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No. 42 "The Supreme Court And The New Deal," June 17, 1935. American Liberty League. 400dpi TIFF G4 page images Digital Library Services, University of Kentucky Libraries Lexington, Kentucky Am_Lib_Leag_42 These pages may freely searched and displayed. Permission must be received for subsequent distribution in print or electronically. No. 42 "The Supreme Court And The New Deal," June 17, 1935. American Liberty League. American Liberty League. Washington, D.C. 1935. This electronic text file was created by Optical Character Recognition (OCR). No corrections have been made to the OCR-ed text and no editing has been done to the content of the original document. Encoding has been done through an automated process using the recommendations for Level 1 of the TEI in Libraries Guidelines. Digital page images are linked to the text file. Pamphlets Available Copies of the following pamphlets and other League literature may be obtained upon application to the League's national headquarters: Why, the American Liberty League? The Tenth Commandment Statement of Principles and Purposes Progress vs. Change Speech by Jouett Shouse Recovery, Relief and the Constitution Speech by Jouett Shouse American Liberty League Its Platform An Analysis of the President's Budget Message Analysis of the $4,880,000,000 Emergency Relief Appropriation Act Economic Security The Bonus Inflation Democracy or Bureaucracy? Speech by Jouett Shouse The Thirty Hour Week The Constitution Still Stands Speech by Jouett The Pending Banking Bill The Holding Company Bill The Legislative Situation Speech by Jouett Shouse "What is the Constitution Between Friends?" Speech by James M. Beck Where Are We Going? Speech by James W. Wadsworth Price Control Yesterday, Today and Tomorrow The Labor Relations Bill Government by Experiment Speech by Dr. Neil Carothers How Inflation Affects the Average Family Speech by Dr. Ray Bert Westerfield The AAA Amendments Political Banking Speech by Dr. Walter E. Spahr The Bituminous Coal Bill Regimenting the Farmers Speech by Dr. G. W. Dyer Extension of the NRA Human Rights and the Constitution Speech by R. E. Desvemine The Farmers' Home Bill The TV A Amendments The New Deal, Its Unsound Theories and Irreconcilable Policies Speech by Ralph M. Shaw Is the Constitution for Sale? Speech by Capt. William H. Stayton How to Meet the Issue Speech by Hon. William E. Borah AMERICAN LIBERTY LEAGUE NATIONAL PRESS BUILDING WASHINGTON, D. C. â˜… â˜… THE SUPREME COURT AND THE NEW DEAL â˜… â˜… â˜… "If, in the opinion of the people, the distribution or modification of the constitutional powers be in any particular wrong, let it be corrected by an amendment in the way in which the Constitution designates. But let there be no change by usurpation; for though this, in one instance, may be the instrument of good, it is the customary weapon by which free governments are destroyed." George Washington. AMERICAN LIBERTY LEAGUE Rational Headquarters NATIONAL PRESS BUILDING WASHINGTON, D. C. Document No. 42 June, 1935 The Supreme Court and the New Deal â˜… Beginning with the Amazon Petroleum decision on January 17, 1935, the Supreme Court of the United States on five occasions within a period of five months has decided formally that measures adopted by those presently in charge of the Executive and Legislative branches of the Federal Government, acting either in combination or individually, were in violation of the Constitution. In two of these cases the Schechter case resulting in the invalidation of the National Industrial Recovery Act, and the oil decision the Court held that Congress had attempted an unconstitutional delegation of legislative powers to the President. In two instances the Schechter case and the decision invalidating the Railroad Retirement Act the Court declared that the Congress and the President together had attempted to go beyond the limitations of Federal power to regulate interstate commerce and had thus invaded the reserved rights of the States. Also in two instances the Railroad Retirement decision and that invalidating the Frazier-Lemke Farm Mortgage Moratorium Act the Court held that Congress and the President acting together had violated that provision of the Fifth Amendment to the Constitution which prohibits the taking of private property without due process of law. In one instance the so-called Humphrey case resulting in a decision that the President had exceeded his authority in attempting the summary removal of a member of the Federal Trade Commission the Court held that the President had attempted to infringe upon the prerogatives of the Legislative branch of the Government. Thus there has been official confirmation from the highest source of the criticisms which have been made from time to time of various policies of the present administration criticisms based principally upon the contention that these policies involved attempted aggrandizement of the Executive branch of the Government (the President) in violation of those basic principles upon which rest our system of dual sovereignty of State and Nation and our division of powers between the three coordinate branches of the Federal Government. There are now reports that some of those who are dissatisfied with the Supreme Court's forthright defense of the