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THE PRESIDENT: Well, Steve, if you insist. That s an awful thing to put up to a fellow at this hour of the morning just out of bed. Suppose we make this background and take some time because it is an awfully big subject to cover, and it is just possible that one or two of you may not have read the whole twenty-eight or twenty-nine pages of the Supreme Court decision.
I have been a good deal impressed bywhat shall I call it?the rather pathetic appeals that I have had from all around the country to do something. They are very sincere as showing faith in the Government. They are so sincere that you feel in reading themand so far there have been somewhere between two and three thousand by letter and telegram and I haven't seen this morning's mail yetso sincere that you feel the country is beginning to realize that something in the long run has to be done. And they are all hoping that something will be done right away.
I think probably the best way to illustrate it is to read you just a few telegrams that came out of this huge pile. They are all from business men, every one. I took out only the telegrams from business men. And they illustrate pretty well that the information that they have received since Monday through the press and through the radio has failed to explain to them the implications of the Supreme Court's decision. In other words, they are groping, and they have not yet had information from either the press or the radio or from me, which would put this situation in plain, lay language.
Now, coming down to the decision itself. What are the implications? For the benefit of those of you who haven't read it through I think I can put it this way: the implications of this decision are much more important than almost certainly any decision of my lifetime or yours, more important than any decision probably since the Dred Scott case, because they bring the country as a whole up against a very practical question. That is in spite of what one gentleman said in the paper this morning, that I resented the decision. Nobody resents a Supreme Court decision. You can deplore a Supreme Court decision, and you can point out the effect of it. You can call the attention of the country to what the implications are as to the future, what the results of that decision are if future decisions follow this decision.
Now take the decision itself. In the Schechter case the first part of it states the facts in the case, which you all know. Then it takes up the code itself and it points out that the code was the result of an Act of Congress. It mentions in passing that the Act of Congress was passed in a great emergency and that it sought to improve conditions immediately through the establishing of fair practices, through the prevention of unfair practices. It then goes on in general and says that even though it was an emergency, it did not make any difference whether it was an emergency or not, it was unconstitutional because it did not set forth very clearly, in detail, definitions of the broad language which was used in the Act. In fact, it says that it makes no difference what kind of emergency this country ever gets into, an Act has to be constitutional. Of course, it might take a month or two of delay to make an Act constitutional and then you wouldn't know whether it was constitutional or notyou would have to do the best you could.
Now, they have pointed out in regard to this particular Act that it was unconstitutional because it delegated certain powers which should have been written into the Act itself. And then there is this interesting language that bears that out. It is on page eight.
Of course, that is a very interesting implication. Some of us are old enough to remember the war daysthe legislation that was passed in April, May and June of 1917. Being a war, that legislation was never brought before the Supreme Court. Of course, as a matter of fact, a great deal of that legislation was far more violative of the strict interpretation of the Constitution than any legislation that was passed in 1933. All one has to do is to go back and read those war acts which conferred upon the Executive far greater power over human beings and over property than anything that was done in 1933. But the Supreme Court has finally ruled that extraordinary conditions do not create or enlarge constitutional power! It is a very interesting statement on the part of the Court.
However, the question of the delegation of legislative power is not so very important in this particular case because the Supreme Court has at least intimated that in so far as the delegation of power was concerned, the language of the Act could have been so improved as to give definite directions to administrative or quasi-judicial bodies and in that respect it refers to the methods already used in the case of the Federal Trade Commission and cites that with approval.
In other words, for the future the delegation of power is not an unsurmountable object, and undoubtedly an Act could be written which would in general conform to this opinion of the Supreme Court as to delegated powersget that! So that is not the most serious implication yet.
it only prescribed, if you remember, objectives to be sought
Of course, there is a good deal said in the opinion about the imposing of codes. As I remember it there was only one code imposed and that was the alcohol code. I don't think there was any other code imposed by Executive Order.
Now we come down to this big thing. The implication of the provisions as applied to intrastate transactions. Why is itlet me put it this waywhy is it that so many of these telegrams are futile? Why is it that so many of these letters and telegrams show that the senders do not realize what the rest of this decision means?
Let's put the decision in plain lay language in regard to at least the dictum of the Court and never mind this particular sick chicken or whatever they call it. That was a question of fact, but of course the Court in ruling on the question of fact about these particular chickens said they were killed in New York and sold and probably eaten in New York, and therefore it was probably intrastate commerce. But of course the Court does not stop there. In fact the Court in this decision, at least by dictumand remember that dictum is not always followed in the futurehas gone back to the old Knight case in 1885, which in fact limited any application of interstate commerce to goods in transitnothing else!
