PANAMA REFINING CO. v. RYAN, 293 U.S. 388 (1935)

293 U.S. 388

PANAMA REFINING CO. et al. v.

RYAN et al.

AMAZON PETROLEUM CORPORATION et al. v.

SAME.

Nos. 135, 260. Argued Dec. 10, 11, 1934.

Decided Jan. 7, 1935.

[293 U.S. 388, 391] Messrs. J. N. Saye, of Longview, Tex., and F. W. Fischer, of Tyler, Tex., for petitioners.

[293 U.S. 388, 398] Mr. Harold M. Stephens, Asst. Atty. Gen., for respondents.

[293 U.S. 388, 405]

Mr. Chief Justice HUGHES delivered the opinion of the Court.

On July 11, 1933, the President, by Executive Order No. 6199 (15 USCA 709 note), prohibited 'the transportation in interstate and foreign commerce of petroleum and the products thereof produced or withdrawn from storage in excess of the amount permitted to be produced or withdrawn from storage by any State law or valid regulation or order prescribed thereunder, by any board, commission, officer, or other duly [293 U.S. 388, 406] authorized agency of a State.' 1 This action was based on section 9(c) of title 1 of the National Industrial Recovery Act of June 16, 1933, 48 Stat. 195, 200, 15 U.S.C. tit. 1, 709(c), 15 USCA 709(c). That section provides:

'Sec. 9. ... '(c) The President is authorized to prohibit the transportation in interstate and foreign commerce of petroleum and the products thereof produced or withdrawn from storage in excess of the amount permitted to be produced or withdrawn from storage by any State law or valid regulation or order prescribed thereunder, by any board, commission, officer, or other duly authorized agency of a State. Any violation of any order of the President issued under the provisions of this subsection shall be punishable by fine of not to exceed $1,000, or imprisonment for not to exceed six months, or both.'

On July 14, 1933, the President, by Executive Order No. 6204 (15 USCA 709 note), authorized the Secretary of the Interior to exercise all the powers vested in the President 'for the purpose of en- [293 U.S. 388, 407] forcing Section 9(c) of said act and said order' of July 11, 1933, 'including full authority to designate and appoint such agents and to set up such boards and agencies as he may see fit, and to promulgate such rules and regulations as he may deem necessary.' 2 That order was made under section 10(a) of the National Industrial Recovery Act, 48 Stat. 200, 15 U.S.C. 710(a), 15 USCA 710(a), authorizing the President 'to prescribe such rules and regulations as may be necessary to carry out the purposes' of title 1 of the National Industrial Recovery Act and providing that 'any violation of any such rule or regulation shall be punishable by fine of not to exceed $500, or imprisonment for not to exceed six months, or both.'

On July 15, 1933, the Secretary of the Interior issued regulations to carry out the President's orders of July 11 and 14, 1933. These regulations were amended by orders [293 U.S. 388, 408] of July 25, 1933, and August 21, 1933, prior to the commencement of these suits. Regulation IV provided, in substance, that every producer of petroleum should file a

monthly statement under oath, beginning August 15, 1933, with the Division of Investigations of the Department of the Interior giving information with respect to the residence and post office address of the producer, the location of his producing properties and wells, the allowable production as prescribed by state authority, the amount of daily production, all deliveries of petroleum, and declaring that no part of the petroleum or products produced and shipped had been produced or withdrawn from storage in excess of the amount permitted by state authority. Regulation V required every purchaser, shipper (other than a producer), and refiner of petroleum, including processors, similarly to file a monthly statement under oath, giving information as to residence and post office address, the place and date of receipt, the parties from whom and the amount of petroleum received and the amount held in storage, the disposition of the petroleum, particulars as to deliveries, and declaring, to the best of the affiant's information and belief, that none of the petroleum so handled had been produced or withdrawn from storage in excess of that allowed by state authority. Regulation VII provided that all persons embraced within the terms of section 9(c) of the act, 15 USCA 709(a) and the executive orders and regulations issued thereunder, should keep 'available for inspection by the Division of Investigations of the Department of the Interior adequate books and records of all transactions involving the production and transportation of petroleum and the products thereof.'

On August 19, 1933, the President, by Executive Order No. 6256, stating that his action was taken under title 1 of the National Industrial Recovery Act, approved a 'Code of [293 U.S. 388, 409] Fair Competition for the Petroleum Industry.' 3 By a further Executive Order of August 28, 1933, the President designated the Secretary of the Interior as Administrator, and the Department of the Interior as the federal agency, to exercise on behalf of the President all the powers vested in him under that act and code. Section 3(f) of title 1 of the National Industrial Recovery Act, 15 USCA 703(f), provides that, when a code of fair competition has been approved or prescribed by the President under that title, 'any violation of any provision thereof in any transaction in or affecting interstate or foreign commerce shall [293 U.S. 388, 410] be a misdemeanor and upon conviction thereof an offender shall be fined not more than $500 for each offense, and each day such violation continues shall be deemed a separate offense.'

This 'Petroleum Code' (in its original form and as officially printed) provided in section 3 of article III relating to 'Production' for estimates of 'required production of crude oil to balance consumer demand for petroleum products' to be made at intervals by the federal agency. This 'required production' was to be 'equitably allocated' among the several states. These estimates and allocations, when approved by the President, were to be deemed to be 'the net reasonable market demand,' and the allocations were to be recommended 'as the operating schedules for the producing States and for the industry.' By section 4 of article III, the subdivision, with respect to producing properties, of the production allocated to each state, was to be made within the state. The second paragraph of that section further provided:

'If any subdivision into quotas of production allocated to any State shall be made within a State any production by any person, as person is defined in Article I, Section 3 of this code in excess of any such quota assigned to him, shall be deemed an unfair trade practice and in violation of this code.'

By an Executive Order of September 13, 1933, No. 6284-a, modifying certain provisions of the Petroleum Code, this second paragraph of section 4 of article III was eliminated. It was reinstated by Executive Order of September 25, 1934, No. 6855

These suits were brought in October, 1933.

In No. 135, the Panama Refining Company, as owner of an oil refining plant in Texas, and its coplaintiff, a producer having oil and gas leases in Texas, sued to restrain the defendants, who were federal officials, from enforcing Regulations IV, V, and VII prescribed by the Secretary of the Interior under section 9(c) of the National Industrial [293 U.S. 388, 411] Recovery Act. Plaintiffs attacked the validity of section 9(c) as an unconstitutional delegation to the President of legislative power and as transcending the authority of the Congress under the commerce clause. The regulations, and the attempts to enforce them by coming upon the properties of the plaintiffs, gauging their tanks, digging up pipe lines, and otherwise, were also assailed under the Fourth and Fifth Amendments of the Constitution.

In No. 260, the Amazon Petroleum Corporation and its coplaintiffs, all being oil producers in Texas and owning separate properties, sued to enjoin the Railroad Commission of that state, its members and other state officers, and the other defendants who were federal officials, from enforcing the state and federal restrictions upon the production and disposition of oil. The bill alleged that the legislation of the state and the orders of its commission in curtailing

production violated the Fourteenth Amendment of the Federal Constitution. As to the federal requirements, the bill not only attacked section 9(c) of the National Industrial Recovery Act, and the regulations of the Secretary of the Interior thereunder, upon substantially the same grounds as those set forth in the bill of the Panama Refining Company, but also challenged the validity of provisions of the Petroleum Code. While a number of these provisions were set out in the bill, the contest on the trial related to the limitation of production through the allocation of quotas pursuant to section 4 of article III of the code.