Constitution may seek to devise means whereby to attain their objectives despite the decisions mentioned. In that connection the American Liberty League calls attention to the excerpt from George Washington's farewell address printed on the cover page of this pamphlet. i The Schechter Case Decided May 27, 1935 This case grew out of the conviction in the United States District Court for the Eastern District of New York of the several defendants upon eighteen counts of an indictment charging violations of the "Live Poultry Code" promulgated under the National Industrial Recovery-Act. In the language of Chief Justice Hughes who delivered the unanimous opinion of the Court the defendants raised three contentions as follows: "(1) that the Code had been adopted pursuant to an unconstitutional delegation by Congress of legislative power; "(2) that it attempted to regulate intrastate transactions which lay outside the authority of Congress; and "(3) that in certain provisions it was repugnant to the due process clause of the Fifth Amendment." The Court upheld the first two contentions and passed over the third with a statement to the effect that in view of the decision with respect to the first two there was no need for considering the third. Pertinent excerpts from the Court's unanimous decision follow: "We are told that the provision of the statute authorizing the adoption of codes must be viewed in the light of the grave national crisis with which Congress was confronted. Undoubtedly, the conditions to which power is addressed are always to be considered when the exercise of power is challenged. Extraordinary conditions may call for extraordinary remedies. But the argument necessarily stops short of an attempt to justify action which lies outside the sphere of constitutional authority. Extraordinary conditions do not create or enlarge constitutional power. The Constitution established a national government with powers deemed to be adequate, as they have proved to be both in war and peace, but these powers of the national government are limited by the constitutional grants. Those who act under these grants are not at liberty to transcend the imposed limits because they believe that more or different power is necessary. Such assertions of extra-constitutional authority were anticipated and precluded by the explicit terms of the Tenth Amendment '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.'" ****** "We recently had occasion to review the pertinent decisions and the general principles which govern the determination of this question. Panama Refining Company v. Ryan, 293 U. S. 388. The Constitution provides that 'All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.' Art. I,_sec. 1. And the Congress is authorized 'To make all laws which shall be necessary and proper for carrying into execution' its general powers. Art. I, sec. 8, par. 18. The Congress is not permitted to abdicate or to transfer to others the essential legislative functions with which it is thus vested. We have repeatedly recognized the necessity of adapting legislation to complex conditions involving a host of details with which the national legislature cannot deal directly. We pointed out in the Panama Company case that the Constitution has never been regarded as denying to Congress the necessary resources of flexibility and practicality, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the legislature is to apply. But we said that the constant recognition of the necessity and validity of such provisions, and the wide range of administrative authority which has been developed by means of them, cannot be allowed to obscure the limitations of the authority to delegate, if our constitutional system is to be maintained." ****** "Congress cannot delegate legislative power to the President to exercise an unfettered discretion to make whatever laws he thinks may be needed or advisable for the rehabilitation and expansion of trade or industry." ****** "Section 3 of the Recovery Act is without precedent. It supplies no standards for any trade, industry or activity. It does not undertake to prescribe rules of conduct to be applied to particular states of fact determined by appropriate administrative procedure. Instead of prescribing rules of conduct, it authorizes the making of codes to prescribe them. For that legislative undertaking, section 3 sets up no standards, aside from the statement of the general aims of rehabilitation, correction and 4 expansion described in section one. In view of the scope of that broad declaration, and of the nature of the few restrictions that are imposed, the discretion of the President in approving or prescribing codes, and thus enacting laws for the government of trade and industry throughout the country, is virtually unfettered. We think that the code-making authority thus conferred is an unconstitutional delegation of legislative power." "If the commerce clause were construed to reach all enterprises and transactions which could be said to have an indirect effect upon interstate commerce, the federal authority would embrace practically all the activities of the people and the authority of the State over its domestic concerns would exist only by sufferance of the federal government." ****** "If the federal government may determine the wages and hours of