retail milk prices was upheld. These decisions, it should be noted, dealt only with state power, but they argued well for federal regulatory legislation.
1934 Term
At the October, 1934 Term, however, federal legislation met with reversal at the outset. On January 7, 1935, the Panama Refining Co. v. RyanFootnote3 decision invalidated federal control of petroleum production because of undue delegation of legislative power of the executive. On February 18, 1935, the Gold Clause casesFootnote4 were decided. The power of the federal government to abrogate gold clauses in private contracts was held valid. The action of the government in abrogating the gold clauses in governmental contracts, however, was held unconstitutional, but since the holder of the government obligation could not show damage he was not entitled to recovery.Footnote5 On May 6, 1935, the Railroad Retirement Act was invalidated by a 5-4 decision.Footnote6 The majority opinion was devoted principally to a demonstration that particular features of the pension act violated the due process clause of the Fifth Amendment, but it went further and denied that Congress had the power, under the interstate commerce clause, to enact any compulsory pension act for railroad employees. Congress did pass a second railroad retirement act shortly after this decision, and then in 1937 a third act, which was drafted by the railroads and the employees. On May 27, 1935, the Court pronounced a benediction over an economic collapse when it "Schechtered" the National Industrial Recovery Act.Footnote7
1935 Term
On January 6, 1936, following its established technique "to lay the article of the Constitution which is invoked beside the statute which is challenged and to decide whether the latter squares with the former," the Court found that the Agricultural Adjustment Act control of agricultural production was unconstitutional because it exceeded the limits of the taxing power.Footnote8 Then on May 18, 1936, there followed the six-to-three decision in Carter v. Carter Coal Co.Footnote9 The Bituminous Conservation Act of 1935 undertook to tax, to fix the price of coal and to regulate wages and hours of labor of miners. It contained the usual recitals as to practices in the industry "affecting" interstate commerce.
The Supreme Court held that the provision of the Act of the code in regard to wages, hours and labor adjustment were unconstitutional, that the price-fixing sections were so intertwined that they must fall with the rest, and, therefore, did not pass upon their constitutionality.
The majority opinion was written by Mr. Justice Sutherland. It is evident from the exhaustive character of the opinion, both in its review of the authorities and its complete restatement of fundamental principles, that the majority of the Supreme Court thought that the often stated distinction between production and commerce should be made so clear and positive that it would never again be questioned. After stating that the recitals as to the reasons for the Act were recitals only and not the enactment's of laws, Mr. Justice Sutherland said:
"The determination of the Framers Convention and the ratifying conventions to preserve complete and unimpaired state self-government in all matters not committed to the general government is one of the plainest facts which emerge from the history of their deliberations. And adherence to that determination is incumbent equally upon the federal government and the states. State powers can neither be appropriated on the one hand nor abdicated on the other. Every journey to a forbidden end begins with the first step; and the danger of such a step by the federal government in the direction of taking over the powers of the states is that the end of the journey may find the states so despoiled of their powers, or - what may amount to the same thing - so relieved of the responsibilities which possession of the powers necessarily enjoins, as to reduce them to little more than geographical subdivisions of the national domain. It is safe to say that if, when the Constitution was under consideration, it had been thought that any such danger lurked behind its plain words, it would never have been ratified.
"One who produces or manufactures a commodity, subsequently sold and shipped by him in interstate commerce, whether such sale and shipment were originally intended or not, has engaged in two distinct and separate activities. So far as he produces or manufactures a commodity, his business, is purely local. So far as he sells and ships, or contracts to sell and ship, the commodity to customers in another state, he engages in interstate commerce. In respect of the former, he is subject only to regulation by the state; in respect of the latter, to regulations only by the federal government. Utah Power & Light v. Pfost, 286 U.S. 165, 182.
"If the production by one man of a single ton of coal intended for interstate sale and shipment, and actually so sold and shipped, affects interstate commerce indirectly, the effect does not become direct by multiplying the tonnage, or increasing the number of men employed, or adding to the expense or complexities of the business, or by all combined.
