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The Court Sees a New Light

American constitutional law has first and last undergone a number of revolutions, but none so radical, so swift, so altogether dramatic as that witnessed by the term of Court just ended. I have in mind only the results so far recorded in actual decisions; when the logical possibilities for the future of these holdings are considered, the impression left is, of course, still more striking.

A year ago minimum-wage legislation, even for women, still rested under the ban of the Court, the national government was for the most part without authority over the employer-employee relation in the industrial field, and social security was at best highly suspect on constitutional grounds. Today the truth contradicts each one of these statements. More than that, the tone of the Court has altered vastly in a twelvemonth. Last spring, following the slaughter of the AAA and "the little NIRA," the Chief Justice jauntily proclaimed in his American Law Institute address, "I have to announce that the Supreme Court still functions," and at about the same time six of the nine Justices joined in the case of Jones v. the SEC in an opinion which sets an all-time high for judicial arrogance. These lapses from good sense and good taste would not today be repeated.

The Court first gave arresting notice of its change of mind when, on March 29, it sustained a minimum-wage statute of the state of Washington, and at the same time explicitly overruled its decision of 1923 in Adkins v. the Children's Hospital, which it had reaffirmed so recently as June, 1936. The new Court was the outcome of the defection of Mr. Justice Roberts from the Sutherland-VanDevanter-McReynolds-Butler combination, and the Chief Justice was its spokesman. While his opinion cites "the economic conditions which have supervened" since the Adkins case was decided, it also quotes with warm approval the views of the dissenters in that case. "We think," the opinion reads, "that the views thus expressed are sound and that the decision in the Adkins case was a departure from the true application of the principles governing the regulation by the state of employer and employee." But the decision more than recovers lost ground, since much of its reasoning goes to establish the constitutionality oi minimum-wage legislation for all workers. Thus the Court pointed out that it was no objection to the act before it that it did not cover the entire field oi possible legislation. It also cited the history of hour legislation, which underwent a like expansion. In the Chief Justice's words, "Liberty in each of its phases has its history and connotation. But the liberty safeguarded is liberty in a social organization which requires the protection of law against the evils which menace the health, safety, morals and welfare of the people." In the face -of these words it becomes impossible to contend that difference in sex sets up an absolute barrier to governmental regulation of wages.

A fortnight later the new Court, again speaking through the Chief Justice, sustained the application of the Wagner National Labor Relations Act to certain industrial establishments which were found to be extensively engaged in interstate commerce. The Act forbids "any unfair labor practice affecting interstate commerce" and lists among these "the denial by employers of the right of their employees to organize and the refusal by employers to accept the procedure of collective bargaining." Dealing first with the "due process" aspect of the case, the Chief Justice characterizes "the right of employees to self-organization and to select representatives of their own choosing for collective bargaining or other mutual protection without restraint or coercion by their employer" as "a fundamental right," interference with which "is a proper subject for condemnation by competent legislative authority." The Chief Justice then continues:

Long ago we stated the reason for labor organizations. We said that they were organized out of the necessities of the situation; that a single employee was helpless in dealing with an employer; that he was dependent ordinarily on his daily wage for the maintenance of himself and family; and that if the employer refused to pay him the wages that he thought fair, he was nevertheless unahle to leave the employ and resist arbitrary and unfair treatment; that union was essential to give laborers opportunity to deal on an equality with their employers.

Thus "liberty" is recognized as something that may be infringed by other forces as well as by those of government; indeed, something that may require the positive intervention of government against those other forces. This recognition marks a development of profound significance in our constitutional history.

But the principal difficulty of these cases arose from the contention of the defendant companies that Congress could not, without unconstitutionally invading the reserved powers of the states, govern the relationship between industrial employers and employees. So, indeed, it had been asserted by the Court itself less than a year previous in the Carter case, in which the Guffey Coal Conservation Act was set aside. Said Mr. Justice Sutherland on that occasion:

Much stress is put upon the evils which come from the struggle between employers and employees over the 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 afiected 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.

Furthermore, it is at least highly probable that in speaking thus, Mr. Justice Sutherland voiced what was the opinion of the entire Court at that date. Otherwise the effort of Mr. Justice Cardozo, speaking also for Justices Brandeis and Stone, to separate the price-fixing provisions of the Guffey Act from the hours-and-wages provisions would appear to have been gratuitous, while the Chief Justice's words, in his separate opinion, would be meaningless: "If the people desire to give Congress the power to regulate industries within the states and the relation 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 Court to amend the Constitution by judicial decision."

Fortunately the Chief Justice was mistaken. If it was a part of the Constitution on May 18,1936, that Congress could not regulate the employer-employee relation in industry, then the Constitution was in that respect amended by the Court on April 12 last. Setting out from Mr. Chief Justice Taft's dictum in Stafford v. Wallace, decided in 1922, that "whatever amounts to more or less constant practice, and threatens to obstruct or unduly to burden the freedom of interstate commei'ce, is within the regulatory power of Congress under the commerce clause, and it is primarily for Congress to consider and decide the fact of the danger and meet it," the Court rejects the contention that the power thus recognized has reference only to the protection of the instruments of interstate commerce. "The agency," says the Chief Justice, "is not superior to the commerce which uses it... . The close and intimate effect which brings the subject within the reach of federal power may be due to activities in relation to productive industry, although this industry when separately viewed is local" Nor will it do to say that such effect is "indirect." Considering defendant's "farflung activities," the effect of strife between it and its employees "would be immediate and it might be catastrophic. We are asked to shut our eyes to the plainest facts of our national life and to deal with the question of direct and indirect effects in an intellectual vacuum...