employees in the internal commerce of a State, because of their relation to cost and prices and their indirect effect upon interstate commerce, it would seem that a similar control might be exerted over other elements of cost, also affecting prices, such as the number of employees, rents, advertising, methods of doing business, etc. All the processes of production and distribution that enter into cost could likewise be controlled. If the cost of doing an intrastate business is in itself the permitted object of federal control, the extent of the regulation of cost would be a question of discretion and not of power." ****** "It is not the province of the Court to consider the economic advantages or disadvantages of such a centralized system. It is sufficient to say that the Federal Constitution does not provide for it. Our growth and development have called for wide use of the commerce power of the federal government in its control over the expanded activities of interstate commerce, and in protecting that commerce from burdens, interferences, and conspiracies to restrain and monopolize it. But the authority of the federal government may not be pushed to such an extreme as to destroy the distinction, which the commerce clause itself establishes, between commerce 'among the several States' and the internal concerns of a State. The same answer must be made to the contention that is based upon the serious economic situation which led to the passage of the Recovery Act, the fall in prices, the decline in wages and employment, and the curtailment of the market for commodities. Stress is laid upon the great importance of maintaining wage distributions which would provide the necessary stimulus in starting 'the cumulative forces making for expanding commercial activity.' Without in any way disparaging this motive, it is enough to say that the recuperative efforts of the federal government must be made in a manner consistent with the authority granted by the Constitution." 5 Justice Cardozo in a separate opinion concurring in the decision, in which he was joined by Justice Stone, commented as follows: "This is delegation running riot. No such plenitude of power is susceptible of transfer. The statute, however, aims at nothing less, as one can learn both from its terms and from the administrative practice under it. Nothing less is aimed at by the code now submitted to our scrutiny." ****** "If this code had been adopted by Congress itself, and not by the President on the advice of an industrial association, it would even then be void unless authority to adopt it is included in the grant of power 'to regulate commerce with foreign nations and among the several states.' United States Constitution, art. I, sec. 8, clause 3. "I find no authority in that grant for the regulation of wages and hours of labor in the intrastate transactions that make up the defendants' business." ii The Humphrey Case Decided May 27, 19S5 The Federal Trade Commission Act specifies that members of that body shall serve for seven-year terms with the proviso that "any Commissioner may be removed by the President for inefficiency, neglect of duty, or malfeasance in office." The late William E. Humphrey on December 10, 1931, was nominated by President Hoover to succeed himself as a member of the Commission. The nomination was confirmed by the Senate and Mr. Humphrey was duly commissioned for a term of seven years expiring September 25, 1938. On July 25, 1933, President Roosevelt addressed a letter to the Commissioner asking for the latter's resignation on the ground "that the aims and purposes of the administration with respect to the work of the Commission can be carried out more effectively with personnel of my own selection." The President's letter disclaimed any reflection upon the Commissioner personally or upon his services. After some intervening correspondence, Mr. Humphrey declined to resign and on October 7, 1933 the President wrote him: "Effective as of this date you are hereby removed from the office of Commissioner of the Federal Trade Commission." Mr. Humphrey refused to acquiesce in this action and until the time of his death on February 14, 1934, contended that he was legally a member of the Commission, entitled to perform the duties of that office and to receive the compensation provided by law. After his death, the executor of his estate brought suit in the Court of Claims to recover the salary alleged to be due the deceased from October 8, 1933, to February 14, 1934. The Court of Claims certified two specific questions to the Supreme Court as follows: "1. Do the provisions of section 1 of the Federal Trade Commission Act, stating that 'any commissioner may be removed by the President for inefficiency, neglect of duty, or malfeasance in office,' restrict or limit the power of the President to remove a commissioner except upon one or more of the causes named? "If the foregoing question is answered in the affirmative, then "2. If the power of the President to remove a commissioner is restricted or limited as shown by the foregoing interrogatory and the answer made thereto, is such a restriction or limitation valid under the Constitution of the United States?" The Supreme Court answered both questions in the affirmative. The far-reaching implications of the authority sought to be