"Much stress is put upon the evils which come from the struggle between employers and employees over matter of wages, working conditions, the right of collective bargaining, etc., and the resulting strikes, curtailment and irregularity of production and effect on prices; and it is insisted that interstate commerce is greatly affected thereby. But, in addition to what has just been said, the conclusive answer is that the evils are all local evils over which the federal government has no legislative control. The relation of employer and employee is a local relation. At common law, it is one of the domestic relations. The wages are paid for the doing of local work. Working conditions are obviously local conditions. The employees are not engaged in or about commerce, but exclusively in producing a commodity. And the controversies and evils, which it is the object of the act to regulate and minimize, are local controversies and evils affecting local work undertaken to accomplish that local result. Such effect as they may have upon commerce, however extensive it may be, is secondary and indirect. An increase in the greatness of the effect adds to its importance. It does not alter its character."Footnote10
The Chief Justice, in his concurring opinion, agreed that mining was not commerce. He said:
"I agree that the constitutional power of the Federal Government to impose this penalty must rest upon the commerce clause, as the Government concedes; that production - in this case mining - which precedes commerce, is not itself commerce; and that the power to regulate commerce among the several states is not a power to regulate industry within the State.
"The power to regulate interstate commerce embraces the power to protect that commerce from injury, whatever may be the source of the dangers which threaten it, and to adopt any appropriate means to that end. Second Employers' Liability cases, 223 U.S. 1, 51. But Congress may not use this protective authority as a pretext for the exertion of power to regulate activities and relations within the States which affect interstate commerce only indirectly. Otherwise, in view of the multitude of indirect effects, Congress in its discretion could assume control of virtually all the activities of the people to the subversion of the fundamental principle of the Constitution. If the people desire to give Congress the power to regulate industries within the State and the relations of employers and employees in those industries, they are at liberty to declare their will in the appropriate manner, but it is not for the Courts to amend the Constitution by judicial decision."Footnote11
On May 25, 1936, one week after the decision in the Carter Coal case, the Court held that federal legislation providing for municipal debt readjustments was an unconstitutional exercise of the bankruptcy power.Footnote12 The Court found that state sovereignty was infringed. Then on June 1, 1936, the Court invalidated New York's Minimum Wage law.Footnote13
1936 Term
The 1936 Term will probably rank in the history of the Supreme Court as one of its most important sessions. This is so not only because of the actual decisions rendered, but also by reason of the influence upon these decisions of outside forces. It will be noted that the opinion in the Carter case was handed down on May 18, 1936, shortly before the adjournment of the Court for the summer. Within a few weeks after this decision, the national conventions were held and the campaign for the presidential election of 1936 was in full swing. The Carter case was the last decision of the Court which involved the constitutionality of any Act of Congress before the election. It will be recalled that, before and during the campaign, and even after the election, there were suggestions from many who desired to extend the Federal power to control such things as wages, hours and other matters within the states that the Constitution be amended to confer this authority. Of course, an attempt to amend the Constitution in this way met with determined opposition. The legislature of Missouri, for example, could hardly have ratified such an amendment in the face of the Bill of Rights of the Missouri ConstitutionFootnote14 which provides:
Section 2. That the people of this State have the inherent, sole and exclusive right to regulate the internal government and police thereof, and to alter and abolish their constitution and form of government whenever they may deem it necessary to their safety and happiness: Provided, Such change be not repugnant to the Constitution of the United States.
Section 3. That Missouri is a free and independent State, subject only to the Constitution of the United States; and as the preservation of the states and the maintenance of their governments, are necessary to an indestructible Union, and were intended to co-exist with it, the Legislature is not authorized to adopt, nor will the people of this State ever assent to any amendment or change of the Constitution of the United States which may in anywise impair the right of local self-government belonging to the people of this State.Footnote15
Section 4. That all constitutional government is entitled to promote the general welfare of the people; that all persons have a natural right to life, liberty and the enjoyment of the gains of their own industry; that all persons are created equal and are entitled to equal rights and opportunity under the law; that to give security to these things is the principal office of government, and that when government does not confer this security, it fails of its chief design.Footnote16
The process of amendment by judicial interpretations, however, follows a smoother path. No state nor any group of states can block it. The draftsmen who prepared most of the measures enacted during the Roosevelt administration approached the problem by this smoother route. They sought to connect with interstate commerce every object desired to be accomplished. Nearly all of these New Deal acts contain elaborate and labored recitals, by which Congress purports to find that interstate commerce is affected in some way by the evils sought to be remedied by the legislature.