As the case involved the constitutional validity of orders of the state commission and an interlocutory injunction was sought, a court of three judges was convened under section 266 of the Judicial Code (28 U.S.C . 380 (28 USCA 380)). That court decided that the cause of action against the federal officials was not one within section 266, but was for the consideration of the District Judge alone. The parties agreed that the causes of action should be severed and that each cause [293 U.S. 388, 412] should be submitted to the tribunal having jurisdiction of it. Hearing was had both on the applications for interlocutory injunction and upon the merits. The court of three judges, sustaining the state orders, denied injunction, and dismissed the bill as against the state authorities. Amazon Petroleum Corp. v. Railroad Comm. (D.C.) 5 F.Supp. 633, 634, 639.

In both cases against the federal officials, that of the Panama Refining Company and that of the Amazon Petroleum Corporation, heard by the District Judge, a permanent injunction was granted. 5 F.Supp. 639. In the case of the Amazon Petroleum Corporation, the court specifically enjoined the defendants from enforcing section 4 of article III of the Petroleum Code; both plaintiffs and defendants and the court being unaware of the amendment of September 13, 1933.

The Circuit Court of Appeals reversed the decrees against the federal officials and directed that the bills be dismissed. Ryan v. Amazon Petroleum Corp., 71 F.(2d) 1; Ryan v. Panama Refining Co., 71 F.(2d) 8. The cases come here on writs of certiorari granted on October 8, 1934, 293 U.S. 539 , 55 S.Ct. 102, 79 L.Ed. --;293 U.S. 539 , 55 S.Ct. 83, 79 L.Ed. --.

First. The controversy with respect to the provision of section 4 of article III of the Petroleum Code was initiated and proceeded in the courts below upon a false assumption. That assumption was that this section still contained the paragraph (eliminated by the Executive Order of September 13, 1933) by which production in excess of assigned quotas was made an unfair practice and a violation of the code. 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 government's announcement that, by reason of the elimination of this paragraph, the government 'cannot, and therefore it does not intend to, prosecute petitioners or other producers of oil in Texas, criminally or otherwise, [293 U.S. 388, 413] for exceeding, at any time prior to September 25, 1934, the quotas of production assigned to them under the laws of Texas,' but that, if 'petitioners, or other producers, produce in excess of such quotas after September 25, 1934, the government intends to prosecute them,' cannot avail to import into the present case the amended provision of that date. 4 The case is not one where a subsequent law is applicable to a pending suit and controls its disposition. 5 When this suit was brought and when it was heard, there was no cause of action for the injunction sought with respect to the provision of section 4 of article III of the code; as to that, there was no basis for real controversy. See California v. San Pablo & T.R. Co., 149 U.S. 308, 314 , 13 S.Ct. 876; United States v. Alaska Steamship Co., 253 U.S. 113, 116 , 40 S.Ct. 448; Barker Painting Co. v. Local No. 734, Brotherhood of Painters, etc., 281 U.S. 462 , 50 S.Ct. 356. If the government undertakes to enforce the new provision, the petitioners, as well as others, will have an opportunity to present their grievance, which can then be considered, as it should be, in the light of the facts as they will then appear.

For this reason, we pass to the other questions presented, and we express no opinion as to the interpretation or validity of the provisions of the Petroleum Code.

Second. Regulations IV, V, and VII, issued by the Secretary of the Interior prior to these suits, have since been amended. But the amended regulations continue sub-[293 U.S. 388, 414] stantially the earlier requirements and expand them. They present the same constitutional questions, and the cases as to these are not moot. Southern Pacific Company v. Interstate Commerce Commission, 219 U.S. 433, 452 , 31 S. Ct. 288; Southern Pacific Terminal Co. v. Interstate Commerce Commission, 219 U.S. 498 , 514-516, 31 S.Ct. 279; McGrain v. Daugherty, 273 U.S. 135, 181 , 182 S., 47 S.Ct. 319, 50 A.L.R. 1.

The original regulations of July 15, 1933, as amended July 25, 1933, and August 21, 1933, were issued to enforce the Executive Orders of July 11 and July 14, 1933. The Executive Order of July 11, 1933, was made under section 9(c) of the National Industrial Recovery Act, and the Executive Order of July 14, 1933, under section 10(a) of that act, authorizing the Secretary of the Interior to promulgate regulations, was for the purpose of enforcing section 9(c) and the Executive Order of July 11, 1933. The amended regulations have been issued for the same purpose. The fundamental question as to these regulations thus turns upon the validity of section 9( c) and the executive orders to carry it out.

Third. The statute provides that any violation of any order of the President issued under section 9(c) shall be punishable by fine of not to exceed $1,000, or imprisonment for not to exceed six months, or both. We think that these penalties would attach to each violation, and in this view the plaintiffs were entitled to invoke the equitable jurisdiction to restrain enforcement, if the statute and the executive orders were found to be invalid. Philadelphia Company v. Stimson, 223 U.S. 605, 620 , 621 S., 32 S.Ct. 340; Terrace v. Thompson, 263 U.S. 197 , 214-216, 44 S. Ct. 15; Hygrade Provision Company v. Sherman, 266 U.S. 497, 499 , 500 S., 45 S.Ct. 141.

Fourth. Section 9[c] is assailed upon the ground that it is an unconstitutional delegation of legislative power. The section purports to authorize the President to pass a prohibitory law. The subject to which this authority relates is defined. It is the transportation in interstate and [293 U.S. 388, 415] foreign commerce of petroleum and petroleum products which are produced or withdrawn from storage in excess of the amount permitted by state authority. Assuming for the present purpose, without deciding, that the Congress has power to interdict the transportation of that excess in interstate and foreign commerce, the question whether that transportation shall be prohibited by law is obviously one of legislative policy. Accordingly, we look to the statute to see whether the Congress has declared a policy with respect to that subject; whether the Congress has set up a standard for the President's action; whether the Congress has required any finding by the President in the exercise of the authority to enact the prohibition.

Section 9(c) 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 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 creterion 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. [293 U.S. 388, 416] We examine the context to ascertain if it furnishes a declaration of policy or a standard of action, which can be deemed to relate to the subject of section 9(c) and thus to imply what is not there expressed. It is important to note that section 9 (15 USCA 709) is headed 'Oil Regulation'-that is, section 9 is the part of the National Industrial Recovery Act which particularly deals with that subject-matter. But the other provisions of section 9 afford no ground for implying a limitation of the broad grant of authority in section 9(c). Thus section 9(a) authorizes the President to initiate before the Interstate Commerce Commission 'proceedings necessary to prescribe regulations to control the operations of oil pipe lines and to fix reasonable, compensatory rates for the transportation of petroleum and its products by pipe lines,' and the Interstate Commerce Commission is to grant preference 'to the hearings and determination of such cases.' Section 9(b) authorizes the President to institute proceedings 'to divorce from any holding company any pipe-line company controlled by such holding company which pipeline company by unfair practices or by exorbitant rates in the transportation of petroleum or its products tends to create a monopoly.' It will be observed that each of these provisions contains restrictive clauses as to their respective subjects. Neither relates to the subject of section 9(c).

We turn to the other provisions of title 1 of the act. The first section (15 USCA 701) is a 'declaration of policy.' 6 It declares that a national emergency exists which is 'pro- [293 U.S. 388, 417] ductive of widespread unemployment and disorganization of industry, which burdens interstate and foreign commerce, affects the public welfare, and undermines the standards of living of the American people.' It is declared to be the policy of Congress 'to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof;' 'to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups;' 'to induce and maintain united action of labor and management under adequate governmental sanctions and supervision;' 'to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of

industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry and to conserve natural resources.'

