Constitutional challenges to the New Deal

The first major test of New Deal legislation came in Panama Refining Co. v. Ryan, announced January 7, 1935. Contested in this case was the National Industrial Recovery Act, Section 9(c), in which Congress had delegated to the President authority "to prohibit the transportation in interstate and foreign commerce of petroleum ... produced or withdrawn from storage in excess of the amount permitted ... by any State law". The NIRA passed in June 1933, and Roosevelt moved quickly to file executive orders to regulate the oil industry. Two small, independent oil producers, Panama Refining Co. and Amazon Petroleum Co. filed suit seeking an injunction to halt enforcement, arguing that the law exceeded Congress's interstate commerce power and improperly delegated authority to the President. The Supreme Court, by an 8-1 margin, Chief Justice Hughes, who wrote the majority opinion, indicated that the policy which Section 9(c) enacted was not unconstitutional and that it was only ruled unconstitutional because it was poorly worded and did not convey specific powers. The Court's opinion indicated that Congress could resolve the unconstitutional provisions of the Act by simply adding procedural safeguards, == Gold Clause Cases ==

Economic regulation again appeared before the Supreme Court in the Gold Clause Cases. In his first week after taking office, Roosevelt closed the nation's banks, acting from fears that gold hoarding and international speculation posed a danger to the national monetary system. He based his actions on the Trading with the Enemy Act of 1917. Congress quickly ratified Roosevelt's action with the Emergency Banking Act. A month later, the President issued Executive Order 6102, confiscating all gold coins, bullion, and certificates, requiring they be surrendered to the government by May 1, 1933, in exchange for currency. Congress also passed a joint resolution cancelling all gold clauses in public and private contracts, stating such clauses interfered with its power to regulate U.S. currency. While the Roosevelt administration waited for the Court to return its judgment, contingency plans were made for an unfavorable ruling. Ideas circulated within the White House to narrowly exercise the government's power of sovereign immunity by withdrawing the right to sue the government to enforce gold clauses. Attorney General Cummings suggested the Court should be immediately packed to ensure a favorable ruling. Roosevelt himself ordered the Treasury to manipulate the market to give the impression of turmoil, although Treasury Secretary Henry Morgenthau refused. Roosevelt also drew up executive orders to close all stock exchanges and prepared a radio address to the public. Hughes chided Congress for an act that, while legal, was regarded as clearly immoral; == Railroad Retirement Board v. Alton Railroad Co. ==

While not itself a part of the New Deal, the Roosevelt administration kept a close eye on the challenge to the 1934 Railroad Retirement Act, Railroad Retirement Board v. Alton Railroad Co. Its similarity with the Social Security Act meant the test of the railroad pension regime would serve as an indicator of whether Roosevelt's ambitious retirement program would be found constitutional. The railroad pension was designed to encourage older rail workers to retire, thereby creating jobs for younger railroaders desperately in need of work, although ostensibly Congress passed the act on the grounds that it would increase safety on the country's railways. On May 6, 1935, Justice Roberts's 5–4 opinion for the Court rejected the government's position, dismissing the purported effect on railway safety as "without support in reason or common sense". Furthermore, Roberts took issue with a provision of the act which awarded pension computation credit to former rail workers, regardless of when they had last worked in the industry. Roberts characterized the provision as "a naked appropriation of private property"—taking the belongings "of one and bestowing it upon another"—and a violation of the Due Process Clause of the Fifth Amendment. == Black Monday ==