Up to and including the year 1936, as readily seen from the cases, the Supreme Court, with consistent steadfastness, refused to recognize that recitals could alter facts, and refused to overturn the long settled distinction between production and commerce.
In November, 1936, the presidential election took place. Three months later, on February 5, 1937, a re-elected Franklin Roosevelt sent a message to Congress in which he advocated that the Supreme Court be enlarged by adding new judges so as to bring the total membership to fifteen, obviously motivated by a desire for change in the character of the Supreme Court's decisions. And, whether influenced by the demand or not, the change or "surrender" came. In the crucial cases it was a change in the attitude of Mr. Justice Roberts. For at this term, in the fourteen cases in which one vote determined the outcome, a greater number of such decisions than at any other term in the Court's history, Justice Roberts sided with the liberals in every instance but one; at the previous term he had sided with the conservatives in six out of ten such cases. In at least two casesFootnote17 of the term, the change represented a reversal of position. It is also interesting to note that the Chief Justice and Mr. Justice Roberts, who had written the opinions in the Schechter case, the Railroad Retirement Board v. Alton case and the Butler case, wrote the majority opinions in nearly all of these subsequent cases.
The decisions which resulted in this new position of the Court were all, in one respect or another, labor cases. And they came before it against a background of extensive and far-reaching labor disputes accompanied by the growth of the militant C.I.O. labor organization and the development of the "sit-down" strike technique. It is hardly strange that under such circumstances as these and with mounting pressure from both the executive and legislative branches of government as well as the increased public resentment of the Court, that the Supreme Court would abandon its well established position on interstate commerce, and as Chief Justice Hughes in a speech given later in the year would reply, "What the people really want they generally get. That same Constitution which serves as a shield to protect the rights of the people will now be used as the sword for their own destruction."Footnote18
Ever since the decision in the Schechter caseFootnote19 the literature of the law, has been replete with suggestions to the effect that all would be well if the judges would but see the light and realize that the framers of the Constitution intended to create a national government strong enough to function where the states could not. The Supreme Court did not heed any of these admonitions. In the Guffey caseFootnote20 the majority made it clear that the doctrine of states rights existed not only to protect the states but also to protect private rights in hostility to the expressed desire of the states concerned. And in the Municipal Bankruptcy caseFootnote21 this doctrine was carried so far as to thwart national action directly approved by a state legislature. The hampering effects of undue emphasis on federalism could hardly have gone further.
As a consequence of these decisions it was generally assumed that the Supreme Court would apply a narrow interpretation to the National Labor Relations Act.Footnote22 While that statute by its terms applied only to commerce between the states and with foreign nations, the National Labor Relations Board had sought to invoke it against manufacturing plants whose activities crossed state borders. Thus on February 10, 1937, five days after Roosevelt sent his court packing message to Congress, three cases involving the constitutionality of the National Labor Relations Act were argued before the Supreme Court. They were decided on April 12, 1937, while the Court fight was in full swing. Chief Justice Hughes writing the opinion, and Justices McReynolds, Van Devanter, Sutherland and Butler dissenting.
The case which was chosen as the first of these, and, hence, the vehicle for the Chief Justice's elaborate opinion - shorter ones being written in the other case - was National Labor Relations Board v. Jones and Laughlin.Footnote23 Whether the choice of the case was intentional or accidental, the facts of this case (above all the cases which have been decided) furnished the most plausible reason for abandoning the old landmarks and the best opportunity for metaphysical dialectics. The employees involved in the particular labor dispute were all employees in the production of steel in the steel mills of Jones and Laughlin's plant near Pittsburgh, called the "Aliquippa plant." It appeared from the evidence, however, that Jones and Laughlin in separate and distinct departments also owned and operated private steamships and private railroads to bring a part of its ores and coal and coke to the plant, and barges on the Ohio River to transport a part of its manufactured products. The Chief Justice, without holding that it was necessary to do so, commented on the fact that raw materials were transported in interstate commerce to the plant and that, afterwards, manufactured products were transported in interstate commerce out of the plant, and approved the Government's argument that, in consequence, the plant was in the midst of a stream or flow of commerce - although a similar argument had been made and rejected by the Court in some of the prior cases.