This general outline of policy contains nothing as to the circumstances or conditions in which transportation of petroleum or petroleum products should be prohibited-nothing as to the policy of prohibiting or not prohibiting the transportation of production exceeding what the [293 U.S. 388, 418] states allow. The general policy declared is 'to remove obstructions to the free flow of interstate and foreign commerce.' As to production, the section lays down no policy of limitation. It favors the fullest possible utilization of the present productive capacity of industries. It speaks, parenthetically, of a possible temporary restriction of production, but of what, or in what circumstances, it gives no suggestion. The section also speaks in general terms of the conservation of natural resources, but it prescribes no policy for the achievement of that end. It is manifest that this broad outline is simply an introduction of the act, leaving the legislative policy as to particular subjects to be declared and defined, if at all, by the subsequent sections.

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 [293 U.S. 388, 419] officer executing a declared legislative policy. We find nothing in section 1 which limits or controls the authority conferred by section 9(c).

We pass to the other sections of the act. Section 2 (15 USCA 702) relates to administrative agencies which may be constituted. Section 3 (15 USCA 703) provides for the approval by the President of 'codes' for trades or industries. These are to be codes of 'fair competition' and the authority is based upon certain express conditions which require findings by the President. Action under section 9(c) is not made to depend on the formulation of a code under section 3. In fact, the President's action under section 9(c) was taken more than a month before a Petroleum Code was approved. Subdivision (e) of section 3 (15 USCA 703(e) authorizes the President, on his own motion or upon complaint, as stated, in case any article is being imported into the United States 'in substantial quantities or increasing ratio to domestic production of any competitive article,' under such conditions as to endanger the maintenance of a code or agreement under title 1, to cause an immediate investigation by the Tariff Commission. The authority of the President to act, after such investigation, is conditioned upon a finding by him of the existence of the underlying facts, and he may permit entry of the articles concerned upon such conditions and with such limitations as he shall find it necessary to prescribe in order that the entry shall not tend to render the code or agreement ineffective. Section 4 (15 USCA 704) relates to agreements and licenses for the purposes stated. Section 5 (15 USCA 705) refers to the application of the anti-trust laws. Sections 6 and 7 (15 USCA 706, 707) impose limitations upon the application of title 1, bearing upon trade associations and other organizations and upon the relations between employers and employees. Section 8 (15 USCA 708), contains provisions with respect to the application of the Agricultural Adjustment Act of May 12, 1933 (7 USCA 601 et seq.). [293 U.S. 388, 420] None of these provisions can be deemed to prescribe any limitation of the grant of authority in section 9(c).

Fifth. 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 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 [293 U.S. 388, 421] think desirable. In that view, there would appear to be no ground for denying a similar prerogative of delegation with respect to other subjects of legislation.

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.' Article 1, 1. And the Congress is empowered 'To make all Laws which shall be necessary and proper for carrying into Execution' its general powers. Article 1, 8, par. 18. The Congress manifestly is not permitted to abdicate or to transfer to others the essential legislative functions with which it is thus vested. Undoubtedly legislation must often be adapted to complex conditions involving a host of details with which the national Legislature cannot deal directly. The Constitution has never been regarded as denying to the 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. Without capacity to give authorizations of that sort we should have the anomaly of a legislative power which in many circumstances calling for its exertion would be but a futility. But 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.

The Court has had frequent occasion to refer to these limitations and to review the course of congressional action. At the very outset, amid the disturbances due to war in Europe, when the national safety was imperiled [293 U.S. 388, 422] and our neutrality was disregarded, the Congress passed a series of acts, as a part of which the President was authorized, in stated circumstances, to lay and revoke embargoes, to give permits for the exportation of arms and military stores, to remit and discontinue the restraints and prohibitions imposed by acts suspending commercial intercourse with certain countries, and to permit or interdict the entrance into waters of the United States of armed vessels belonging to foreign nations. 7 These early acts were not the subject of judicial decision, and, apart from that, they afford no adequate basis for a conclusion that the Congress assumed that it possessed an unqualified power of delegation. They were inspired by the vexations of American commerce through the hostile enterprises of the belligerent powers,8 they were directed to the effective execution of policies repeatedly declared by the Congress, and they confided to the President, for the purposes and under the conditions stated, an authority which was cognate to the conduct by him of the foreign relations of the government. 9 [293 U.S. 388, 423] The first case relating to an authorization of this description was that of The Aurora v. United States, 7 Cranch, 382, 388. The cargo of that vessel had been condemned as having been imported from Great Britain in violation of the Nonintercourse Act of March 1, 1809 (2 Stat. 528). That act expired on May 1, 1810,10 when Congress passed another [293 U.S. 388, 424] act (2 Stat. 605, 606) providing that, in case either Great Britain or France before March 3, 1811, 'shall ... so revoke or modify her edicts as that they shall cease to violate the neutral commerce of the United States, which fact the President of the United States shall declare by proclamation, and if the other nation shall not within three months thereafter so revoke or modify her edicts in like manner' (section 4), then, with respect to that nation, as stated, the provisions of the act of 1809, after three months from that proclamation, 'shall ... be revived and have full force and effect.' On November 2, 1810, the President issued his proclamation declaring that France had so revoked or modified her edicts, and it was contended that the provisions of the act of 1809, as to the cargo in question, had thus been revived. The Court said that it could see no sufficient reason why the Legislature should not exercise its discretion in reviving the act of 1809, 'either expressly or conditionally, as their judgment should direct.' The provision of that act declaring 'that it should continue in force to a certain time, and no longer,' could not restrict the power of the Legislature to extend its operation 'without limitation upon the occurrence of any subsequent combination of events.' This was a decision, said the Court in Field v. Clark, 143 U.S. 649, 683 , 12 S.Ct. 495, 501, 'that it was competent for congress to make the revival of an act depend upon the proclamation of the president, showing the ascertainment by him of the fact that the edicts of certain nations had been so revoked or modified that they did not violate the neutral commerce of the United States.'

In Field v. Clark, supra, the Court applied that ruling to the case of 'the suspension of an act upon a contingency to be ascertained by the president, and made known by his proclamation.' The Court was dealing with section 3 of the Act of October 1, 1890, 26 Stat. 567, 612. [293 U.S. 388, 425] That section provided that, 'with a view to secure reciprocal trade' with countries producing certain articles, 'whenever, and so often as the President shall be satisfied' that the government of any country producing them imposed 'duties or other exactions upon the agricultural or other products

of the United States' which, in view of the free list established by the act, the President 'may deem to be reciprocally unequal and unreasonable, he shall have the power and it shall be his duty,' to suspend the free introduction of those articles by proclamation to that effect, and that during that suspension the duties specified by the section should be levied. The validity of the provision was challenged as a delegation to the President of legislative power. The Court reviewed the early acts to which we have referred, as well as later statutes considered to be analogous. 11 While sustaining the provision, the Court emphatically declared that the principle that 'congress cannot delegate legislative power to the president' is 'universally [293 U.S. 388, 426] recognized as vital to the integrity and maintenance of the system of government ordained by the constitution.' The Court found that the act before it was not inconsistent with that principle; that it did not 'in any real sense, invest the president with the power of legislation.' As 'the suspension was absolutely required when the president ascertained the existence of a particular fact,' it could not be said 'that in ascertaining that fact, and in issuing his proclamation, in obedience to the legislative will, he exercised the function of making laws.' 'He was the mere agent of the law-making department to ascertain and declare the event upon which its expressed will was to take effect.' Id., pages 692, 693 of 143 U.S., 12 S.Ct. 495, 504, 505. The Court referred with approval to the distinction pointed out by the Supreme Court of Ohio in Cincinnati, Wilmington, etc., Railroad v. Clinton County Commissioners, 1 Ohio St. 88, between 'the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring authority or discretion as to its execution, to be exercised under and in pursuance of the law.'