Since 1885 the Court in various decisions has enlarged on the definition of interstate commercerailroad cases, coal cases and so forth and so on. It was clearly the opinion of the Congress before this decision and the opinion of various attorneys-general, regardless of party, that the words "interstate commerce" applied not only to an actual shipment of goods but also to a great many other things that affected interstate commerce....
The whole tendency over these years has been to view the interstate commerce clause in the light of present-day civilization. The country was in the horse-and-buggy age when that clause was written and if you go back to the debates on the Federal Constitution you will find in 1787 that one of the impelling motives for putting in that clause was this: There wasn't much interstate commerce at allprobably 80 or 90 percent of the human beings in the thirteen original States were completely self-supporting within their own communities.
They got their own food, their own clothes; they swapped or bought with any old kind of currency, because we had thirteen different kinds of currency. They bought from their neighbors and sold to their neighbors. However, there was quite a fear that each of the thirteen States could impose tariff barriers against each other and they ruled that out. They would not let the States impose tariff barriers, but they were afraid that the lawyers of that day would find some other method by which a State could discriminate against its neighbors on one side or the other, or discriminate in favor of its neighbors on one side or the other. Therefore, the interstate commerce clause was put into the Constitution with the general objective of preventing discrimination by one of these Sovereign States against another Sovereign State.
They had in those days no problems relating to employment. They had no problems relating to the earning capacity of peoplewhat the man in Massachusetts earned, what his buying power was. Nobody had ever thought of what the wages were or the buying capacity in the slave-holding States of the South. There were no social questions in those days. The question of health on a national basis had never been discussed. The question of fair business practices had never been discussed. The word was unknown in the vocabulary of the Founding Fathers. The ethics of the period were very different from what they are today. If one man could skin a fellow and get away with it, why, that was all right.
In other words, the whole picture was a different one when the interstate commerce clause was put into the Constitution from what it is now. Since that time, because of the improvement in transportation, because of the fact that, as we know, what happens in one State has a good deal of influence on the people in another State, we have developed an entirely different philosophy.
The prosperity of the farmer does have an effect today on the manufacturer in Pittsburgh. The prosperity of the clothing worker in the city of New York has an effect on the prosperity of the farmer in Wisconsin, and so it goes. We are interdependent-we are tied in together. And the hope has been that we could, through a period of years, interpret the interstate commerce clause of the Constitution in the light of these new things that have come to the country. It has been our hope that under the interstate commerce clause we could recognize by legislation and by judicial decision that a harmful practice in one section of the country could be prevented on the theory that it was doing harm to another section of the country. That was why the Congress for a good many years, and most lawyers, have had the thought that in drafting legislation we could depend on an interpretation that would enlarge the Constitutional meaning of interstate commerce to include not only those matters of direct interstate commerce, but also those matters which indirectly affect interstate commerce.
The implication, largely because of what we call obiter dicta in this opinion, the implication of this opinion is that we have gone back, that the Supreme Court will no longer take into consideration anything that indirectly may affect interstate commerce. That hereafter they will decide the only thing in interstate commerce over which they can permit the exercise of Federal jurisdiction is goods in transit plus, perhaps, a very small number of transactions which would directly affect goods in transit.
Furthermore, they say on page 19 [295 US 495, 542], "(1) Were these transactions 'in' interstate commerce? Much is made of the fact that almost all the poultry coming to New York is sent there from other States" . . . "When defendants had made their purchases, whether at the West Washington Market in New York City or at the railroad terminals serving the City, or elsewhere, the poultry was trucked to their slaughter houses in Brooklyn for local disposition. The interstate transactions in relation to that poultry then ended."
Then to come to the next point, they take one very interesting stand; first they talk about necessary and well-established distinctions between the direct and indirect effects. They quote a number of cases and finally come down to the quotation from Industrial Association vs. United States at the top of page 23 [295 US 495, 547]:
The other four are: first, construction. I suppose the theory is that the building, even though the materials come from other States and none of the materials come from the locality of the building, that the building is part of the land and therefore that nothing entering into the erection of that building can have anything to do with the interstate commerce clause of the Constitution.
The next, the third large occupation, is miningthat is to say the taking of coal, oil or copper or anything else out of the ground. The implication there is that no matter where the coal or oil or copper goes it cannot be considered to have any relationship to interstate commerce because it came out of one place. It was a part of a place or locus.
