Politically Incorrect Guide To The Constitution (Politically Incorrect Guides) (28 page)

Justice Charles Evans Hughes

The Contracts Clause had been written with a case precisely like this
in mind. It was meant to protect creditors and their ability to collect debts
by prohibiting states from interfering with the obligation of contracts.
And yet the Supreme Court upheld the law! Why? Because, in the words
of Chief Justice Charles Evans Hughes, the law was "of a character appropriate to the emergency and allowed upon
what are said to be reasonable conditions."
Although the Constitution has no "emergency" clause attached to the Contracts Clause
and no definition of "reasonable conditions,"
the Court felt fully justified in amending the
Constitution, because, after all, what the Court
said was "law."

The Court began to move away from its liberty of contract ideology in Nebbia v. New York (1934) when it said that
states could regulate milk prices. The Constitution does not actually prohibit such regulation, but the Court had to invent a justification for its ruling because it had previously struck down state economic regulations
under the Due Process Clause of the Fourteenth Amendment. So the
Court now took an expansive view of businesses that were "affected with
a public interest" and thus could be regulated by the state.

Yet surely the Supreme Court, so long a friend of "liberty of contract,"
would stand against the New Deal's litany of economic regulations? For
a moment, and in part, it did.

In Schechter Poultry Corp. v. United States (1935), the Court ruled the
New Deal's National Industrial Recovery Act (NIRA) unconstitutional.
The case came to the Court as an appeal. Schechter Poultry had been con victed of violating the "code of fair competition" under the act, because
the corporation had hired people at lower wages and set them to work for
longer hours than the president had decreed to be legal. Moreover, the
corporation was accused of selling "an unfit chicken." The corporation's
defenders argued that, with the unemployment rate hovering around 25
percent, the corporation was providing people with work at fair market
wages.

A Book You're Not
Supposed to Read

The Politically Incorrect Guide" to American
History by Thomas Woods; Washington, DC:
Regnery, 2004.

But the New Deal planners believed not only in raising wages and
prices, but also in other elements of centralized economic planning. The
NIRA regulations had come straight from the White House, not from Congress (which had delegated the president this power because of the economic "emergency").

The Court found the NIRA void because it delegated excessive power
to the president. The full extent of the president's powers under this act,
the Court said, was "virtually unfettered." It was as broad as Congress's
power under the Commerce Clause. "This," wrote justice Benjamin Cardozo, "is delegation run riot." If the United States was swept somewhat
less by the rising tide of socialism that appeared in the Soviet Union,
Germany, and Italy, besides Britain, France, and elsewhere to varying
degrees in the 1930s, it was because America's constitutional traditions
impeded it. These traditions did not, however, avert it completely.
Indeed, in the end, Schechter proved to be an aberration-but not before
the old guard on the Supreme Court struck down some additional New
Deal legislation.

In U.S. v. Butler (1936), the Court ruled that the New Deal's Agricultural Adjustment Act was unconstitutional, with justices Benjamin Cardozo, Louis Brandeis, and Harlan Fiske Stone dissenting. The Court ruled
that the price- and production-setting powers claimed by the federal government were reserved to the states, as shown in the Constitution's ratification debates and the Tenth Amendment. One would be hard-pressed
to name another Supreme Court decision of the twentieth century that so accurately interpreted the Constitution.
Legal scholars, however, generally sympathize with the New Deal, and so you won't
find much praise for the Court's decision in
U.S. v. Butler. To these scholars, it's not the
Constitution but their own policy preferences that matter.

In Carter v. Carter Coal Company (1936),
the Court struck down similar legislation
regulating the coal industry, though this
time using its faulty "liberty of contract" theory.

That same year the Democrats scored overwhelming electoral victories, and FDR called on Congress to help him fight the Supreme Court.
His strategy was to appoint blatantly partisan justices who would rubberstamp his policies. Purportedly because many of his measures' opponents
on the Court were more than seventy years old, he asked Congress to
expand the Court by adding one justice for every sitting justice over seventy.

Most historians and legal scholars criticize Roosevelt for his "courtpacking" scheme because they think it violates the Constitution's separation of powers. In other words, they criticize FDR not for trying to pack
the Court, but for asking Congress to assert authority over it, diminishing
the Court's significance. But Roosevelt was exactly right to demand congressional oversight of the Court, even if he did so for the wrong reason
(which was essentially to read the Tenth Amendment out of the Constitution completely).