Applying that principle, authorizations given by Congress to selected instrumentalities for the purpose of ascertaining the existence of facts to which legislation is directed have constantly been sustained. Moreover the Congress may not only give such authorizations to determine specific facts, but may establish primary standards, devolving upon others the duty to carry out the declared legislative policy; that is, as Chief Justice Marshall expressed it, 'to fill up the details' under the general provisions made by the Legislature. Wayman v. Southard, 10 Wheat. 1, 43. In Buttfield v. Stranahan, 192 U.S. 470, 496 , 24 S.Ct. 349, 352, the Act of March 2, 1897 (29 Stat. 604, 605, 3 (see 21 USCA 43)), was upheld, which authorized the Secretary of the Treasury, upon the recommendation of a board of experts, to 'establish uniform standards of purity, quality, and fitness [293 U.S. 388, 427] for consumption of all kinds of teas imported into the United States.' The Court construed the statute as expressing 'the purpose to exclude the lowest grades of tea, whether demonstrably of inferior purity, or unfit for consumption, or presumably so because of their inferior quality.' The Congress, the Court said, thus fixed 'a primary standard' and committed to the Secretary of the Treasury 'the mere executive duty to effectuate the legislative policy declared in the statute.' 'Congress legislated on the subject as far as was reasonably practicable, and from the necessities of the case was compelled to leave to executive officials the duty of bringing about the result pointed out by the statute.' See Red 'C' Oil Co. v. Board of Agriculture of North Carolina, 222 U.S. 380, 394 , 32 S.Ct. 152.

Another notable illustration is that of the authority given to the Secretary of War to determine whether bridges and other structures constitute unreasonable obstructions to navigation and to remove such obstructions. Act of March 3, 1899, 18, 30 Stat. 1153, 1154 (33 USCA 502). By that statute the Congress declared 'a general rule and imposed upon the Secretary of War the duty of ascertaining what particular cases came within the rule' as thus laid down. Union Bridge Co. v. United States, 204 U.S. 364, 386 , 27 S.Ct. 367; Monongahela Bridge Co. v. United States, 216 U.S. 177, 193 , 30 S.Ct. 356; Philadelphia Co. v. Stimson, 223 U.S. 605, 638 , 32 S.Ct. 340. Upon this principle rests the authority of the Interstate Commerce Commission, in the execution of the declared policy of the Congress in enforcing reasonable rates, in preventing undue preferences and unjust discriminations, in requiring suitable facilities for transportation in interstate commerce, and in exercising other powers held to have been validly conferred. St. Louis, I.M. & S. Ry. Co. v. Taylor, 210 U.S. 281, 287 , 28 S.Ct. 616; Inter-Mountain Rate Cases, 234 U.S. 476, 486 , 34 S.Ct. 986; Avent v. United States, 266 U.S. 127, 130 , 45 S.Ct. 34; New York Central Securities Corporation [293 U.S. 388, 428] v. United States, 287 U.S. 12, 24 , 25 S., 53 S.Ct. 45. Upon a similar ground the authority given to the President, in appropriate relation to his functions as Commander-in-Chief, by the Trading with the Enemy Act, as amended by the Act of March 28, 1918 (40 Stat. 460, 12 (50 USCA Appendix 12)), with respect to the disposition of enemy property, was sustained. 'The determination,' said the Court, 'of the terms of sales of enemy properties in the light of facts and conditions from time to time arising in the progress of war was not the making of a law; it was the application of the general rule laid down by the act.' United States v. Chemical Foundation, 272 U.S. 1, 12 , 47 S.Ct. 1, 5.12

The provisions of the Radio Act of 1927 (44 Stat. 1162, 1163), providing for assignments of frequencies or wave lengths to various stations, afford another instance. In granting licenses, the Radio Commission is required to act 'as public convenience, interest, or necessity requires.' Section 4. In construing this provision, the Court found that the statute itself declared the policy as to 'equality of radio broadcasting service, both of transmission and of reception,' and that it

conferred authority to make allocations and assignments in order to secure, according to stated criteria, an equitable adjustment in the distribution of facilities. 13 The standard set up was not so indefinite 'as to confer an unlimited power.' Federal Radio Commission v. Nelson Brothers Co., 289 U.S. 266, 279 , 285 S., 53 S.Ct. 627, 634.

So also, from the beginning of the government, the Congress has conferred upon executive officers the power to make regulations-'not for the government of their departments, but for administering the laws which did govern.' United States v. Grimaud, 220 U.S. 506, 517 , 31 S.Ct. 480, 483. Such regulations become, indeed, binding rules of con- [293 U.S. 388, 429] duct, but they are valid only as subordinate rules and when found to be within the framework of the policy which the Legislature has sufficiently defined. In the case of Grimaud, supra, a regulation made by the Secretary of Agriculture requiring permits for grazing sheep on a forest reserve of lands belonging to the United States was involved. The Court referred to the various acts for the establishment and management of forest reservations and the authorization of rules which would 'insure the objects of such reservations,' that is, 'to regulate their occupancy and use, and to preserve the forests thereon from destruction.' The Court observed that 'it was impracticable for Congress to provide general regulations for these various and varying details of management,' and that, in authorizing the Secretary of Agriculture to meet local conditions, Congress 'was merely conferring administrative functions upon an agent, and not delegating to him legislative power.' Id., pages 515, 516 of 220 U. S., 31 S.Ct. 480, 482. The Court quoted with approval the statement of the principle in Field v. Clark, supra, that the Congress cannot delegate legislative power, and upheld the regulation in question as an administrative rule for the appropriate execution of the policy laid down in the statute. See Wayman v. Southard, supra; Interstate Commerce Commission v. Goodrich Transit Co., 224 U.S. 194, 214 , 215 S., 32 S.Ct. 436; Selective Draft Law Cases, 245 U.S. 366, 389 , 38 S.Ct. 159, L.R.A. 1918C, 361, Ann.Cas. 1918B, 856; McKinley v. United States, 249 U.S. 397 , 39 S.Ct. 324.

The applicable considerations were reviewed in Hampton, Jr., & Co. v. United States, 276 U.S. 394 , 48 S.Ct. 348, 352, where the Court dealt with the so-called 'flexible tariff provision' of the Act of September 21, 1922 (42 Stat. 858, 941, 942, 315 (19 USCA 154-159)), and with the authority which it conferred upon the President. The Court applied the same principle that permitted the Congress to exercise its ratemaking power in interstate commerce, and found that a similar provision was justified for the fixing of customs duties; that is, as the Court said: 'If Congress shall lay down by [293 U.S. 388, 430] legislative act an intelligible principle to which the person or body authorized to fix such rates is directed to conform, such legislative action is not a forbidden delegation of legislative power. If it is thought wise to vary the customs duties according to changing conditions of production at home and abroad, it may authorize the Chief Executive to carry out this purpose, with the advisory assistance of a Tariff Commission appointed under congressional authority.' The Court sustained the provision upon the authority of Field v. Clark, supra, repeating with approval what was there said, that 'What the President was required to do was merely in execution of the act of Congress.' Id., pages 409-411 of 276 U.S., 48 S.Ct. 348, 352.

