Part 17

The case in which the Court reduced the distinction between "direct" and "indirect" effects to the vanishing point, and thereby put Congress in the way of governing productive industry and labor relations in such industry was National Labor Relations Board _v._ Jones and Laughlin Steel Corp.,[454] decided April 12, 1937. Here the statute involved was the National Labor Relations Act of July 5, 1935,[455] which forbids "any unfair labor practice affecting interstate commerce" and lists among these "the denial by employers of the right of employees to organize and the refusal by employers to accept the procedure of collective bargaining." Ignoring recent holdings, government counsel appealed to the "current of commerce" concept of the Swift Case. The scope of respondent's activities, they pointed out, was immense. Besides its great steel-producing plants, it owned and operated mines, steamships, and terminal railways scattered through several States, and altogether it gave employment to many thousands of workers. A vast industrial commonwealth such as this, whose operations constantly traversed State lines, comprised, they contended, a species of territorial enclave which was subject in all its parts to the only governmental power capable of dealing with it as an entity, that is, the National Government. Yet even if this were not so, still the protective power of Congress over interstate commerce must be deemed to extend to disruptive strikes by employees of such an immense concern, and hence to include power to remove the causes of such strikes. The Court, speaking through Chief Justice Hughes, held the corporation to be subject to the act on the latter ground. "The close and intimate effect," said he, "which brings the subject within the reach of federal power may be due to activities in relation to productive industry although the industry when separately viewed is local." Nor will it do to say that such effect is "indirect." Considering defendant's "far-flung 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."[456]

While the act was thus held to be within the constitutional powers of Congress in relation to a productive concern, the interruption of whose business by strike "might be catastrophic," the decision was forthwith held to apply also to two minor concerns;[457] and in a later case the Court stated specifically that "the smallness of the volume of commerce affected in any particular case" is not a material consideration.[458] Moreover, the doctrine of the Jones-Laughlin Case applies equally to "natural" products, to coal mined, to stone quarried, to fruit and vegetables grown.[459]

THE FAIR LABOR STANDARDS ACT; THE DARBY CASE

In 1938 Congress enacted the Fair Labor Standards Act.[460] The measure prohibits not only the shipment in interstate commerce of goods manufactured by employees whose wages are less than the prescribed minimum or whose weekly hours of labor are greater than the prescribed maximum, but also the employment of workmen in the production of goods for such commerce at other than the prescribed wages and hours. Interstate commerce is defined by the act to mean "trade, commerce, transportation, transmission, or communication among the several States or from any State to any place outside thereof." It was further provided that "for the purposes of this act an employee shall be deemed to have been engaged in the production of goods [that is, for interstate commerce] if such employee was employed * * *, or in any process or occupation necessary to the production thereof, in any State." Sustaining an indictment under the act, a unanimous Court, speaking by Chief Justice Stone, said: "The motive and purpose of the present regulation are plainly to make effective the congressional conception of public policy that interstate commerce should not be made the instrument of competition in the distribution of goods produced under substandard labor conditions, which competition is injurious to the commerce and to the States from and to which commerce flows."[461] In support of the decision the Court invokes Chief Justice Marshall's reading of the necessary and proper clause in McCulloch _v._ Maryland and his reading of the commerce clause in Gibbons _v._ Ogden.[462] Objections purporting to be based on the Tenth Amendment are met from the same point of view: "Our conclusion is unaffected by the Tenth Amendment which provides: 'The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.' The amendment states but a truism that all is retained which has not been surrendered. There is nothing in the history of its adoption to suggest that it was more than declaratory of the relationship between the national and State governments as it had been established by the Constitution before the amendment or that its purpose was other than to allay fears that the new National Government might seek to exercise powers not granted, and that the States might not be able to exercise fully their reserved powers. _See_ e.g., II Elliot's Debates, 123, 131; III id. 450, 464, 600; IV id. 140, 149; I Annals of Congress, 432, 761, 767-768; Story, Commentaries on the Constitution, Sec. 1907-1908."[463] Commenting recently on this decision, former Justice Roberts said: "Of course, the effect of sustaining the Fair Labor Standards Act was to place the whole matter of wages and hours of persons employed throughout the United States, with slight exceptions, under a single federal regulatory scheme and in this way completely to supersede state exercise of the police power in this field."[464] In a series of later cases construing terms of the act, it had been given wide application.[465]