''Humphrey's Executor v. United States'' The first of three cases on Black Monday read out was ''Humphrey's Executor v. United States''. After taking office, President Roosevelt came to believe that William E. Humphrey, a Republican appointed to a six-year term on the Federal Trade Commission (FTC) in 1931, was at odds with the administration's New Deal initiatives. Writing to request Humphrey's resignation from the FTC in August 1933, Roosevelt openly admitted his reason for seeking his removal: "I did not feel that your mind and my mind go along together." This proved to be a blunder on Roosevelt's part. Humphrey promptly filed suit to return to his appointed office and to collect backpay. The basis for his suit was the 1914 Federal Trade Commission Act, which specified that the President was only authorized to remove a FTC commissioner "for inefficiency, neglect of duty, or malfeasance in office". Humphrey died on February 14, 1934, and his suit was carried on by his wife—as executor of his estate—for backpay up to the date of his death (with interest). Associate Justice George Sutherland read the Court's opinion, holding that Roosevelt had indeed acted outside of his authority when he fired Humphrey from the FTC, stating that Congress had intended regulatory commissions such as the FTC to be independent of executive influence. Louisville Joint Stock Land Bank v. Radford Next announced was Louisville Joint Stock Land Bank v. Radford. The 1934 Frazier-Lemke Farm Bankruptcy Act was designed to give aid to debt-ridden farmers, allowing them to reacquire farms they had lost from foreclosure, or to petition the Bankruptcy Court within their district to suspend foreclosure proceedings. The legislation's ultimate goal was to help those farmers scale down their mortgages. which revisited the National Industrial Recovery Act, invalidating the NIRA in its entirety. Under Section 3 of the NIRA, the President had promulgated the Live Poultry Code to regulate the New York poultry market. The Schechter brothers had been charged with criminal violations of the code and were convicted, whereupon they appealed on grounds that the NIRA was an unconstitutional delegation of legislative power to the executive, the NIRA sought to regulate business which was not engaged in interstate commerce, and that certain sections violated the Fifth Amendment Due Process Clause. Chief Justice Hughes delivered the opinion of the unanimous court, holding that Congress had delegated too much lawmaking authority to the President without any clear guidelines or standards. Section 3 granted either trade associations or the President authority to draft "codes of fair competition", which amounted to a capitulation of congressional legislative authority. Hughes determined the poultry at issue in the case, though purchased for slaughter interstate, were not intended for any further interstate transactions after Schecter slaughtered them. Thus, the poultry were outside of Congress's authoritative reach unless Schechter's business had a direct and logical connection to interstate commerce, per the Shreveport Rate Case. Hughes used a direct/indirect effect analysis to determine the Schechters' business was not within the reach of congressional regulation. The Supreme Court's decision in ''Humphrey's Ex. particularly stunned the administration. Only nine years earlier, in Myers v. United States'', the Taft Court had held the President's power to remove executive officials was plenary. Roosevelt and his entourage viewed Sutherland's particularly vicious criticism as an attempt to publicly shame the President and paint him as having purposefully violated the Constitution. The comment lit a fire under the media and indignated the public. Scorned for the perceived attack on the Court, Roosevelt assumed a diplomatic silence toward the Court and waited for a better opportunity to press his cause with the public. == United States v. Butler ==

The Agricultural Adjustment Act received its trial in the case of United States v. Butler, announced January 6, 1936. The AAA had created an agricultural regulatory program with a supporting processing tax; the revenue raised was then specifically used to pay farmers to reduce their acreage and production, which would in turn reduce surplus harvest yields and increase prices. Officials of the Hoosac Mills Corp. argued that the AAA was as unconstitutional as the National Industrial Recovery Act, attempting to regulate activity not in interstate commerce. Specifically attacked was the use of Congress's Taxing and Spending power undergirding the program. Associate Justice Roberts again delivered the opinion of a divided court, agreeing with those challenging the tax. Regarding agriculture as an essentially local activity, the Court invalidated the AAA as a violation of the powers reserved to the states under the Tenth Amendment. The Court also used the occasion to settle a dispute over the General Welfare Clause stemming back to the administration of George Washington, holding Congress possessed a power to tax and spend for the general welfare. == Carter v. Carter Coal Co. ==

Following the undoing of the National Recovery Administration by the Schechter decision, Congress attempted to salvage the coal industry code promulgated under the National Industrial Recovery Act in the Bituminous Coal Conservation Act of 1935. The act, closely following the criteria of the Schechter ruling, declared a public interest in coal production and found it so integrated into interstate commerce as to warrant federal regulation. James Carter, shareholder and president of the Carter Coal Co., filed suit against the board of directors when they voted to pay the tax. On May 18, 1936, the Supreme Court ruled the act unconstitutional by a 5–4 margin. Associate Justice Sutherland read the Carter v. Carter Coal Company opinion, striking down the coal act in its entirety, citing the Schechter decision. Most surprising in the opinion was reliance on 19th-century cases legal scholars had thought long repudiated: Kidd v. Pearson and United States v. E. C. Knight Co. == Ashton v. Cameron County Water Improvement Dist. No. 1 ==