Thus, in every case in which the question has been raised, the Court has recognized that there are limits of delegation which there is no constitutional authority to transcend. We think that section 9(c) goes beyond those limits. As to the transportation of oil production in excess of state permission, the Congress has declared no policy, has established no standard, has laid down no rule. There is no requirement, no definition of circumstances and conditions in which the transportation is to be allowed or prohibited.

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 lawmaking function. The reasoning of the many decisions we have reviewed would be made vacuous and their distinctions nugatory. Instead of performing its lawmaking 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. [293 U.S. 388, 431] Sixth. There is another objection to the validity of the prohibition laid down by the executive order under section 9(c). The executive order contains no finding, no statement of the grounds of the President's action in enacting the prohibition. Both section 9(c) and the executive order are in notable contrast with historic practice (as shown by many statutes and proclamations we have cited in the margin14) by which declarations of policy are made by the Congress and delegations are within the framework of that policy and have relation to facts and conditions to be found and stated by the President in the appropriate exercise of the delegated authority. If it could be said that from the four corners of the statute any possible inference could be drawn of particular circumstances or conditions which were to govern the exercise of the authority conferred, the President could not act validly without having regard to those circumstances and conditions. And findings by him as to the existence of the required basis of his action would be necessary to sustain that action, for otherwise the

case would still be one of an unfettered discretion as the qualification of authority would be ineffectual. The point is pertinent in relation to the first section of the National Industrial Recovery Act. We have said that the first section is but a general introduction, that it declares no policy and defines no standard with respect to the transportation which is the subject of section 9(c). But if from the extremely broad description contained in that section and the widely different matters to which the section refers, it were possible to derive a statement of prerequisites to the President's action under section 9(c), it would still be necessary for the President to comply with those conditions and to show that compliance as the ground of his prohibition. To hold [293 U.S. 388, 432] that he is free to select as he chooses from the many and various objects generally described in the first section, and then to act without making any finding with respect to any object that he does select, and the circumstances properly related to that object, would be in effect to make the conditions inoperative and to invest him with an uncontrolled legislative power.

We are not dealing with action which, appropriately belonging to the executive province, is not the subject of judicial review or with the presumptions attaching to executive action. 15 To repeat, we are concerned with the question of the delegation of legislative power. If the citizen is to be punished for the crime of violating a legislative order of an executive officer, or of a board or commission, due process of law requires that it shall appear that the order is within the authority of the officer, board, or commission, and, if that authority depends on determinations of fact, those determinations must be shown. As the Court said in Wichita Railroad & Light Co. v. Public Utilities Commission, 260 U.S. 48, 59 , 43 S.Ct. 51, 55: 'In creating such an administrative agency, the Legislature, to prevent its being a pure delegation of legislative power, must enjoin upon it a certain course of procedure and certain rules of decision in the performance of its function. It is a wholesome and necessary principle that such an agency must pursue the procedure and rules enjoined, and show a substantial compliance therewith to give validity to its action. When, therefore, such an administrative agency is required as a condition precedent to an order, to make a finding of facts, the validity of the order must rest upon the needed finding. If it is lacking, the order is ineffective. [293 U.S. 388, 433] It is pressed on us that the lack of an express finding may be supplied by implication and by reference to the averments of the petition invoking the action of the Commission. We cannot agree to this.' Referring to the ruling in the Wichita Case, the Court said in Mahler v. Eby, 264 U.S. 32, 44 , 44 S.Ct. 283, 288: 'We held that the order in that case, made after a hearing and ordering a reduction, was void for lack of the express finding in the order. We put this conclusion, not only on the language of the statute, but also on general principles of constitutional government.' We cannot regard the President as immune from the application of these constitutional principles. When the President is invested with legislative authority as the delegate of Congress in carrying out a declared policy, he necessarily acts under the constitutional restriction applicable to such a delegation.

We see no escape from the conclusion that the Executive Orders of July 11, 1933, and July 14, 1933, Nos. 6199, 6204 (15 USCA 709 note), and the regulations issued by the Secretary of the Interior thereunder, are without constitutional authority.

The decrees of the Circuit Court of Appeals are reversed, and the causes are remanded to the District Court, with direction to modify its decrees in conformity with this opinion so as to grant permanent injunctions, restraining the defendants from enforcing those orders and regulations.

It is so ordered.

Mr. Justice CARDOZO (dissenting).

With all that is said in the opinion of the court as to the Code of Fair Competition adopted by the President August 16, 1933, for the Governance of the Petroleum Industry, I am fully in accord. No question is before us at this time as to the power of Congress to regulate production. No question is here as to its competence to clothe the President with a delegated power whereby a code of fair competition may become invested with the force of [293 U.S. 388, 434] law. The petitioners were never in jeopardy by force of such a code or of regulations made thereunder. They were not in jeopardy because there was neither statute nor regulation subjecting them to pains or penalties if they set the code at naught. One must deplore the administrative methods that brought about uncertainty for a time as to the terms of executive orders intended to be law. Even so, the petitioners do not stand in need of an injunction to restrain the enforcement of a non-existent mandate.

I am unable to assent to the conclusion that section 9(c) of the National Recovery Act, 15 USCA 709(c), a section delegating to the President a very different power from any that is involved in the regulation of production or in the promulgation of a code, is to be nullified upon the ground that his discretion is too broad or for any other reason. My point of difference with the majority of the court is narrow. I concede that to uphold the delegation there is need to discover in the terms of the act a standard reasonably clear whereby discretion must be governed. I deny that such a standard is lacking in respect of the prohibitions permitted by this section when the act with all its reasonable implications is considered as a whole. What the standard is becomes the pivotal inquiry.