For many, however, this was too radical. There was serious division,
then, among Democrats over the desirability of the court-packing plan.
Roosevelt's plan drew united opposition from southern Democrats and
from Republicans. To borrow a phrase, it withered on the vine.

Bet Your Law Professor
Never Told You

FDR, and most presidents ever after,
essentially tried to read the Tenth Amendment out of the Constitution.

Meanwhile, a change of heart occurred on the Court. Justices Charles
Evans Hughes and Owen J. Roberts joined in "the switch in time that
saved nine" by voting with the three-justice pro-New Deal minority in
upholding New Deal legislation. The Court's new attitude made its first
appearance in West Coast Hotel Co. v. Parrish (1937).

The case involved a Washington state minimum wage law covering
women and minors. Elsie Parrish, a maid at the West Coast Hotel, sued
for the difference between the wages she had been paid and the wages
she should have been paid under the law, which had been on the books
since 1932. The hotel argued that the law was unconstitutional. But the
Supreme Court, overturning its own "liberty of contract" precedents,
ruled in favor of Parrish.

Writing for the majority, Charles Evans Hughes exploded the doctrine
of liberty of contract. "In each case the violation alleged by those attacking minimum wage regulation for women is deprivation of freedom of
contract," Hughes wrote. "What is this freedom? The Constitution does
not speak of freedom of contract. It speaks of liberty and prohibits the
deprivation of liberty without due process of law."

"In prohibiting that deprivation," Hughes said, "the Constitution does
not recognize an absolute and uncontrolled liberty.... Regulation which
is reasonable in relation to its subject and is adapted to the interests of
the community is due process."

The Court's decision was correct as a matter of constitutional law-the
Fourteenth Amendment was not intended to make the Supreme Court
into a protector of "freedom of contract" against state social legislation.
Hughes did cloud the Court's opinion with superfluous economic pontifications about the "exploitation of a class of workers." But should anyone be surprised? Supreme Court justices have rarely spared us their
uninformed opinions.

aving given up its brief opposition to the New Deal, the
Supreme Court now became FDR's rubber stamp. Seeing the
Court reverse itself and (correctly) uphold the right of states to
adopt minimum wage laws in West Coast Hotel Co. v. Parrish, Congress
unconstitutionally adopted similar legislation-with no judicial opposition. (Where the Court formerly had prevented both the states and Congress from doing what the states alone had the right to do, it now allowed
both the states and Congress to do what the states alone had the right to
do.)

Then, in National Labor Relations Board v. Jones tr Laughlin Steel Corporation (1937), the Court again eliminated its own precedents. Jones and
Laughlin Steel had tried to prevent its workers from unionizing and fired
those who did. The federal government intervened on the side of the fired
workers, invoking the New Deal's pro-union National Labor Relations Act
(commonly known as the Wagner Act). The steel corporation protested
that the Wagner Act was unconstitutional-and lower courts agreed. But
the Supreme Court backtracked from its own precedents and ruled that
Congress, under the Commerce Clause, could regulate the economy in
ways previously thought beyond its reach.

Helvering v. Davis (1937) was the third case (after Jones & Laughlin and
Parrish) that represented the Court's "switch in time" that staved off FDR's threat to pack it with his supporters. Helvering concerned the
Social Security Act of 1935. Businesses, now subject to the Social Security tax, charged that the Social Security Act was unconstitutional, and
certainly there is no provision in the Constitution for the federal government to run a pension program.

Guess what?

-.' The states have the
right to establish
religions.

- In 1942 the
Supreme Court
ruled that a farmer
couldn't grow
"surplus" wheat to
feed his family and
his livestock.

-4W Justice Robert H.
Jackson wrote in
1953 of himself
and his fellow
justices, We are
not final because
we are infallible,
but we are
infallible only
because we are
final."

The Court's opinion was again larded with the sort of sociological data
that might have been appropriate for a legislature considering legislation
but not for a court interpreting the Constitution. What did ruminations
about an aging population, a decline in charitable donations, declining
state revenues, and other alleged effects of the Great Depression have to
do with the Constitution? Precisely nothing, but the Court tried to make
something out of nothing by ruling that the General Welfare Clause of
Article I, Section 8 of the Constitution-which restricts Congress's taxation powers to promoting the "general" (as opposed to special interest)
welfare-was actually a grant of power to Congress. Congress, the Court
said, could itself determine what taxes (and what spending) promoted the
"general welfare," thus once again ignoring the Tenth Amendment and
shifting power from the states to the federal government.