On May 25, 1936, the Supreme Court ruled the 1934 Municipal Bankruptcy Act (also known as the Sumners-Wilcox Bill) was unconstitutional in a 5–4 decision. The law amended the Federal Bankruptcy Act and permitted any municipality or other political subdivision of any state to obtain a voluntary readjustment of its debts through proceedings in Federal Court. Texas's Cameron County Water Improvement Dist. No. 1, which claimed to be insolvent and unable to meets its debts in the long run, petitioned the local Federal District Court for readjustments granted under the Municipal Bankruptcy Act. The case eventually reached the Supreme Court, which found that the law violated Tenth Amendment rights of state sovereignty. == Morehead v. New York ex rel. Tipaldo ==

The final provocation for New Deal supporters came in the overturning of a New York minimum wage statute on June 1, 1936. Morehead v. New York ex rel. Tipaldo was an important attempt among New Deal supporters to overturn a prior Supreme Court decision prohibiting wage price controls, ''Adkins v. Children's Hospital. Felix Frankfurter, who had led the earlier unsuccessful arguments before the Supreme Court, worked carefully to craft the law for the New York legislature so it would stand up to challenges based upon the Adkins opinion. The case resulted from the indictment of a Brooklyn laundry owner John Tipaldo, who not only had failed to pay his female employees the required minimum salary ($12.40 per week) but had further hidden his transgression by falsifying his books. Tipaldo contested the law under which he was charged as unconstitutional and filed for habeas corpus relief. The New York Court of Appeals found itself in agreement with Tipaldo, being unable to find any substantial difference between the New York law and the Washington, D.C., law overturned in Adkins. The outcome of the Tipaldo'' case thus hung in the balance of Justice Roberts's vote. however, Roberts believed the appellant had not taken issue with the Adkins precedent and failed to challenge it. Having no "case or controversy" legs upon which to stand, Roberts deferred to the Adkins precedent. == West Coast Hotel v. Parrish ==

The decision in the Parrish case received the most attention, and later became an integral part of the "switch in time" narrative of conventional history. In the case, the Court divided along the same lines it had in the Tipaldo case, only this time around Roberts voted to overrule the Adkins precedent as the case brief specifically asked the Court to reconsider its prior decision. Furthermore, the decision worked to hinder Roosevelt's push for the Court reform bill, further reducing what little public support there was for change in the Supreme Court. Oral arguments occurred on December 16 and 17, 1936, with counsel for Parrish specifically asking the Court to reconsider its decision in ''Adkins v. Children's Hospital'', Roberts indicated his desire to overturn Adkins immediately after oral arguments on December 17, 1936. The eight voting justices anticipated Justice Harlan F. Stone, who was absent due to illness, would be the fifth vote necessary for a majority opinion affirming the constitutionality of the minimum wage law. Roosevelt also believed that because of the overwhelming support that had been shown for the New Deal in his re-election, Hughes was able to persuade Roberts to no longer base his votes on his own political beliefs and side with him during future votes on New Deal-related policies. In one of his notes from 1936, Hughes wrote that Roosevelt's re-election forced the Court to depart from "its fortress in public opinion" and severely weakened its capability to base its rulings on personal or political beliefs. Shortly after leaving the Court, Roberts reportedly burned all of his legal and judicial papers. As a result, there is no significant collection of Roberts' manuscript papers, as there is for most other modern Justices. Roberts did prepare a short memorandum discussing his alleged change of stance around the time of the Court-packing effort, which he left in the hands of Justice Felix Frankfurter. ==New Justices after 1937 Parrish case==

Three New Deal justices that favored Roosevelts policies were Hugo Black, William O. Douglas, and Felix Frankfurter. Each of these men served on the Supreme Court for over 20 years; they formed a new majority upholding economic regulation of the New Deal and similar policies. Willis Van Devanter of the Four Horsemen of Reaction announced his retirement in 1937 after 26 years as a Justice. His seat was filled by Black. Starting 1937, a slew of Supreme Court cases affirmed the constitutionally of the New Deal laws: • NLRB v. Jones & Laughlin Steel Corp. for workers' unions • Steward Machine Co. v. Davis for unemployment taxes for unemployed people • Helvering v. Davis for employment taxes for old-age people labeled as Old-Age, Survivors, and Disability Insurance (OASDI) program • United States v. Carolene Products Co. for allowing Congress to regulate interstate commerce "The switch in time that saved nine" has been called the "Constitutional Revolution" of 1937. ==References==