As to the nature of the act which the President is authorized to perform there is no need for implication. That at least is definite beyond the possibility of challenge. He may prohibit the transportation in interstate and foreign commerce of petroleum and the products thereof produced or withdrawn from storage in excess of the amount permitted by any state law or valid regulation or order prescribed thereunder. He is not left to roam at will among all the possible subjects of interstate transportation, picking and choosing as he pleases. I am far from asserting now that delegation would be [293 U.S. 388, 435] valid if accompanied by all that latitude of choice. In the laying of his interdict he is to confine himself to a particular commodity, and to that commodity when produced or withdrawn from storage in contravention of the policy and statutes of the states. He has choice, though within limits, as to the occasion, but none whatever as to the means. The means have been prescribed by Congress. There has been no grant to the Executive of any roving commission to inquire into evils and then, upon discovering them, do anything he pleases. His act being thus defined, what else must he ascertain in order to regulate his discretion and bring the power into play? The answer is not given if we look to section 9(c) only, but it comes to us by implication from a view of other sections where the standards are defined. The prevailing opinion concedes that a standard will be as effective if imported into section 9(c) by reasonable implication as if put there in so many words. If we look to the whole structure of the statute, the test is plainly this, that the President is to forbid the transportation of the oil when he believes, in the light of the conditions of the industry as disclosed from time to time, that the prohibition will tend to effectuate the declared policies of the act-not merely his own conception of its policies, undirected by any extrinsic guide, but the policies announced by section 1 (15 USCA 701) in the forefront of the statute as an index to the meaning of everything that follows. 1 [293 U.S. 388, 436] Oil produced or transported in excess of a statutory quota is known in the industry as 'hot oil,' and the record is replete with evidence as to the effect of such production and transportation upon the economic situation and upon national recovery. A declared policy of Congress in the adoption of the act is 'to eliminate unfair competitive practices.' Beyond question an unfair competitive practice exists when 'hot oil' is transported in interstate commerce with the result that lawabiding dealers must compete with lawbreakers. Here is one of the standards set up in the act to guide the President's discretion. Another declared policy of Congress is 'to conserve natural resources.' Beyond question the disregard of statutory quotas is wasting the oil fields in Texas and other states and putting in jeopardy of exhaustion one of the treasures of the nation. All this is developed in the record and in the arguments of counsel for the government with a wealth of illustration. Here is a second standard. Another declared policy of Congress is to 'promote the fullest possible utilization of the present productive capacity of industries,' and 'except as may be temporarily required' to 'avoid undue restriction of production.' Beyond question prevailing conditions in the oil industry have brought about the need for temporary restriction in order to promote in the long run the fullest productive capacity of business in all its many [293 U.S. 388, 437] branches, for the effect of present practices is to diminish that capacity by demoralizing prices and thus increasing unemployment. The ascertainment of these facts at any time or place was a task too intricate and special to be performed by Congress itself through a general enactment in advance of the event. All that Congress could safely do was to declare the act to be done and the policies to be promoted, leaving to the delegate of its power the ascertainment of the shifting facts that would determine the relation between the doing of the act and the attainment of the stated ends. That is what it did. It said to the President, in substance: You are to consider whether the transportation of oil in excess of the statutory quotas is offensive to one or more of the policies enumerated in section 1, whether the effect of such conduct is to promote unfair competition or to waste the natural resources or to demoralize prices or to increase unemployment or to reduce the purchasing power of the workers of the nation. If these standards or some of them have been flouted with the result of a substantial obstruction to industrial recovery, you may then by a prohibitory order eradicate the mischief.

I am not unmindful of the argument that the President has the privilege of choice between one standard and another, acting or failing to act according to an estimate of values that is individual and personal. To describe his conduct thus is to ignore the essence of his function. What he does is to inquire into the industrial facts as they exist from time to time. Cf. Hampton, Jr., & Co. v. United States, 276 U.S. 394 , at page 409, 48 S.Ct. 348; Locke's Appeal, 72 Pa. 491, 498, 13 Am.Rep. 716, quoted with approval in Field v. Clark, 143 U.S. 649 , at page 694, 12 S.Ct. 495. These being ascertained, he is not to prefer one standard to another in any subjective attitude of mind, in any personal or willful way. He is to study the facts objectively, the violation of a standard [293 U.S. 388, 438] impelling him to action or inaction according to its observed effect upon industrial recovery-the ultimate end, as appears by the very heading of the title, to which all

the other ends are tributary and mediate. Nor is there any essential conflict among the standards inter se, at all events when they are viewed in relation to section 9 (c) and the power there conferred. In its immediacy, the exclusion of oil from the channels of transportation is a restriction of interstate commerce, not a removal of obstructions. This is self-evident, and, of course, was understood by Congress when the discretionary power of exclusion was given to its delegate. But what is restriction in its immediacy may in its ultimate and larger consequences be expansion and development. Congress was aware that for the recovery of national well-being there might be need of temporary restriction upon production in one industry or another. It said so in section 1. When it clothed the President with power to impose such a restriction-to prohibit the flow of oil illegally produced-it laid upon him a mandate to inquire and determine whether the conditions in that particular industry were such at any given time as to make restriction helpful to the declared objectives of the act and to the ultimate attainment of industrial recovery. If such a situation does not present an instance of lawful delegation in a typical and classic form (Field v. Clark, 143 U.S. 649 , 12 S.Ct. 495; United States v. Grimaud, 220 U.S. 506 , 31 S.Ct. 480; Hampton, Jr., & Co. v. United States, 276 U.S. 394 , 48 S.Ct. 348), categories long established will have to be formulated anew.

In what has been written, I have stated, but without developing the argument, that by reasonable implication the power conferred upon the President by section 9(c) is to be read as if coupled with the words that he shall exercise the power whenever satisfied that by doing so he will effectuate the policy of the statute as theretofore declared. Two canons of interpretation, each familiar to our law, [293 U.S. 388, 439] leave no escape from that conclusion. One is that the meaning of a statute is to be looked for, not in any single section, but in all the parts together and in their relation to the end in view. Cherokee Intermarriage Cases (Red Bird v. U.S.), 203 U.S. 76, 89 , 27 S.Ct. 29; McKee v. United States, 164 U.S. 287 , 17 S.Ct. 92; Talbott v. Board of Com'rs of Silver Bow County, 139 U.S. 438, 443 , 444 S., 11 S.Ct. 594. The other is that, when a statute is reasonably susceptible of two interpretations, by one of which it is unconstitutional and by the other valid, the court prefers the meaning that preserves to the meaning that destroys. United States v. Delaware & Hudson Co., 213 U.S. 366, 407 , 29 S.Ct. 527; Knights Templars' & Masons' Life Indemnity Co. v. Jarman, 187 U.S. 197, 205 , 23 S.Ct. 108. Plainly, section 1, with its declaration of the will of Congress, is the chart that has been furnished to the President to enable him to shape his course among the reefs and shallows of this act. If there could be doubt as to this when section 1 (15 USCA 701) is viewed alone, the doubt would be dispelled by the reiteration of the policy in the sections that come later. In section 2 (15 USCA 702). which relates to administrative agencies, in section 3 (15 USCA 703), which relates to codes of fair competition, in section 4 (15 USCA 704), which relates to agreements and licenses, in section 6 (15 USCA 706), which prescribes limitations upon the application of the statute, and in section 10 (15 USCA 710), which permits the adoption of rules and regulations, authority is conferred upon the President to do one or more acts as the delegate of Congress when he is satisfied that thereby he will aid 'in effectuating the policy of this title' or in carrying out its provisions. True section 9 (15 USCA 709), the one relating to petroleum, does not by express words of reference embody the same standard, yet nothing different can have been meant. What, indeed, is the alternative? Either the statute means that the President is to adhere to the declared policy of Congress, or it means that he is to exercise a merely arbitrary will. The one construction invigorates the act; the other saps its life. A choice between them is not hard. [293 U.S. 388, 440] I am persuaded that a reference, express or implied, to the policy of Congress as declared in section 1, is a sufficient definition of a standard to make the statute valid. Discretion is not unconfined and vagrant. It is canalized within banks that keep it from overflowing. Field v. Clark, 143 U.S. 649 , 12 S.Ct. 495, United States v. Grimaud, 220 U.S. 506 , 31 S.Ct. 480, and Hampton, Jr., & Co. v. United States, 276 U.S. 394 , 48 S.Ct. 348, state the applicable principle. Under these decisions the separation of powers between the Executive and Congress is not a doctrinaire concept to be made use of with pedantic rigor. There must be sensible approximation, there must be elasticity of adjustment, in response to the practical necessities of government, which cannot foresee to-day the developments of tomorrow in their nearly infinite variety. The Interstate Commerce Commission, probing the economic situation of the railroads of the country, consolidating them into systems, shaping in numberless ways their capacities and duties, and even making or unmaking the prosperity of great communities (Texas & Pacific R. Co. v. United States, 289 U.S. 627 , 53 S.Ct. 768 ), is a conspicuous illustration. See, e.g., 41 Stat. 479-482, c. 91, 405, 406, 407, 408, 42 Stat. 27, c. 20, 49 U.S.C. 3, 4, 5 (49 USCA 3- 5). Cf. Inter-Mountain Rate Case (U.S. v. Atchison, T. & S.F.R. Co.), 234 U.S. 476 , 34 S.Ct. 986; N.Y. Central Securities Co. v. United States, 287 U.S. 12, 24 , 25 S., 53 S.Ct. 45; Sharfman, The Interstate Commerce Commission, vol. 2, pp. 357, 365. There could surely be no question as to the validity of an act whereby carriers would be prohibited from transporting oil produced in contravention of a statute if in the judgment of the Commission the practice was demoralizing the market and bringing disorder and insecurity into the national economy. What may be delegated to a commission may be delegated to the President. 'Congress may feel itself unable conveniently to determine exactly when its exercise of the legislative power should become effective, because dependent on future conditions, and it may leave [293 U.S. 388, 441] the determination of such time to the decision of an executive.' Hampton, Jr., & Co. v. United States, supra, at page 407 of 276 U.S., 48 S.Ct. 348, 351. Only recently (1932) the whole subject was discussed with much enlightenment in the Report by the Committee on Ministers' Powers to the