The Chief Justice, in his opinion in the Jones and Laughlin case, referred to the previous decisions of the Supreme Court that manufacturing is not commerce, and said:
"The Government distinguishes these cases. The various parts of respondent's enterprise are described as interdependent and as thus involving 'a great movement of iron ore, coal and limestone along well-defined paths to the steel mills, thence through them, and thence in the form of steel products into the consuming centers of the country - a definite and well-understood course of business.' It is urged that these activities constitute a 'stream' or 'flow' of commerce, of which the Aliquippa manufacturing plant is the focal point, and that industrial strife at that point would cripple the entire movement.
"The congressional authority to protect interstate commerce from burdens and obstructions is not limited to transactions which can be deemed to be an essential part of a 'flow' of interstate or foreign commerce. Burdens and obstructions may be due to injurious action springing from other sources. Although activities may be intrastate in character when separately considered, if they have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions, Congress cannot be denied the power to exercise that control. Schechter Corp. v. United States, supra. Undoubtedly the scope of this power must be considered in the light of our dual system of government and may not be extended so as to embrace effects upon interstate commerce so indirect and remote that to embrace them, in view of our complex society, would effectually obliterate the distinction between what is national and what is local and create a completely centralized government. The question is necessarily one of degree."Footnote24
He then brushed aside the Schechter case and the Carter case and said:
"It is thus apparent that the fact that the employees here concerned were engaged in production is not determinative. The question remains as to the effect upon interstate commerce to the labor practice involved. In the Schechter case, supra, we found that the effect there was so remote as to be beyond the federal power. To find immediacy or directness' there was to find it 'almost everywhere,' a result inconsistent with the maintenance of our federal system. In the Carter case, supra, the Court was of the opinion that the provisions of the statute relating to production were invalid upon several grounds - that there was improper delegation of legislative power, and that the requirements not only went beyond any sustainable measure of protection of interstate commerce but were also inconsistent with due process. These cases are not controlling here."Footnote25
It is noteworthy that in each of these three cases the Circuit Court of Appeals had decided the other way, the Jones and Laughlin case being from the Fifth Circuit, the Fruehauf case from the Sixth Circuit, and the Friedman-Harry Marks Clothing case from the Second Circuit. Each Circuit Court of Appeals had relied upon the Schechter case and the Carter case, and each had considered them so conclusive and controlling as to require only a short per curiam opinion.
Mr. Justice McReynolds delivered the dissenting opinion in all three cases, in which Justices Van Devanter, Sutherland and Butler concurred. The dissenting opinion pointed out that, not only these three Circuit Court of Appeals, but six District Courts had held that the Board had no authority to regulate relations between employers and employees engaged in local production and that no decision or judicial opinion to the contrary had been cited. The dissenting opinion said:
"Every consideration brought forward to uphold the Act before us was applicable to support the Acts held unconstitutional in causes decided within two years. And the lower courts rightly deemed them controlling.
"The three respondents happen to be manufacturing concerns - one large, two relatively small. The Act is now applied to each upon grounds common to all. Obviously what is determined as to these concerns may gravely affect a multitude of employers who engage in a great variety of private enterprises - mercantile, manufacturing, publishing, stock-raising, mining, etc. It puts into the hands of a Board power to control purely local industry beyond anything heretofore deemed permissible."Footnote26
The dissenting opinion then sets out in full the opinions of the three Circuit Court of Appeals. As already mentioned, each Circuit Court of Appeals had handed down a short per curiam opinion referring to the Carter case or the Schechter case, or both, as conclusive authority, evidently considering it unnecessary to write an extended opinion. The dissenting opinion then said:
"Any effect on interstate commerce by the discharge of employees shown here, would be indirect and remote in the highest degree, as consideration of the facts will show. In No. 419 ten men out of ten thousand were discharged; in the other cases only a few. The immediate effect in the factory may be to create discontent among all those employed and a strike may follow, which, in turn, may result in reducing production, which ultimately may reduce the volume of goods moving in interstate commerce. By this chain of indirect and progressively remote events we finally reach the evil with which it is said the legislation under consideration undertakes to deal. A more remote and indirect interference with interstate commerce or a more definite invasion of the powers reserved to the states is difficult, if not impossible, to imagine.