Another great occupation is manufacturing. The implication is that if I manufacture at Hyde Park, New York, let us say, a national article such as a national brand of tooth paste or a national brand of automobiles while I only sell a few tubes of tooth paste or four or five cars in the place of manufacture at Hyde Park, and sell the rest in interstate commerce, the actual manufacturing itself seems to be so closely tied to the actual factory, that it does not make any difference where the goods go and therefore the interstate commerce clause of the Constitution cannot apply to any of the elements of the manufacturing at that place, either to materials that may come from other States, to the working conditions that obtain in the factory, to the wages paid or to the unfair practices that I as a manufacturer may be engaged in.
And then finally you have a fifth great occupation of human lifethe growing of crops. It evidently does not make any difference, after I grow my wheat, whether it is put in an elevator in a different State, perhaps to be commingled with other wheat and sold in Liverpool, or New York or Germany or in any other State of the Union-it does not make any difference. The fact is that the wheat was grown in one place, and therefore the growing of crops cannot be considered in any shape, manner or form as coming under the interstate commerce clause of the Constitution. Perhaps wheat actually in transit under this decision may come under it. But it could not if it were in storage, for example in a bin, because there it would be tied to a definite locality.
And so it does bring us up rather squarely as to the big issue in the country and as to how we are going to solve it. The big issue is this: Does this decision mean that the United States Government has no control over any national economic problem?
The simple example is crop adjustment. Are we going to take the hands of the Federal Government completely off any effort to adjust the growing of national crops, and go right straight back to the old principle that every farmer is a lord of his own farm and can do anything he wants, raise anything, any old time, in any quantity, and sell any time he wants? You and I know perfectly well that if we completely abandon crop controlI don't care whether it is the present method or, let us say, the McNary-Haugen method, because, after all, that is a Federal method, tooif we are to abandon Federal relationship to any national crop, we shall again have thirty-six-cent wheat. You can't stop it. Under present world conditions we will have five-cent cotton. That is obvious.
And then you come down to the next series of thingsmanufacturing. We have tried to improve the economic conditions of certain forms of manufacturing. I am not talking about the social conditions now. I am talking about the economic conditions, giving to manufacturers a chance to eliminate things that we have nationally concluded are not fair. For example, the chain stores going into little communities or big communities all over the country and starting a system of loss leaders. Of course anybody who does his own marketing, and all you ladies of the press will appreciate this, knows perfectly well that where there is the loss-leader system and you are trying to get along on a budget, you are going to look into the chain-store window and see what the loss leader is each day. You may get a can of peas for fourteen cents instead of eighteen cents; naturally you wait and buy the loss leader. The chain store can afford to put out loss leaders; but the independent grocery store cannot.
A number of Statesand here we come down to the last questionhave attempted to take away the privileges or the advantages that come to very large nationwide businesses, by imposing special taxes on chain stores, but only a few States have succeeded in doing it. And that is a very good illustration of the difficulty of correcting economic conditions by forty-eight separate actions.
We attempted to do it in the codes by getting industry itself to formulate codes that would eliminate loss leaders. They did, and as a result the wave of bankruptcies of small stores which was under way throughout the country two years ago was stopped. And the volume of telegrams that has come in today leads one to believe that they again face, a great many of them, bankruptcies, or at least they think they do.
The other example is that of a department store which puts in a book department and sells all the latest detective stories that retail ordinarily at $1.50I ought to know because I read themfor ninety cents. Up to the time that their code went through, bankruptcies of small book stores throughout the country where these practices were engaged in were increasing. They were being put out of business because they could not afford to sell $1.50 books for ninety cents. The big department stores could afford to do it, because people who went into that department to save sixty cents on a detective story undoubtedly bought a good many other things in that department store, and the store was able to make up the loss.
Now all that seems to be "out of the window." We made a very sincere effort to eliminate things that were called unfair trade practices not only because they were hurting little fellows, but also because they were giving advantages to people with lots of capital or with nationwide systemsadvantages over smaller men or local men. It seemed to be going pretty well. It was done under the general theory that, because these goods came from every part of the United States, there was a rather direct implication that they affected the internal commerce of the United States as a whole, and therefore came under the interstate commerce clause.
Then we come down to the mines. There have been a number of cases about mines, but the implication in this quotation is that mines and mining do not come under interstate commerce. It is purely a local thing no matter where the copper or the oil or coal goes. It is rather interesting, I think, that there are former decisions of the Supreme Court which have held much more liberally in labor cases, in mining cases where people were trying to get an injunction against labor. In those cases the Supreme Court has tended to approve mining injunctions on the ground that the coal was going to go into interstate commerce.
This case, however, seems to be a direct reversal in saying that where you try to improve the wages and hours of miners, the coal suddenly becomes a purely local intrastate matter and you can't do anything about it. Of course, here the shoe is on the other foot.