Lord Chancellor of Great Britain. See, especially, pages 23, 51. In the complex life of to-day, the business of government could not go on without the delegation, in greater or less degree, of the power to adapt the rule to the swiftly moving facts.

A striking illustration of this need is found in the very industry affected by this section, the production of petroleum and its transportation between the states. At the passage of the National Recovery Act (48 Stat. 195) no one could be certain how many of the states would adopt valid quota laws, or how generally the laws would be observed when adopted, or to what extent illegal practices would affect honest competitors or the stability of prices or the conservation of natural resources or the return of industrial prosperity. Much would depend upon conditions as they shaped themselves thereafter. Violations of the state laws might turn out to be so infrequent that the honest competitor would suffer little, if any, damage. The demand for oil might be so reduced that there would be no serious risk of waste, depleting or imperiling the resources of the nation. Apart from these possibilities, the business might become stabilized through voluntary co-operation or the adoption of a code or otherwise. Congress not unnaturally was unwilling to attach to the state laws a sanction so extreme as the cutting off of the privilege of interstate commerce unless the need for such action had unmistakably developed. What was left to the President was to ascertain the conditions prevailing in the industry, and prohibit or fail to prohibit according to the effect of those conditions upon the phases of the national policy relevant thereto. [293 U.S. 388, 442] From a host of precedents available, both legislative and judicial, I cite a few as illustrations. By an act approved June 4, 1794, during the administration of Washington (1 Stat. 372; Field v. Clark, 143 U.S. 649, 683 , 12 S.Ct. 495) Congress authorized the President, when Congress was not in session, and for a prescribed period 'whenever, in his opinion, the public safety shall so require, to lay an embargo on all ships and vessels in the ports or the United States, or upon the ships and vessels of the United States, or the ships and vessels of any foreign nation, under such regulations as the circumstances of the case may require, and to continue or revoke the same, whenever he shall think proper.' By an act of 1799, February 9 (1 Stat. 613, 615, 4), suspending commercial intercourse with France and its dependencies, 'it shall be lawful for the President of the United States, if he shall deem it expedient and consistent with the interest of the United States, by his order, to remit, and discontinue, for the time being, the restraints and prohibitions aforesaid; ... and also to revoke such order (i.e., ree stablish the restraints), whenever, in his opinion, the interest of the United States shall require.' By an act of October 1, 1890 (26 Stat. 567, 612), sustained in Field v. Clark, supra, the President was authorized to suspend by proclamation the free introduction into this country of enumerated articles when satisfied that a country producing them imposes duties or other exactions upon the agricultural or other products of the United States which he may deem to be reciprocally unequal or unreasonable. By an act of September 21, 1922 (42 Stat. 858, 941, 945 (19 USCA 154- 159, 182 et seq.)), sustained in Hampton, Jr., & Co. v. United States, supra, the President was empowered to increase or decrease tariff duties so as to equalize the differences between the costs of production at home and abroad, and empowered, by the same means, to give redress for other acts of discrimination or unfairness 'when he finds that the public interest will be [293 U.S. 388, 443] served thereby.' 19 USCA 182. Delegation was not confined to an inquiry into the necessity or occasion for the change. It included the magnitude of the change, the delegate thus defining the act to be performed. By an act of June 4, 1897 (30 Stat. 11, 35), amended in 1905 (33 Stat. 628), regulating the forest reservations of the nation, the purpose of the reservations was declared to be 'to improve and protect the forest within the reservation,' and to secure 'favorable conditions of water flows, and to furnish a continuous supply of timber for the use and necessities of citizens of the United States.' Without further guide or standard, the Secretary of Agriculture was empowered to 'make such rules and regulations and establish such service as will insure the objects of such reservations, namely, to regulate their occupancy and use and to preserve the forests thereon from destruction.' The validity of these provisions was upheld in United States v. Grimaud, supra, as against the claim by one who violated the rules that there had been an unlawful delegation. Many other precedents are cited in the margin. 2 They teach one lesson and a clear one.

There is no fear that the nation will drift from its ancient moorings as the result of the narrow delegation of power permitted by this section. What can be done under cover of that permission is closely and clearly circumscribed both as to subject-matter and occasion. The statute was framed in the shadow of a national disaster. A host of unforeseen contingencies would have to be faced from day to day, and faced with a fullness of under [293 U.S. 388, 444] standing unattainable by any one except the man upon the scene. The President was chosen to meet the instant need.

A subsidiary question remains as to the form of the executive order, which is copied in the margin. 3 The question is a subsidiary one, for, unless the statute is invalid, another order with fuller findings or recitals may correct the informalities of this one, if informalities there are. But the order to my thinking is valid as it stands. The President was not required either by the Constitution or by any statute to state the reasons that had induced him to exercise the granted power. It is enough that the grant of power had been made and that pursuant to that grant he had signified the will to act. The will