THE AGRICULTURAL MARKETING AGREEMENT ACT

Meantime Congress had returned to the task of bolstering agriculture by passing the Agricultural Marketing Agreement Act of June 3, 1937,[466] authorizing the Secretary of Agriculture to fix the minimum prices of certain agricultural products, when the handling of such products occurs "in the current of interstate or foreign commerce or * * * directly burdens, obstructs or affects interstate or foreign commerce in such commodity or product thereof." In United States _v._ Wrightwood Dairy Company[467] the Court sustained an order of the Secretary of Agriculture fixing the minimum prices to be paid to producers of milk in the Chicago "marketing area." The dairy company demurred to the regulation on the ground of its applying to milk produced and sold intrastate. Sustaining the order the Court said: "Congress plainly has power to regulate the price of milk distributed through the medium of interstate commerce, * * *, and it possesses every power needed to make that regulation effective. The commerce power is not confined in its exercise to the regulation of commerce among the States. It extends to those activities intrastate which so affect interstate commerce, or the exertion of the power of Congress over it, as to make regulation of them appropriate means to the attainment of a legitimate end, the effective execution of the granted power to regulate interstate commerce. _See_ McCulloch _v._ Maryland, 4 Wheat. 316, 421; * * * The power of Congress over interstate commerce is plenary and complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution. Gibbons _v._ Ogden, 9 Wheat. 1, 196. It follows that no form of State activity can constitutionally thwart the regulatory power granted by the commerce clause to Congress. Hence the reach of that power extends to those intrastate activities which in a substantial way interfere with or obstruct the exercise of the granted power."[468]

In Wickard _v._ Filburn[469] a still deeper penetration by Congress into the field of production was sustained. As amended by the act of 1941, the Agricultural Adjustment Act of 1938,[470] regulates production even when not intended for commerce but wholly for consumption on the producer's farm. Sustaining this extension of the act, the Court pointed out that the effect of the statute was to support the market. It said: "It can hardly be denied that a factor of such volume and variability as home-consumed wheat would have a substantial influence on price and market conditions. This may arise because being in marketable condition such wheat overhangs the market and, if induced by rising prices, tends to flow into the market and check price increases. But if we assume that it is never marketed, it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market. Home-grown wheat in this sense competes with wheat in commerce. The stimulation of commerce is a use of the regulatory function quite as definitely as prohibitions or restrictions thereon. This record leaves us in no doubt that Congress may properly have considered that wheat consumed on the farm where grown, if wholly outside the scheme of regulation, would have a substantial effect in defeating and obstructing its purpose to stimulate trade therein at increased prices."[471] And it elsewhere stated: "Questions of the power of Congress are not to be decided by reference to any formula which would give controlling force to nomenclature such as 'production' and 'indirect' and foreclose consideration of the actual effects of the activity in question upon interstate commerce. * * * The Court's recognition of the relevance of the economic effects in the application of the Commerce Clause, * * *, has made the mechanical application of legal formulas no longer feasible."[472]

Acts of Congress Prohibiting Commerce

FOREIGN COMMERCE; JEFFERSON'S EMBARGO

"Jefferson's Embargo" of 1807-1808, which cut all trade with Europe, was attacked on the ground that the power to regulate commerce was the power to preserve it, not the power to destroy it. This argument was rejected by Judge Davis of the United States District Court for Massachusetts in the following words: "A national sovereignty is created [by the Constitution]. Not an unlimited sovereignty, but a sovereignty, as to the objects surrendered and specified, limited only by the qualifications and restrictions, expressed in the Constitution. Commerce is one of those objects. The care, protection, management and control, of this great national concern, is, in my opinion, vested by the Constitution, in the Congress of the United States; and their power is sovereign, relative to commercial intercourse, qualified by the limitations and restrictions, expressed in that instrument, and by the treaty making power of the President and Senate. * * * Power to regulate, it is said, cannot be understood to give a power to annihilate. To this it may be replied, that the acts under consideration, though of very ample extent, do not operate as a prohibition of all foreign commerce. It will be admitted that partial prohibitions are authorized by the expression; and how shall the degree, or extent, of the prohibition be adjusted, but by the discretion of the National Government, to whom the subject appears to be committed? * * * The term does not necessarily include shipping or navigation; much less does it include the fisheries. Yet it never has been contended, that they are not the proper objects of national regulation; and several acts of Congress have been made respecting them. * * * [Furthermore] if it be admitted that national regulations relative to commerce, may apply it as an instrument, and are not necessarily confined to its direct aid and advancement, the sphere of legislative discretion is, of course, more widely extended; and, in time of war, or of great impending peril, it must take a still more expanded range. Congress has power to declare war. It, of course, has power to prepare for war; and the time, the manner, and the measure, in the application of constitutional means, seem to be left to its wisdom and discretion. * * * Under the Confederation, * * * we find an express reservation to the State legislatures of the power to pass prohibitory commercial laws, and, as respects exportations, without any limitations. Some of them exercised this power. * * * Unless Congress, by the Constitution, possess the power in question, it still exists in the State legislatures--but this has never been claimed or pretended, since the adoption of the federal Constitution; and the exercise of such a power by the States, would be manifestly inconsistent with the power, vested by the people in Congress, 'to regulate commerce.' Hence I infer, that the power, reserved to the States by the articles of Confederation, is surrendered to Congress, by the Constitution; unless we suppose, that, by some strange process, it has been merged or extinguished, and now exists no where."[473]