"The Constitution still recognizes the existence of states with indestructible powers; the Tenth Amendment was supposed to put them beyond controversy.
"We are told the Congress may protect the 'stream of commerce' and that one who buys raw materials without the state, manufactures it therein, and ships the output to another state is in that stream. Therefore it is said he may be prevented form doing anything which may interfere with its flow.
"This, too, goes beyond the constitutional limitations heretofore enforced. If a man raises cattle and regularly delivers them to a carrier for interstate shipment, may Congress prescribe the conditions under which he may employ or discharge helpers on the ranch? The products of a mine pass daily into interstate commerce; many things are brought to it from other states. Are the owners and the miners within the power of Congress in respect of the miners' tenure and discharge? May a mill owner be prohibited from closing his factory or discontinuing his business because to do so would stop the flow of products to and from his plant in interstate commerce? May employees in a factory be restrained from quitting work in a body because this will close the factory and thereby stop the flow of commerce? May arson of a factory be made a Federal offense whenever this would interfere with such flow? If the business cannot continue with the existing wage scale, may Congress command a reduction? If the ruling of the Court just announced is adhered to these questions suggest some problems certain to arise.
"And if this theory of a continuous 'stream of commerce' as now defined is correct, will it become the duty of the Federal Government hereafter to suppress every strike which by possibility may cause a blockade in that stream? In re Debs, 158 U.S. 564. Moreover, since Congress has intervened, a labor relations between most manufacturers and their employees removed from all control by the state? Oregon-Washington R. & N. Co. v. Washington, 270 U.S. 87 (1926).
"It is gravely stated that experience teaches that if an employer discourages membership in 'any organization of any kind' in which employees participate, and which exists for the purpose in whole or in part of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment or conditions of work, discontent may follow and this in turn may lead to a strike, and as the outcome of the strike there may be a block in the stream of interstate commerce. Therefore Congress may inhibit the discharge! Whatever effect any cause of discontent may ultimately have upon commerce is far too indirect to justify Congressional regulation. Almost anything marriage, birth, death may - in some fashion affect commerce."Footnote27
Two other labor cases presented interstate commerce questions during the term. In the Associated Press caseFootnote28 the employer insisted that it was not engaged in commerce at all so far as its editorial staff in New York was concerned, on the theory that the news was there "manufactured." The Supreme Court rejected this fanciful argument, pointing out that the operations of the Press involved the constant use of channels of interstate communication.
In the Virginia Railway caseFootnote29 the employer argued that employees of a repair shop were not engaged in interstate commerce. The Court unanimously held otherwise, on the ground that 97% of the railways business was interstate and that a strike in the repair shops would cripple its business. It was no answer, said Mr. Justice Stone, that the company might close its shops and have the work done elsewhere. So long as it maintained the shops the railway was subject to the provision of the law.
In three other cases decided in 1937, the Supreme Court approved the use of federal power in cooperation with state legislation. The most far-reaching of these are the two cases dealing with the Social Security Act. In Steward Machine Co. v. DavisFootnote30 the unemployment insurance features contained in the act were approved, and in Helvering v. Davis,Footnote31 the old-age pensions. Justice McReynolds, Sutherland and Butler wrote separate dissenting opinions in the first case, Justice Van Devanter agreeing with that of Justice Sutherland. In the second, Justices McReynolds and Butler contented themselves with the brief statement that the law violated the Tenth Amendment.Footnote32
1937 Term
After the Supreme Court executed its volte face in New Deal constitutional law at the 1936 Term, the following 1937 Term is found lacking in the drama and color of its predecessor. But there was a beginning in the "reconstruction" of the Court. Before the October 1937 Term was well under way some significant changes in the Supreme Court's personnel occurred. Justice Van Devanter had retired on June 2, 1937,Footnote33 and Justice Sutherland followed on January 18, 1938.Footnote34 The replacements were Justices BlackFootnote35 and Reed.Footnote36
On January 3, 1938, the question of the validity of the Government's power program was again raised but went unanswered, by a Court acting in concert in Alabama Power Co. v. Ickes and Duke Power Co. v Greenwood County.Footnote37 At its Monday session of January 31, 1938, the Court passed on a challenge to the constitutional authority of Congress in creating the Home Owners' Loan Corporation and providing for the conduct of a business enterprise of that character and held that a person convicted of violating the provisions of the Home Owners' Loan Act which made criminal the making of false statements in connection with a loan thereunder, or excessive charges for services in connection therewith, had no standing to make such a challenge; and that the latter provision did not lack the requisite definiteness for validity under the due process clause of the Fifth Amendment.Footnote38
On March 23, 1938 the Court applied the National Labor Act to a packing plant operating entirely in California.Footnote39 All the fruit packed was grown in California, but, after packing, about 37 per cent of it was shipped out of the state. The plant was thus not in the middle of any "flow" or "stream" of commerce. The Chief Justice said that the term "stream of commerce" previously stressed was a metaphor and the "stream" need not exist.