established by the President in the Humphrey case were pointed out by the Supreme Court in its unanimous decision as follows: "If Congress is without authority to prescribe causes for removal of members of the trade commission and limit executive power of removal accordingly, that power at once becomes practically all-inclusive in respect of civil officers with the exception of the judiciary provided for by the Constitution. The Solicitor General, at the bar, apparently recognizing this to be true, with commendable candor, agreed that his view in respect of the removability of members of the Federal Trade Commission necessitated a like view in respect of the Interstate Commerce Commission and the Court of Claims. We are thus confronted with the serious question whether not only the members of these quasi-legislative and quasi-judicial bodies, but the judges of the legislative Court of Claims, exercising judicial power (Williams v. United States, 289 U. S. 553, 565-567), continue in office only at the pleasure of the President." In other words, if the President's assumption of authority to dismiss a Federal Trade Commissioner without cause had been validated, the Chief Executive would have been in a position to establish unquestioned control over several important quasi-legislative and quasi-judicial 7 bodies which have been set up by Congress to carry out congressional mandates. The Supreme Court declared its position as follows: "We think it plain under the Constitution that illimitable power of removal is not possessed by the President in respect of officers of the character of those just named. The authority of Congress, in creating quasi-legislative or quasi-judicial agencies, to require them to act in discharge of their duties independently of executive control cannot well be doubted; and that authority includes, as an appropriate incident, power to fix the period during which they shall continue, and to forbid their removal except for cause in the meantime. For it is quite evident that one who holds his office only during the pleasure of another, cannot be depended upon to maintain an attitude of independence against the latter's will. "The fundamental necessity of maintaining each of the three general departments of government entirely free from the control or coercive influence, direct or indirect, of either of the others, has often been stressed and is hardly open to serious question. So much is implied in the very fact of the separation of the powers of these departments by the Constitution; and in the rule which recognizes their essential co-equality. The sound application of a principle that makes one master in his own house precludes him from imposing his control in the house of another who is master there." Ill The Frazier-Lemke Case Decided May 27, 1935 This case arose out of an attempt by the Louisville Joint Stock Land Bank to foreclose a mortgage amounting to $9,000 secured by a farm owned by William W. Radford in Christian County, Kentucky. The mortgage was given for $8,000 in 1922 and increased to $9,000 in 1924. In 1931 and in subsequent years Radford defaulted on his covenant to pay taxes. In 1932 and 1933 he defaulted in his promise to pay the installments of interest and principal. In 1933 he also defaulted in his promise to keep the buildings insured. After some preliminary negotiations, Radford sought to take refuge in the relief provided by paragraph 7 of sub-section (s) of the Frazier-Lemke Act. That section purported to require the bankruptcy court to stay all proceedings for five years during which the debtor would be permitted to retain possession of his property 8 provided he paid a "reasonable rental annually." At the end of five years, or prior thereto, the debtor would be permitted to pay into court the appraised price of the property. He was also given the privilege of asking a reappraisal at any time during this five-year period and upon payment of the price fixed either by the original appraisal or the reappraisal it was provided that he would be given full possession of and title to the property. During this stage of the procedure Radford's farm was appraised at $4,445, although the bank offered in open court to pay $9,205.09 in cash for the mortgaged property. The District Court approved the findings of the referee appointed in this case and the District Court's decree was affirmed by the Circuit Court of Appeals for the Sixth Circuit. The Supreme Court in its unanimous decision delivered by Justice Brandeis reviewed the status of mortgage holders prior to the enactment of the Frazier-Lemke Act and contrasted that status with that which would have existed had the latter Act been held valid. In this connection the Court said: "For centuries efforts to protect necessitous mortgagors have been persistent. Gradually the mortgage of real estate was transformed from a conveyance upon condition into a lien; and failure of the mortgagor to pay on the day fixed ceased to effect an automatic foreclosure. Courts of equity, applying their established jurisdiction to relieve against penalties and forfeitures, created the equity of redemption. Thus the mortgagor was given a reasonable time to cure the default and to require a reconveyance of the property. Legislation in many states carried this development further, and preserved the