American Legal History
American Legal History II
Antitrust Law, Labor Law, and the New Deal
What is the role of law in society?
Tonight’s Timeframe . . .
Reconstruction → 1865 - 1877
Gilded Age → 1870s - 1900
Progressive Era → 1890s - 1920
American Imperialism → 1880s - 1914
World War I → 1914 - 1918
The Roaring Twenties → 1920 - 1929
Great Depression & New Deal → 1929 - 1941
World War II → 1941 - 1945
An Unprecedented Crisis
Stock Market Value → GM ($73 → $8); US Steel ($262 → $22)
Bank Failures → 9,000 during the 1930s
Business Closures → 26,000 businesses in 1930 alone
Survivors → Layoffs
Unemployment → 11 million; 25% of labor force
Evictions → 200,000 in NYC in 1930
Auto and consumer good sales stagnating since 1926
Government Response
Hoover (1928 - 1932):
Small Government
Normal Feature of Capitalism & “Market Correction”
Subsequent Government involvement
FDR:
Reconcile democracy, individual liberty, and economic recovery/development.
Legacy of Progressivism
Expanded federal government → Relief, Recovery, and Reform
Legal Concerns and the New Deal
Were the New Deal programs Constitutional?
Was the expansion of federal power by the FDR administration Constitutional?
Is it acceptable to ignore the Constitution in emergency situations?
What are the larger implications of these questions/precedents?
For historical periods that followed the New Deal?
For the speed an efficacy of the recovery from the Great Depression?
Legal Challenges to New Deal Programs → NIRA
NIRA → National Industrial Recovery Act (1933)
President authorized to regulate industry for fair wages and prices.
Created the NRA and PWA
Suspended antitrust laws, encouraged industry alliances.
Voluntary agreements with companies regarding hours of work, rates of pay, and prices to charge for their products.
Regulations → 557 codes; nearly 5000 business practices banned.
Schechter Poultry Corp. v. United States (1934)
“Sick chicken case”
NRA Code regulating the sale of chickens → Live Poultry Code
Schecter Corp. → Indicted on 60 violations of the poultry code including:
Competing too hard
Keeping prices too low
Selling unfit chickens
Avoiding inspections by local poultry regulators
Falsifying records of poultry sold
Selling poultry to non-licensed purchasers
500 other code violations pending at time of Supreme Court decision.
Major Question → Did Congress unconstitutionally delegate legislative power to the President by giving him power to regulate certain industries without also providing guiding standards?
Unanimous Decision → Text 489 - 492
Legal Challenges to New Deal Programs → AAA
Agricultural Adjustment Act (1933)
Rural Depression → Overproduction, shrinking markets.
Goal → Decreasing surpluses and correcting market prices.
Features:
(1) to secure voluntary reduction of the acreage in basic crops through agreements with producers and use of direct payments for participation in acreage control programs;
(2) to regulate marketing through voluntary agreements with processors, associations or producers, and other handlers of agricultural commodities or products;
(3) to license processors, association, and others handling agricultural commodities to eliminate unfair practices or charges;
(4) to determine the necessity for and the rate or processing taxes; and
(5) to use the proceeds of taxes and appropriate funds for the cost of adjustment operations, for the expansion of markets, and for the removal or agricultural surpluses."
By 1935 farm income was 50% higher than in 1932.
United States v. Butler (1936)
Challenge to processing tax on agricultural commodities.
Secretary of Agriculture determined crops subject to tax.
What is the nature of the Congress’ Article I power to levy taxes?
Tax was imposed on processors of farm products, the proceeds to be paid to farmers who would reduce their area and crops.
Major Question → Did Congress exceed its constitutional taxing and spending powers with the Agricultural Adjustment Act?
6 - 3 Decision - Text 492 - 496
Legal Challenges to New Deal Efforts → NLRA
National Labor Relations Act (1935)
“Wagner Act”
Guarantees the right of private sector employees to organize into trade unions, engage in collective bargaining, and take collective action such as strikes.
Congressional ability to regulate and investigate any unfair business practices in commercial activity that affected interstate commerce.
Roots in Progressivism
Enforcement → NLRB (Prevent violations, judicial review)
Conservative Opposition
NLRB v. Jones and Laughlin Steel Corp. (1937)
4th largest U.S. steel producer
Fired 10 workers at PA plant who moved to unionize
NLRB intervention → rehire, back pay
Company refuses w/ lower court support.
Major Question → Was the NLRA consistent with the Commerce Clause?
5 - 4 Decision - Excerpt Packet
Legal Challenges to New Deal Programs → Fair Labor Standards Act
1938
Minimum Wage Right; “Time and a half” overtime for 40 hour week
It applies to employees engaged in interstate commerce or employed by an enterprise engaged in commerce or in the production of goods for commerce.
Children under eighteen cannot do certain dangerous jobs, and children under sixteen cannot work in manufacturing or mining, or during school hours.
700k received raises
West Coast Hotel Company v. Parrish (1937)
Washington State Law → “Minimum Wage for Women” → $14.50 minimum weekly wage per 48 hour work week.
Parrish → Hotel Employee, received less.
Files suit → Recover wages; 5th and 14th Amendments protect substantive economic rights against the state, such as the right to freely negotiate contracts
Hotel Company’s Contention → Individuals do not have such a right and a state may constitutionally restrict the terms of private contracts when protecting the welfare of its citizens.
Major Question → Does a minimum wage law for women violate the Due Process Clause of the Fifth Amendment, as applied to the states by the Fourteenth Amendment?
5 - 4 Decision - Text 499 - 502
Lochner!
US v. Darby (1938)
Prosperous Georgia Lumber Company
Manufactured and shipped lumber in and out of state
Success, expansion, and contraction.
Darby arrested for violating FLSA:
Employed workmen at less than the prescribed minimum wage or more than the prescribed maximum hours without payment to them of any wage for overtime.
Other counts charge the employment by appellee of workmen in the production of lumber for interstate commerce at wages at less than 25 cents an hour or for more than the maximum hours per week without payment to them of the prescribed overtime wage.
Still another count charges appellee with failure to keep records showing the hours worked each day a week by each of his employees as required
Lower Courts → FLSA violates the Commerce Clause
Major Question → Was the FLSA a legitimate exercise of Congress's power to regulate interstate commerce?
Unanimous Decision - Excerpt Packet