Mr. Justice Butler, in his dissenting opinion,Footnote40 pointed out that the Court, in the Jones and Laughlin case, did not either expressly overrule or adequately distinguish the Carter case, and that even the dissenting opinion in the Jones and Laughlin case, which relied on the Carter case, had failed to elicit from the majority of the Court an adequate discussion of the Carter case. He also pointed out that in the Fruehauf and Friedman-Harry Marks case, the Carter case had not even been mentioned.Footnote41
In the Santa Cruz caseFootnote42 brought before Judge Haney of the Circuit Court of Appeals for the Ninth Circuit, after the Supreme Court's decision in Jones and Laughlin that Court, said in a concurring opinion that the Jones and Laughlin case did not really define a new "interstate commerce," but that:
"Were it necessary to make such a definition, I believe the inference which might properly be taken from the Jones case is that anything which either starts or aids the flow of the stream is interstate or foreign commerce. As applied here, the beginning of the flow would be traceable to the planting of the seed. Successive stages would consist of the planting and growing, sale and delivery to respondent, the canning, the shipment in interstate commerce, and each step thereafter until the product reached the hands of the consumer and was consumed by him. Each step would be part of the stream. Such an interpretation is what I believe to be the intent of the words as used in the Constitution."
1938 Term
Two new justices, Frankfurter and Douglas, replaced justices Cardozo and Brandeis during the 1938 Term. As Mr. Justice Frankfurter has aptly said, we have a "reconstructed" Court.Footnote43
On December 5, 1938, in Consolidated Edison Co. v. National Labor Relations Board,Footnote44 the Act was held to apply to public utilities, all of whose products was sold within the State of New York. The Court upheld the jurisdiction of the National Board. Affecting interstate commerce, not engaging in it, was the criterion.
In delivering the majority opinion in the Consolidated Edison case, the Chief Justice intimated that if proceedings had been instituted against the utilities under the New York State Labor Relations Act, which was very similar to the national act in principal and set-up, the need for the exertion of federal authority might have been removed. Thus in determining whether to intervene in a dispute where the employers are not themselves engaged in interstate commerce but where their activities may nevertheless have a substantial effect on such commerce, "regard should be had to all the existing circumstances including the hearing and effect of any protective action to the same end already taken under state authority." But the Board need not await the exercise of state authority.Footnote45
National Labor Relations Board v. FainblattFootnote46 was decided on April 17, 1939. In the Fainblatt case, the Court again had occasion to consider the jurisdiction of the NLRB. To the accompaniment of the argument that Congress had plenary power to regulate interstate commerce, "be it great or small," it held that the National Labor Relations Act is applicable to a contractor in the garment industry located in New Jersey and engaged in a "relatively small business" of processing materials for a jobber in New York, even though the merchandise which he shipped in interstate commerce was not his own, but his jobber's. Fainblatt conducted no interstate transaction whatsoever. Mr. Justice Stone writing for the majority said:
"The end sought in the enactment of the statue was the prevention of the disturbance to interstate commerce consequent upon strikes and labor disputes induced or likely to be induced because of unfair labor practices named in the Act. That those consequences may ensue from strikes of the employees of manufacturers who are not engaged in interstate commerce where the cessation of manufacture necessarily results in the cessation of the movement of the manufactured product in interstate commerce has been repeatedly pointed out by this Court.