When industries organize themselves on a national scale, making their relation to interstate commerce the dominant factor in their activities, how can it be maintained that their industrial labor relations constitute a forbidden field into which Congress may not enter when it is necessary to protect interstate commerce from the paralyzing consequences of industrial war? We have often said that interstate commerce itself is a practical conception. It is equally true that interferences with that commerce must be appraised by a judgment that does not ignore actual experience.

So the test of formula by which the Guffey Act was set aside, a formula derived from the old sugartrust case of 1895, of evil memory, is replaced by one of fact, and this is speedily shown to be an extremely flexible test. In the Jones-Laughlin case, from the opinion in which the above quotations are taken, the defendant company was the fourth largest producer of steel in the United States, embracing nineteen subsidiaries, owning and operating ore, coal and limestone properties, steamship lines, railroads and manufactories scattered among several states and employing more than a half-million men. But the results reached by the Court in applying the Wagner Act to this immense enterprise were held equally applicable to a manufacturer of trailers located in Detroit but selling more than 80 percent of his products in other states, and to a manufacturer of clothing located in Richmond, Virginia, but selling more than 82 percent of his product in other states.

Let the employees of a concern, a considerable proportion of whose trade and activities extend beyond state lines, be ready and willing to strike resolutely for their "fundamental rights," and Congress can govern the employer-employee relation of such a concern with the purpose and effect of backing up such "fundamental rights"—that is the new constitutional law yielded by the Wagner Act cases, although not all of it. For by the same token Congress should have power also to protect the "fundamental rights" of employers against interruptions that would effect interstate commerce detrimentally. Undoubtedly the protective power of Congress over interstate commerce extends to the employer goose as well as to the employee gander.

Of less interest historically although certainly not practically were the brace of cases in which the new Court sustained, on May 24, the Social Security Act of 1935 as to its substantive provisions, and the companion case in which the Unemployment Compensation Act of Alabama was upheld. Salient features of Mr. Justice Cardozo's opinion for the Court in the former were emphasis on the lessons of the depression of 1929 and of experience with unemployment and old-age relief since then, and the notice taken of the inability of the states to deal separately with the problem of social security, both because of the national scope of the problem and because states compete with one another to attract investors.

Proceeding from this dual basis the Court upholds the power of the national government to tax employers on their employment rolls, such a tax being classified as an "excise"; also its power to spend money in support of unemployment insurance and to provide old-age pensions, expenditures of such nature being for "the general welfare of the United States" within the sense of the taxing clause of the Constitution; also, its power to cooperate with the states in a joint program of unemployment relief and old-age security, and to that end to offer financial inducements to the states to cooperate in such a program.

To the claim that the state of Alabama had been "coerced" by the provision in the act of Congress which accords a 90-percent credit against the federal tax to employers contributing under a satisfactory state law to unemployment compensation, Mr. Justice Cardozo answered: "From all that appears she is satisfied with her choice, and would be sorely disappointed if it were now to be annulled...The petitioners' contention...confuses motive with coercion.... But to hold that motive or temptation is equivalent to coercion is to plunge the law in endless difficulties." That is to say, there is no constitutional reason why the national government should not supply motives for action by a state. Nor were the terms which Congress had stipulated for a satisfactoi7 state unemployment act an intrusion upon state power, inasmuch as they were designed to protect the National Treasury and were related to activities fairly within the scope of national fiscal power and policy—a test, it may be remarked in passing, which would have saved the AAA.

And Mr. Justice Stone is similarly dexterous in meeting objections to the Alabama Unemployment Compensation Act. Answering the complaint that the tax levied by the Act yielded no benefits to those who paid it, he says: "The only benefit to which the taxpayer is constitutionally entitled is that derived from his enjoyment of the privilege of living in a civilized society, established and safeguarded by the devotion of taxes to a public purpose." And answering the objection that the Act involved an unconstitutional abdication of power by Alabama to the national government, he says:

The United States and the state of Alabama are not alien governments. They coexist within the same territory. Unemployment within it is their common concern. Together the two statutes now before us embody a cooperative legislative effort by state and national governments, for carrying out a public purpose common to both, which neither could fully achieve without the cooperation of the other. The Constitution does not prohibit such cooperation.

Thus while the keynote of the Wagner Act cases is increased power for the national government over industies and the employer-employee relation therein, that of the Social Security Act cases is national and state cooperation in the field of social insurance. Together these decisions spell a new, a revitalized federal system. To be sure, many questions still remain unanswered—very important questions of statutory interpretation as regards the Wagner Act, several minor questions 0f constitutionality as regards the Social Security Act. But guaranteed the continuance of the mood which finds expression in the opinions here reviewed, these questions too should find solution satisfactory to the administration.

The question arises, of course, whether the Court's remarkable reversal in attitude, just recorded, is to be set down to the credit of the President's Court proposal. To some extent perhaps, but certainly not altogether. The lesson of the November election could have been lost only on members of the Bench with a messianic complex of some sort; and the CIO "sit-down strikes" must also have had a profound effect in the demonstration which they afforded that the country is not to be governed by the simple expedient of tossing acts of Congress out of the window.

On the other hand, the confirmation which these decisions lend to the major premise of the President's argument for his proposal, of the essentially political nature of the Court's function today in the constitutional field, is impressive. Nor is the contention which is now forthcoming from certain opponents of the idea of reconstituting the Court entirely conclusive. Why, they ask in effect, follow up a successful shotgun wedding by shooting the bridegroom? Why indeed; but what of taking precautions to make it reasonably probable that the bridegroom will now turn to and support the family?