mortgagor's right to possession, even after default, until the conclusion of foreclosure proceedings. But the statutory command that the mortgagor should not lose his property on default had always rested on the assumption that the mortgagee would be compensated for the default by a later payment, with interest, of the debt for which the security was given; and the protection afforded the mortgagor was, in effect, the granting of a stay. No instance has been found, except under the Frazier-Lemke Act, of either a statute or decision compelling the mortgagee to relinquish the property to the mortgagor free of the lien unless the debt was paid in full." Discussing the constitutional questions involved, the Court said: "The bankruptcy power, like the other great substantive powers of Congress, is subject to the Fifth Amendment. Under the bankruptcy power Congress may discharge the debtor's personal obligation, be-9 cause, unlike the States, it is not prohibited from impairing the obligation of contracts. Compare Mitchell v. Clark, 110 U. S. 633, 643. But the effect of the Act here complained of is not the discharge of Radford's personal obligation. It is the taking of substantive rights in specific property acquired by the Bank prior to the Act." During the argument of the case, it was contended that the Frazier-Lemke Act was justified on the grounds of public policy which, it was stated, demanded that farms be individually owned by those who operate them; that to permit widespread foreclosure of mortgages would result in transferring ownership to great corporations and a tendency toward creation of a peasant class; that there was grave danger at the time of passage of the act that foreclosures would become widespread, and that an emergency had arisen which required congressional action. The Court declared: "We have no occasion to consider either the causes or the extent of farm tenancy; or whether its progressive increase would be arrested by the provisions of the Act. Nor need we consider the occupations of the beneficiaries of the legislation. These are matters for the consideration of Congress; and the extensive provision for the refinancing of farm mortgages which Congress has already made, shows that the gravity of the situation has been appreciated. The province of the Court is limited to deciding whether the Frazier-Lemke Act as applied has taken from the Bank without compensation, and given to Radford, rights in specific property which are of substantial value. Compare Ochoa v. Hernandez, 230 U. S. 139, 161; Loan Association v. Topeka, 20 Wall. 655, 662, 664; In re Dillard, Fed. Cas. No. 3, 912, p. 706. As we conclude that the Act as applied has done so, we must hold it void. For the Fifth Amendment commands that, however great the Nation's need, private property shall not be thus taken even for a wholly public use without just compensation. If the public interest requires, and permits, the taking of property of individual mortgagees in order to relieve the necessities of individual mortgagors, resort must be had to proceedings by eminent domain; so that, through taxation, the burden of the relief afforded in the public interest may be borne by the public." iv The Amazon Petroleum Case Decided January 7, 19S5 This case arose out of suits brought by the Panama Refining Company, the Amazon Petroleum Corporation and others to restrain Federal 10 officials from enforcement of restrictions upon the production and disposition of oil. The National Industrial Recovery Act in section 9 (c) authorized the President to prohibit transportation in interstate and foreign commerce of petroleum and petroleum products produced or withdrawn from storage in excess of restrictions imposed by any of the states. The Supreme Court by an eight to one decision (Justice Cardozo dissenting) held that: (1) Section 9 (c) of the Recovery Act was an attempted unconstitutional delegation of legislative power to the President because Congress laid down no standard by which the President should determine when to exercise the authority given him. (2) That the Executive Order placing the statutory prohibition in effect was void because it contained no finding of the grounds upon which the President based his action. (3) That Executive Orders and regulations issued under the purported authority under the statute were necessarily void. In passing, the Supreme Court decision called attention to one of the absurdities likely to arise under a system of wholesale law making by executive decree when it pointed out that in the case of the Panama Refining Company a lower court had solemnly issued an injunction restraining the enforcement of section 4 of article 3 of the Petroleum Code at a time when that section did not exist. The section was included in the code in its original form but was eliminated by an Executive Order of September 13, 1933, and subsequently reinstated by an Executive Order of September 25, 1934. On this point the Supreme Court said: "Whatever the cause of the failure to give appropriate public notice of the change in the section, with the result that the persons affected, the prosecuting authorities, and the courts, were- alike ignorant of the alteration, the fact is that the attack in this respect was upon a provision which did not exist." The Supreme Court's analysis