Well, what does it do? It seems to me it bringsoh, I suppose you will want to say an issue. I accept the word "issue" on one condition; and that is that you make it very clear that it is not a partisan issue. It is infinitely deeper than any partisan issue; it is a national issue. Yes, and the issue is thisgoing back to these telegrams that I have been reading to you: Is the United States going to decide, are the people of this country going to decide that their Federal Government shall in the future have no right under any implied power or any court-approved power to enter into a solution of a national economic problem, but that that national economic problem must be decided only by the States?
The other part of it is this: Shall we view our social problemsand in that I include employment of all kindsshall we view them from the same point of view or not; that the Federal Government has no right under this or following opinions to take any part in trying to better national social conditions? Now that is flat and that is simple!
If we accept the point of view that under no interpretation of the Constitution can the Federal Government deal with construction matters, mining matters (which means everything that comes out of the ground), manufacturing matters or agricultural matters, but that they must be left wholly to the States, the Federal Government must abandon any legislation. Thus we go back automatically to the fact that there will be not merely thirteen Governments as there were in 1789 at a time where none of these questions existed in the countrybut we will go back to a Government of forty-eight States.
Or we can go ahead with every possible effort to make national decisions based on the fact that forty-eight sovereignties cannot agree quickly enough or practically enough on any solution for a national economic problem or a national social problem.
When I was in Albany I had the desire of getting through the Legislature on two or three occasions certain bills relating to the improvement of factory conditions and the improvement of labor conditions, and people came to me and said, "If those bills go through we are going to move into Pennsylvania."
That gave to the Chief Executive of one State serious concern. Should he force the legislation and let these factories move out of this State into a State that didn't have any restrictions and didn't have nearly as advanced social legislation; or should he go in and leave certain evils just as they were? In other words, by the returning of all these powers exclusively to the States you will unavoidably develop sectionalism. Just imagine what will happen in the case of the cotton textile industrythe problem of the differential in wage between New England and the South. Less than two years ago that differential was more than five dollars a week in favor of the South. Under the code system it has been cut to two and a half dollars; and in all human probability if we had gone on under code methods, the differential would gradually have been cut still further. They were actually working on an additional cut in the labor differential in the cotton textile industry. That, of course, we have had to stop.
We come down, in passing, to the question of whether they can now live up to these codes. We hope sosurely. Everybody hones that the wage agreements and codes will be lived up to, and every effort should be made to have people in every industry live up to the codes. I sincerely hope that everybody will live up to them.
On the other hand, as President, naturally, I have to think of what is going to happen to the country if people, some people, do not live up to them. You go back to the same old 90 percent and 10 percent we have talked about so often. There are, let's say, 100 of us in this room who are making cotton textiles. Each one owns a mill and out of the 100 there are three or four, that is all, who see an advantage to be gainedan immediate advantage of quick profit. So they cut their wages, and increase their hours, and go ahead with the stretch-out system beyond the code allowance. What is going to happen to us?
Let us say that it happens to be a mill right next to Charlie Hurd's [one of the reporters] mill. Charlie Hurd, making the same kind of goods, is naturally going to call a meeting and he is going to say, "This fellow over here, Bill Smith, is cutting his wages and increasing his hours and increasing his stretch-out. And I am going broke." Well, we are going to have an awful lot of sympathy for Charlie Hurd, and what are we going to do about it? Probably he would say, "Do you think I ought to go broke?" and probably most of us would say, "Why, no; you came 100 percent right straight through, and we will release you from any obligation to keep on with these code practices."
Being human and in order to keep his head above water, he will probably try to meet the competition of the other fellow; and we wouldn't blame him one bit. So it is not a question of fighting industry. The great bulk of industry is perfectly sincere and honest in wanting to maintain good wages and fair hours, but the problem is going to be: Can they do it by agreement? That is the thing of course we cannot tell between Monday and Friday of this week.
You and I know human nature. Fundamentally it comes down to this. In the long run can voluntary processes on the part of business bring about the same practical results that were attained under N.R.A.? I mean the good results. Of course there have been some bad ones. But I mean the good results. Can it be done by voluntary action on the part of business? Can we go ahead as a Nation with the beautiful theory, let us say, of some of the press, "At last the rule of Christ is restored. Business can do anything it wants and business is going to live up to the golden rule so marvelously that all of our troubles are ended." It is a school of thought that is so delightful in its naïveté.