FOREIGN COMMERCE; PROTECTIVE TARIFFS

Tariff laws have customarily contained prohibitory provisions, and such provisions have been sustained by the Court under Congress's revenue powers (_see above_) and under its power to regulate foreign commerce. Speaking for the Court in University of Illinois _v._ United States,[474] in 1933, Chief Justice Hughes said: "The Congress may determine what articles may be imported into this country and the terms upon which importation is permitted. No one can be said to have a vested right to carry on foreign commerce with the United States. * * * It is true that the taxing power is a distinct power; that it is distinct from the power to regulate commerce. * * * It is also true that the taxing power embraces the power to lay duties. Art. I, Sec. 8, cl. 1. But because the taxing power is a distinct power and embraces the power to lay duties, it does not follow that duties may not be imposed in the exercise of the power to regulate commerce. The contrary is well established. Gibbons _v._ Ogden, 9 Wheat. 1, 202. 'Under the power to regulate foreign commerce Congress impose duties on importations, give drawbacks, pass embargo and nonintercourse laws, and make all other regulations necessary to navigation, to the safety of passengers, and the protection of property.' Groves _v._ Slaughter, 15 Pet. 449, 505. The laying of duties is 'a common means of executing the power.' 2 Story on the Constitution, Sec. 1088."[475]

FOREIGN COMMERCE; BANNED ARTICLES

The forerunners of more recent acts excluding objectionable commodities from interstate commerce are the laws forbidding the importation of like commodities from abroad. This power Congress has exercised since 1842. In that year it forbade the importation of obscene literature or pictures from abroad.[476] Six years later it passed an act "to prevent the importation of spurious and adulterated drugs" and to provide a system of inspection to make the prohibition effective.[477] Such legislation guarding against the importation of noxiously adulterated foods, drugs, or liquor has been on the statute books ever since. In 1887 the importation by Chinese nationals of smoking opium was prohibited,[478] and subsequent statutes passed in 1909 and 1914 made it unlawful for anyone to import it.[479] In 1897 Congress forbade the importation of any tea "inferior in purity, quality, and fitness for consumption" as compared with a legal standard.[480] The act was sustained in 1904, in the leading case of Buttfield _v._ Stranahan.[481] In "The Abby Dodge" case an act excluding sponges taken by means of diving or diving apparatus from the waters of the Gulf of Mexico or Straits of Florida was sustained, but construed as not applying to sponges taken from the territorial waters of a State.[482] In Weber _v._ Freed[483] an act prohibiting the importation and interstate transportation of prize-fight films or of pictorial representation of prize fights was upheld. Speaking for the unanimous Court, Chief Justice White said: "In view of the complete power of Congress over foreign commerce and its authority to prohibit the introduction of foreign articles recognized and enforced by many previous decisions of this court, the contentions are so devoid of merit as to cause them to be frivolous."[484] In Brolan _v._ United States[485] the Court again stressed the absolute nature of Congress's power over foreign commerce, saying: "In the argument reference is made to decisions of this court dealing with the subject of the power of Congress to regulate interstate commerce, but the very postulate upon which the authority of Congress to absolutely prohibit foreign importations as expounded by the decisions of this court rests is the broad distinction which exists between the two powers and therefore the cases cited and many more which might be cited announcing the principles which they uphold have obviously no relation to the question in hand."[486]

INTERSTATE COMMERCE; CONFLICT OF DOCTRINE AND OPINION

The question whether Congress's power to regulate commerce "among the several States" embraced the power to prohibit it furnished the topic of one of the most protracted debates in the entire history of the Constitution's interpretation, a debate the final resolution of which in favor of Congressional power is an event of first importance for the future of American Federalism. The issue was as early as 1841 brought forward by Henry Clay, in an argument before the Court in which he raised the specter of an act of Congress forbidding the interstate slave trade.[487] The debate was concluded ninety-nine years later by the decision in United States _v._ Darby, in which the Fair Labor Standards Act was sustained. The resume of it which is given below is based on judicial opinions, arguments of counsel, and the writings of jurists and political scientists. Much of this material was evoked by efforts of Congress, from about 1905 onward, to stop the shipment interstate of the products of child labor.