of Section 9(c), the analysis upon which its declaration of unconstitutionality was based, reads as follows: "Section 9 Cc) is brief and unambiguous. It does not attempt to control the production of petroleum and petroleum products within a State. It does not seek to lay down rules for the guidance of state legislatures or state officers. It leaves to the States and to their constituted authorities the determination of what production shall be permitted. It does not qualify the President's authority by reference to the basis, or extent, of the State's limitation of 11 production. Section 9 (c) does not state whether, or in what circumstances or under what conditions, the President is to prohibit the transportation of the amount of petroleum or petroleum products produced in excess of the State's permission. It establishes no criterion to govern the President's course. It does not require any finding by the President as a condition of his action. The Congress in Section 9 (c) thus declares no policy as to the transportation of the excess production. So far as this section is concerned, it gives to the President an unlimited authority to determine the policy and to lay down the prohibition, or not to lay it down, as he may see fit. And disobedience to his order is made a crime punishable by fine and imprisonment." After discussing the general declarations of policy in Title I of the Recovery Act, some of which were argued in support of the legality of this attempted delegation of legislative authority, the Court stated: "It is no answer to insist that deleterious consequences follow the transportation of 'hot oil,' oil exceeding state allowances. The Congress did not prohibit that transportation. The Congress did not undertake to say that the transportation of 'hot oil* was injurious. The Congress did not say that transportation of that oil was 'unfair competition.' The Congress did not declare in what circumstances that transportation should be forbidden, or require the President to make any determination as to any facts or circumstances. Among the numerous and diverse objectives broadly stated, the President was not required to choose. The President was not required to ascertain and proclaim the conditions prevailing in the industry which made the prohibition necessary. The Congress left the matter to the President without standard or rule, to be dealt with as he pleased. The effort by ingenious and diligent construction to supply a criterion still permits such a breadth of authorized action as essentially to commit to the President the functions of a legislature rather than those of an executive or administrative officer executing a declared legislative policy. We find nothing in Section 1 which limits or controls the authority conferred by Section 9 (c)." The Court also pointed out the far-reaching effects which might have followed had Section 9 (c) been held constitutional. The Court said: "The question whether such a delegation of legislative power is permitted by the Constitution is not answered by the argument that it should be assumed that the President has acted, and will act, for what he believes to be the public good. The point is not one of motives but of constitutional authority, for which the best of motives is not a substitute. While the present controversy relates to a delegation to the President, the basic question has a much wider application. If the Congress can make a grant of legislative authority of the sort attempted 12 by Section 9 (c), we find nothing in the Constitution which restricts the Congress to the selection of the President as grantee. The Congress may vest the power in the officer of its choice or in a board or commission such as it may select or create for the purpose. Nor, with respect to such a delegation, is the question concerned merely with the transportation of oil, or of oil produced in excess of what the State may allow. If legislative power may thus be vested in the President, or other grantee, as to that excess of production, we see no reason to doubt that it may similarly be vested with respect to the transportation of oil without reference to the State's requirements. That reference simply defines the subject of the prohibition which the President is authorized to enact, or not to enact, as he pleases. And if that legislative power may be given to the President or other grantee, it would seem to follow that such power may similarly be conferred with respect to the transportation of other commodities in interstate commerce with or without reference to state action, thus giving to the grantee of the power the determination of what is a wise policy as to that transportation, and authority to permit or prohibit it, as the person, or board or commission, so chosen, may think desirable." In this connection, the Court reviewed numerous precedents that involved the delegation of Legislative power, pointing out that in each instance Congress has prescribed standards and has recognized that there are limits beyond which such delegation cannot go. The Court added: "If Section 9 (c) were held valid, it would be idle to pretend that anything would be left of limitations upon the power of the Congress to delegate its law-making function. The reasoning of the many decisions we have reviewed would be made vacuous and their