And so we are facing a very, very great national non-partisan issue. We have got to decide one way or the other. I don't mean this summer or winter or next fall, but over a period, perhaps, of five years or ten years we have got to decide: whether we are going to relegate to the forty-eight States practically all control over economic conditionsnot only State economic conditions but national economic conditions; and along with that whether we are going to relegate to the States all control over social and working conditions throughout the country regardless of whether those conditions have a very definite significance and effect in other States outside of the individual States. That is one side of the picture. The other side of the picture is whether in some way we are going to turn over or restore towhichever way you choose to put itturn over or restore to the Federal Government the powers which exist in the national Governments of every other Nation in the world to enact and administer laws that have a bearing on, and general control over, national economic problems and national social problems.
This N.R.A. decisionif you accept the obiter dicta and all the phraseology of itseems to be squarely on the side of restoring to the States forty-eight different controls over national economic and social problems. This is not a criticism of the Supreme Court's decision; it is merely pointing out the implications of it.
In some ways it may be the best thing that has happened to this country for a long time that such a decision has come from the Supreme Court, because it clarifies the issue. If the press and the radio of this country can make that issue perfectly clear, it will be doing a very great service. The telegrams that I have been reading to you, suggesting every kind of method of overcoming the decision, will not continue to come in, because all except a very few of them suggest remedies which are wholly outside of the opinion of the Supreme Court. In other words, they are in violation of that opinion-nine suggested remedies out of ten are in violation of the strict interpretation of that opinion.
I think it is perfectly proper to say further that the implications of this decision could, if carried to their logical conclusion, strip the Federal Government of a great many other powers. Federal alcohol controlwell, that is gonewe know that is gone. This decision did it. Federal alcohol control was put in with an objective. At the end of Prohibition, when spirits and beer came back, I think everybody, whether on the Prohibition side or the anti-Prohibition side, believed that the Federal Government should do everything in its power to see that pure liquor and good liquor was offered to the American people. However, that is not, apparently, a Federal power. We have forty-eight Nations from now on under a strict interpretation of this decisionforty-eight Nations, each of which will prescribe a different standard for its own liquor, and will be completely powerless to prevent liquor from the next-door State, or ten States away, from coming into its borders.
Your next implication relates to certain things that we believe are within the Federal power. They have not been definitely outlawed by this decision; but the decision raises a very great question about them. The Securities Act of 1933, for example, was intended to prevent nationally the issuing of securities to the investing or speculating public under false pretenses. The Act required that, through a central Federal organization, securities that were proposed to be issued should have the full truth stated about them. That is all there was to itit was a Truth in Securities Act and it has been working very well. However, securities, I suppose, like a crop or like manufactured goods, can be held to be issued in one place and bought by the public in one place, and are therefore wholly intrastate.
It does not make any difference whether the securities afterward go into forty-eight States or not. The issuance and buying in one State, like a crop or a factory product, have no character of interstate commerce about them under this decision.
In the same way the decision raises a question with respect to the Stock Exchange Act. After all, a stock exchange is just a building in one placein one city. There are a good many of them scattered throughout the country. They sell various forms of securities, but each one is attached to the ground like wheat or cottonlike coal or anything else. The decision raises a question about that.
Then you come down to the A.A.A. itself. I have discussed that. The question is raised by this decision as to whether the Federal Government has any constitutional right to do anything about any crop in the United States; and it suggests by implication that forty-eight States should each have their own crop laws.
You see the implications of the decision. That is why I say it is one of the most important decisions ever rendered in this country. And the issue is not going to be a partisan issue for a minute. The issue is going to be whether we go one way or the other. Don't call it right or left; that is just first-year high-school language, just about. It is not right or leftit is a question for national decision on a very important problem of Government. We are the only Nation in the world that has not solved that problem. We thought we were solving it, and now it has been thrown right straight in our faces. We have been relegated to the horse-and-buggy definition of interstate commerce.
Now, as to the way outI suppose you will want to know something about what I am going to do. I am going to tell you very, very little on that. There will be this afternoon or tomorrow morning an announcement in regard to pending cases. And there will be on Sunday or Monday a further announcement of another step. Probably in the next few days there will be a number of announcements which will be along that line. This is only for the next four or five days, along the line of clarifying certain existing situations. Let the bigger things sink in for the next four or five days. So many suggestions have come that I have asked all of the suggestors to send their suggestions to a central sourcethe Solicitor General and the Attorney Generalin order that they might be digested. Nobody is writing out anything for me. And Steve says it is one o'clock daylight time and we have been talking an awful lot. Have you any other questions?
Q. You made a reference to the necessity of the people deciding within the next five or ten years. Is there any way of deciding that question without voting on a constitutional amendment or the passing of one?