"Here interstate commerce was involved in the transportation of the materials to be processed across state lines to the factory of respondents and in the transportation of the finished product to points outside the state for distribution to purchasers and ultimate consumers.
"Nor do we think it important as respondents seem to argue that the volume of the commerce here involved, though substantial, was relatively small as compared with that in the cases arising under the National Labor Relations Act which have hereinto engaged our attention. The power of Congress is plenary and extends to all such commerce be it great or small."Footnote47
Registering their dissents here as in earlier cases involving the limits of the jurisdiction of the NLRB, Justices McReynolds and Butler patiently record an impressive number of precedents for their view that manufacture is not commerce and that state sovereignty must be respected, and prophetically declared that the subversive views of the majority will seriously impair the "very foundation of our federal system."Footnote48 Their summary was a forceful reminder of the tremendous leap which the Court took in 1936-38 in sanctioning the extension of federal power. After 1936, Mr. Justice McReynolds stated that jurisdiction was claimed on the theory:
"that disapproved labor practices there may lead to disputes; that these may cause a strike; that this may reduce the factory output; that because of such reduction less goods may move across state lines; and thus there may come about interference with the free flow of commerce between the States which Congress has power to regulate. So, it is said, to prevent this possible result Congress may control the relationship between the employer and those employed. Also that the size of the establishment's normal output is of minor or no importance. If the plant presently employed only one women who stitched one skirt during each week which the owner regularly accepted and sent to another State, Congressional power would extend to the enterprise according to the logic of the Court's opinion. Manifestly if such attenuated reasoning - possibly massed upon possibility - suffices, Congress may regulate wages, hours, outputs, prices, etc. whenever any product of employed labor is intended to pass beyond state lines - possibly if consumed next door. Producers of potatoes in Maine, peanuts in Virginia, cotton in Georgia, minerals in Colorado, wheat in Dakota, oranges in California, and thousands of small local enterprises become subject to national direction through a Board.
"Of course, no such results was intended by those who framed the Constitution. If the possibility of this had been declared the Constitution could not have been adopted. So construed, the power to regulate interstate commerce brings within the orbit of federal control most if not all activities of the Nation; subjects states to the will of Congress and permits disruption of our federated system.
"The doctrine approved in Kidd v. Pearson has been often applied. It was the recognized view of this Court for more than a hundred years.
"The present decision and the reasoning offered to support it will inevitably intensify bewilderment. The resulting curtailment of the independence reserved to the states and the tremendous enlargement of federal power denote the serious impairment of the very foundation of our federated system. Perhaps the change in direction, no longer capable of concealment, will give potency to the efforts of those who apparently hope to end a system of government found inhospitable to their ultimate designs."Footnote49
Perhaps the most sensational decision of the Supreme Court in constitutional law during the 1930's was the case of Erie Railroad Co. v. Tompkins.Footnote50 This decision touches our dual form of government as well as the supremacy of the Supreme Court, but perhaps it is better to treat it under the latter heading. This case overruled the case of Swift v. Tyson.Footnote51
Swift v. Tyson had established the rule that in diversity of citizenship cases wherever there was a question of general or commercial interest, the federal courts would not follow the judge-made law of the highest courts of the states but would make their own common law upon the subject. Erie R. Co. v. Tompkins has theoretically changed this rule and now requires all the federal courts to apply in such cases not a federal common law but the common law of that state in which the particular federal court is sitting. The Supreme Court in this case placed its decision not on the ground the Swift v. Tyson had incorrectly interpreted the conformity act of Congress, but that it had rendered an unconstitutional decision in holding that the judicial power of the United States included the power to decide substantive law.