distinctions nugatory. Instead of performing its law-making function the Congress could at will and as to such subjects as it chooses transfer that function to the President or other officer or to an administrative body. The question is not of the intrinsic importance of the particular statute before us, but of the constitutional processes of legislation which are an essential part of our system of government." v The Railroad Pension Case Decided May 6, 1935 In this case the Supreme Court divided five to four to hold unconstitutional the Railroad Retirement Act which was designed to establish a compulsory retirement and pension system 13 for the benefit of employees of all railroads operating in interstate traffic. Justice Roberts delivered the opinion of the Court with the concurrence of Justices Van Devanter, McReynolds, Sutherland and Butler. Chief Justice Hughes was supported in his dissenting opinion by Justices Brandeis, Stone and Cardozo. The Court held that the Act was unconstitutional because several of its provisions were unreasonable and arbitrary and would result in appropriation of the railroads' private property in violation of the Fifth Amendment to the Constitution. It was also held that because the statute's sole purpose was the promotion of the social welfare of the employees it did not constitute a valid exercise of the power granted Congress under the interstate commerce clause. The Court said: "It is arbitrary in the last degree to place upon the carriers the burden of gratuities to thousands who have been unfaithful and for that cause have been separated from the service, or who have elected to pursue some other calling, or who have retired from the business, or have been for other reasons lawfully dismissed. And the claim that such largess will promote efficiency or safety in the future operation of the railroads is without support in reason or common sense." After an extended review of the precedents cited by both sides and a discussion of the financial burdens which the Act would have imposed upon the carriers, the Court declared: "It results from what has now been said that the Act is invalid because several of its inseparable provisions contravene the due process of law clause of the Fifth Amendment. We are of opinion that it is also bad for another reason which goes to the heart of the law, even if it could survive the loss of the unconstitutional features which we have discussed. The Act is not in purpose or effect a regulation of interstate commerce within the meaning of the Constitution." The Court summarized the implications of the theory underlying the Retirement Act as follows: "In final analysis, the petitioners' sole reliance is the thesis that efficiency depends upon morale, and morale in turn upon assurance of security for the worker's old age. Thus pensions are sought to be related to efficiency of transportation, and brought within the commerce power. In supporting the Act the petitioners constantly recur to such phrases as 'old age security,' 'assurance of old age 14 security,' 'improvement of employee morale and efficiency through providing definite assurance of old age security,' 'assurance of old age support,' 'mind at ease/ and 'fear of old age dependency.' These expressions are frequently connected with assertions that the removal of the fear of old age dependency will tend to create a better morale throughout the ranks of employees. The theory is that one who has an assurance against future dependency will do his work more cheerfully, and therefore more efficiently. The question at once presents itself whether the fostering of a contented mind on the part of an employee by legislation of this type, is in any just sense a regulation of interstate transportation. If that question be answered in the affirmative, obviously there is no limit to the field of so-called regulation. The catalogue of means and actions which might be imposed upon an employer in any business, tending to the satisfaction and comfort of his employees, seems endless. Provision for free medical attendance and nursing, for clothing, for food, for housing, for the education of children, and a hundred other matters, might with equal propriety be proposed as tending to relieve the employee of mental strain and worry. Can it fairly be said that the power of Congress to regulate interstate commerce extends to the prescription of any or all of these things? Is it not apparent that they are really and essentially related solely to the social welfare of the worker and therefore remote from any regulation of commerce as such? We think the answer is plain. These matters obviously lie outside the orbit of Congressional power." In conclusion, the Court declared: "We feel bound to hold that a pension plan thus imposed is in no proper sense a regulation of the activity of interstate transportation. It is an attempt for social ends to impose by sheer fiat noncontractual incidents upon the relation of employer and employee, not as a rule or regulation of commerce and transportation between the States, but as a means of assuring a particular class of employees against old age dependency. This is neither a necessary nor an appropriate rule or regulation affecting the due fulfilment of the railroads' duty to serve the public in interstate transportation." 15