ACTS OF CONGRESS PROHIBITIVE OF INTERSTATE COMMERCE

The earliest such acts were in the nature of quarantine regulations and usually dealt solely with interstate transportation. In 1884 the exportation or shipment in interstate commerce of livestock having any infectious disease was forbidden.[488] In 1903 power was conferred upon the Secretary of Agriculture to establish regulations to prevent the spread of such diseases through foreign or interstate commerce.[489] In 1905 the same official was authorized to lay an absolute embargo or quarantine upon all shipments of cattle from one State to another when the public necessity might demand it.[490] A statute passed in 1905 forbade the transportation in foreign and interstate commerce and the mails of certain varieties of moths, plant lice, and other insect pests injurious to plant crops, trees, and other vegetation.[491] In 1912 a similar exclusion of diseased nursery stock was decreed,[492] while by the same act, and again by an act of 1917,[493] the Secretary of Agriculture was invested with powers of quarantine on interstate commerce for the protection of plant life from disease similar to those above described for the prevention of the spread of animal disease. While the Supreme Court originally held federal quarantine regulations of this sort to be constitutionally inapplicable to intrastate shipments of livestock, on the ground that federal authority extends only to foreign and interstate commerce,[494] this view has today been abandoned. _See_ pp. 248-249.

THE LOTTERY CASE

The first case to come before the Court in which the issues discussed above were canvassed at all thoroughly was Champion _v._ Ames,[495] involving the act of 1895 "for the suppression of lotteries."[496] An earlier act excluding lottery tickets from the mails had been upheld in the earlier case of In re Rapier,[497] on the proposition that Congress clearly had the power to see that the very facilities furnished by it were not put to bad uses. But in the case of commerce the facilities are not ordinarily furnished by the National Government, and the right to engage in foreign and interstate commerce comes from the Constitution itself, or is anterior to it.

How difficult the Court found the question produced by the act of 1895, forbidding any person to bring within the United States or to cause to be "carried from one State to another" any lottery ticket, or an equivalent thereof, "for the purpose of disposing of the same," is shown by the fact that the case was thrice argued before the Court, and the fact that the Court's decision finally sustaining the act was a five-to-four decision. The opinion of the Court, on the other hand, prepared by Justice Harlan, marked an almost unqualified triumph at the time for the view that Congress's power to regulate commerce among the States includes the power to prohibit it, especially to supplement and support State legislation enacted under the police power.[498] Early in the opinion extensive quotation is made from Chief Justice Marshall's opinion in Gibbons _v._ Ogden,[499] with special stress upon the definition there given of the phrase "to regulate." Justice Johnson's assertion on the same occasion is also given: "The power of a sovereign State over commerce, * * *, amounts to nothing more than, a power to limit and restrain it at pleasure." Further along is quoted with evident approval Justice Bradley's statement in Brown _v._ Houston,[500] that "the power to regulate commerce among the several States is granted to Congress in terms as absolute as is the power to regulate commerce with foreign nations."

NATIONAL PROHIBITIONS AND STATE POLICE POWER

Following in the wake of Champion _v._ Ames, Congress has repeatedly brought its prohibitory powers over interstate commerce and communications to the support of certain local policies of the States in the exercise of their reserved powers, thereby aiding them in the repression of the liquor traffic,[501] of traffic in game taken in violation of State laws,[502] of commerce in convict-made goods,[503] of the white slave traffic,[504] of traffic in stolen motor vehicles,[505] of kidnapping,[506] of traffic in stolen property,[507] of racketeering,[508] of prize-fight films or other pictorial representation of encounters of pugilists.[509] The conception of the Federal System on which the Court based its validation of this legislation was stated by it in 1913 in sustaining the Mann "White Slave" Act in the following words: "Our dual form of government has its perplexities, State and Nation having different spheres of jurisdiction, * * *, but it must be kept in mind that we are one people; and the powers reserved to the States and those conferred on the Nation are adapted to be exercised, whether independently or concurrently, to promote the general welfare, material, and moral."[510] At the same time, the Court made it plain that in prohibiting commerce among the States, Congress was equally free to support State legislative policy or to devise a policy of its own. "Congress," it said, "may exercise this authority in aid of the policy of the State, if it sees fit to do so. It is equally clear that the policy of Congress acting independently of the States may induce legislation without reference to the particular policy or law of any given State. Acting within the authority conferred by the Constitution it is for Congress to determine what legislation will attain its purposes. The control of Congress over interstate commerce is not to be limited by State laws."[511]

HAMMER _v._ DAGENHART