CONCLUSION
The advent of the New Deal in 1933 represented a marked change in attitude concerning the functions of government. It was inevitable that the executive and legislative should clash with the judiciary unless the latter recognized the trend of the times. At first the judiciary was receptive. The Braisdell and Nebbia cases, while dealing with state regulations, argued well for federal regulatory legislation. At the 1934 Term after viewing the path the executive branch of government wanted the country to travel, a majority of the Court began a process of judicial nullification; this trend was accelerated at the 1935 term. Two utterly inconsistent conceptions of government had collided. Taking the initiative the executive caused the "court-packing" bill to be introduced at about the middle of the 1936 Term. This forced a show down. Bowing to increased Congressional, presidential and public pressure the Supreme Court started gradual reversal of previous decisions and interpretations of constitutional law and the opinions of Justices Van Devanter, Sutherland, Butler and McReynolds were decisively defeated. A volte face in constitutional law occurred. Retirements of justices followed. Replacements accentuated the trend of the new constitutional law. Before the end of the 1939 Term the Supreme Court contained five Roosevelt appointees.Footnote52 Mr. Justice Frankfurter did aptly say, we have a "reconstructed" Court.
Before "the great divide" the Supreme Court stood for the protection of all types of individual rights against what was conceived of, in many quarters, as the inroads of government. The protection afforded the individual was so absolute at times as to create a no-man's land wherein neither state nor federal government could enter. But soon a new "federalism" emerged. This new "federalism" would result in the subjection of the individual to governmental supremacy.
290 U.S. 398 (1934).
291 U.S. 502 (1934).
293 U.S. 388 (1935).
Norman v. Baltimore & Ohio R.R., 294 U.S. 240 (1935); Nortz v. United States, 294 U.S. 317 (1935); Perry v. United States, 294 U.S. 330 (1935).
Perry v. United States, 294 U.S. 330 (1935).
Railroad Retirement Board v. Alton R.R., 295 U.S. 330 (1935).
A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935).
United States v. Butler, 297 U.S. 1 (1936).
298 U.S. 238 (1936).
Id. at 295-308.
Id. at 317-18.
Ashton v. Cameron County Water Improvement District, 298 U.S. 513 (1936).
Morehead v. New York ex rel. Tipaldo, 298 U.S. 587 (1936).
Article I, sections 2-4.
Matter in italics, deleted in 1945 and replaced with; "that all proposed amendments to the Constitution of the United States qualifying or affecting the individual liberties of the people or which in any wise may impair the right of local self-government belonging to the people of this state, should be submitted to conventions of the people."
Matter in italics, added effective 1945.
The Minimum Wage and N.L.R.B. cases.
Perhaps the Chief Justice was offering a warning to those who wish to give up this protection for the benefits and protection offered from a kind Federal government.
295 U.S. 495 (1935).
Carter v. Carter Coal Co., 298 U.S. 238 (1936).
Ashton v. Cameron Co. Water Improvement Dist., 298 U.S. 513 (1936).
Act of July 5, 1935, c. 372, 49 Stat. 449.
301 U.S. 1 (1937).
301 U.S. at 34-7.
301 U.S. at 40.
301 U.S. at 77-8.
301 U.S. 96-9.
301 U.S. 103 (1937).
Virginia Railway Company v. system Federation No. 40, 300 U.S. 515 (1937).
301 U.S. 548 (1937).
301 U.S. 619 (1937).
The opinion in Steward Machine v. Davis is thoroughly analyzed in Volume II of this work.
302 U.S. iii.
303 U.S. iv.
302 U.S. iii.
303 U.S. iv.
302 U.S. 464 (1938).
Kay v. United States, 303 U.S. 1 (1938).
Santa Cruz Packing Co. v. National Labor Relations Board, 303 U.S. 453 (1938).
Justice McReynolds joined in the dissenting opinion, Justices Van Devanter and Sutherland having by this time retired. Justices Cardozo and Reed took no part in the consideration and decision of this case.
In the Chief Justice's opinion in the Santa Cruz case itself, the Carter case is merely referred to, not analyzed.
91 F.2d 790 (1937).
Helvering v. Gerhardt, 304 U.S. 405 (1938).
305 U.S. 197 (1938).
305 U.S. at 224.
National Labor Relations Board v. Fainblatt, 306 U.S. 601 (1939).
Id. at 604-6.
Id. at 673.
Id. at 610-4.
41 U.S. 1 (1842).
Justice Hugh Black was appointed to the Court August 17, 1937; Stanley Reed was appointed to the Court January 25, 1938; Felix Frankfurter was appointed to the Court January 17, 1939; William Douglas was appointed to the Court April 4, 1939; Frank Murphy was appointed to the Court January 15, 1940.