to act being declared, the law presumes that the declaration was preceded by due inquiry and that it was rooted in sufficient grounds. Such, for a hundred years and more, has been the doctrine of this court. The act of February 28, 1795 (1 Stat. 424), authorized the President 'whenever the United States shall be invaded, or be in imminent danger of invasion from any foreign nation or Indian tribe,' to call forth such number of the militia of the states as he shall deem necessary and to issue his [293 U.S. 388, 445] orders to the appropriate officers for that purpose. Cf. Const. art. 1, 8, cl. 15. When war threatened in the summer of 1812, President Madison, acting under the authority of that statute, directed Major General Dearborn to requisition from New York, Massachusetts, and Connecticut certain numbers of the states' militia. American State Papers, Military Affairs, vol. 1, pp. 322-325. No finding of 'imminent danger of invasion' was made by the President in any express way, nor was such a finding made by the Secretary of War or any other official. The form of the requisitions to Massachusetts and Connecticut appears in the state papers of the government (American State Papers, supra); the form of those to New York was almost certainly the same. Replevin was brought by a New York militia man who refused to obey the orders, and whose property had been taken in payment of a fine imposed by a court martial. The defendant, a deputy marshal, defended on the ground that the orders were valid, and the plaintiff demurred because there was no allegation that the President had adjudged that there was imminent danger of an invasion. The case came to this court. Martin v. Mott, 12 Wheat. 19, 32. In an opinion by Story, J., the court upheld the seizure. 'The argument is (he wrote) that the power confided to the president is a limited power, and can be exercised only in the cases pointed out in the statute, and therefore, it is necessary to aver the facts which bring the exercise within the purview of the statute. In short, the same principles are sought t be applied to the delegation and exercise of this power intrusted to the executive of the nation for great political purposes, as might be applied to the humblest officer in the government, acting upon the most narrow and special authority. It is the opinion of the court, that this objection cannot be maintained. When the president exercises an authority confided to him by law, the presumption is, that it is exercised in pursuance [293 U.S. 388, 446] of law. Every public officer is presumed to act in obedience to his duty, until the contrary is shown; and, a fortiori, this presumption ought to be favor ably applied to the chief magistrate of the Union. It is not necessary to aver, that the act which he might rightfully do, was so done.' A like presumption has been applied in other cases and in a great variety of circumstances. Philadelphia & Trenton R. Co. v. Stimpson, 14 Pet. 448, 458; Rankin v. Hoyt, 4 How. 327, 335; Carpenter v. Rannels, 19 Wall. 138, 146; Confiscation Cases ( U.S. v. Clarke), 20 Wall. 92, 109; Knox County v. Ninth National Bank, 147 U.S. 91, 97 , 13 S.Ct. 267; United States v. Chemical Foundation, 272 U.S. 1, 14 , 15 S., 47 S.Ct. 1. This does not mean that the individual is helpless in the face of usurpation. A court will not revise the discretion of the Executive, sitting in judgment on his order as if it were the verdict of a jury. Martin v. Mott, supra. On the other hand, we have said that his order may not stand if it is an act of mere oppression, an arbitrary fiat that overleaps the bounds of judgment. Sterling v. Constantin, 287 U.S. 378, 399 , 400 S., 401, 53 S.Ct. 190. The complainants and others in their position may show, if they can, that in no conceivable aspect was there anything in the conditions of the oil industry in July, 1933, to establish a connection between the prohibitory order and the declared policies of the Congress. This is merely to say that the standard must be such as to have at least a possible relation to the act to be performed under the delegated power. One can hardly suppose that a prohibitory order would survive a test in court if the Executive were to assert a relation between the transportation of petroleum and the maintenance of the gold standard or the preservation of peace in Europe or the Orient. On the other hand, there can be no challenge of such a mandate unless the possibility of a rational nexus is lacking alto- [293 U.S. 388, 447] gether. Here, in the case at hand, the relation between the order and the standard is manifest upon the face of the transaction from facts so notorious as to be within the range of our judicial notice. There is significance in the fact that it is not challenged even now.

The President, when acting in the exercise of a delegated power, is not a quasi judicial officer, whose rulings are subject to review upon certiorari or appeal (Chicago Junction Case, 264 U.S. 258, 265 , 44 S.Ct. 317; cf. Givens v. Zerbst, 255 U.S. 11, 20 , 41 S.Ct. 227), or an administrative agency supervised in the same way. Officers and bodies such as those may be required by reviewing courts to express their decision in formal and explicit findings to the end that review may be intelligent. Florida v. United States, 282 U.S. 194, 215 , 51 S.Ct. 119; Beaumont, Sour Lake & Western R. Co. v. United States, 282 U.S. 74, 86 , 51 S.Ct. 1; United States v. Baltimore & Ohio R. Co., 293 U.S. 454 , 55 S.Ct. 268, Jan. 7, 1935. Cf. Public Service Commission of Wisconsin v. Wisconsin Telephone Co .,289 U.S. 67 , 53 S.Ct. 514. Such is not the position or duty of the President. He is the Chief Executive of the nation, exercising a power committed to him by Congress, and subject, in respect of the formal qualities of his acts, to the restrictions, if any, accompanying the grant, but not to any others. One will not find such restrictions either in the statute itself or in the Constitution back of it. The Constitution of the United States is not a code of civil practice.

The prevailing opinion cites Wichita Railroad & Light Co. v. Public Utilities Commission of Kansas, 260 U.S. 48 , 43 S.Ct. 51, and Mahler v. Eby, 264 U.S. 32, 44, 44 S.Ct. 283. One dealt with a delegation to a public utilities commission of the power to reduce existing rates if they were found to be unreasonable; the other a delegation to the Secretary of Labor of the power to deport aliens found after notice and a hearing to be undesirable residents. In each it was a [293 U.S. 388,

448] specific requirement of the statute that the basic fact conditioning action by the administrative agency be stated in a finding and stated there expressly. If legislative power is delegated subject to a condition, it is a requirement of constitutional government that the condition be fulfilled. In default of such fulfillment, there is in truth no delegation, and hence no official action, but only the vain show of it. The analogy is remote between power so conditioned and that in controversy here.

Discretionary action does not become subject to review because the discretion is legislative rather than executive. If the reasons for the prohibition now in controversy had been stated in the order, the jurisdiction of the courts would have been no greater and no less. Investigation resulting in an order directed against a particular person after notice and a hearing is not to be confused with investigation preliminary and incidental to the formulation of a rule. An embargo under the act of 1794 would have been more than a nullity though there had been a failure to recite that what was done was essential to the public safety or to enumerate the reasons leading to that conclusion. If findings are necessary as a preamble to general regulations, the requirement must be looked for elsewhere than in the Constitution of the nation.

There are other questions as to the validity of section 9(c), 15 USCA 709(c), in matters unrelated to the delegation of power to the President, and also questions as to the regulations adopted in behalf of the President by the Secretary of the Interior. They are not considered in the prevailing opinion. However, they have been well reviewed and disposed of in the opinion of Sibley, J., writing for the court below. It is unnecessary at this time to dwell upon them further.

The decree in each case should be affirmed.

Footnotes

[ Footnote 1 ] The full text of the Executive Order of July 11, 1933, is as follows:

'Executive Order 'Prohibition of Transportation in Interstate and Foreign Commerce of Petroleum and the Products Thereof Unlawfully Produced or Withdrawn from Storage. 'By virtue of the authority vested in me by the Act of Congress entitled 'An Act To encourage national industrial recovery, to foster fair competition, and to provide for the construction of certain useful public works, and for other purposes,' approved June 16, 1933 (Public No. 67, 73d Congress), the transportation in interstate and foreign commerce of petroleum and the products thereof produced or withdrawn from storage in excess of the amount permitted to be produced or withdrawn from storage by any State law or valid regulation or order prescribed thereunder, by any board, commission, officer, or other duly authorized agency of a State, is hereby prohibited. 'Franklin D. Roosevelt. 'The White House, 'July 11, 1933.'

[ Footnote 2 ] The Executive Order of July 14, 1933, is as follows:

'Executive Order 'Prohibition of Transportation in Interstate and Foreign Commerce of Petroleum and the Products Thereof Unlawfully Produced or Withdrawn from Storage. 'By virtue of the authority vested in me by the Act of Congress, entitled 'An Act To encourage national industrial recovery, to foster fair competition, and to provide for the construction of certain useful public works, and for other purposes,' approved June 16, 1933 (Public No. 67, 73d Congress), in order to effectuate the intent and purpose of the Congress as expressed in Section 9(c) thereof, and for the purpose of securing the enforcement of my order of July 11, 1933, issued pursuant to said act, I hereby authorize the Secretary of the Interior to exercise all the powers vested in me, for the purpose of enforcing Section 9(c) of said act and said order, including full authority to designate and appoint such agents and to set up such boards and agencies as he may see fit, and to promulgate such rules and regulations as he may deem necessary. 'Franklin D. Roosevelt. 'The White House, 'July 14, 1933.'

[ Footnote 3 ] The Executive Order of August 19, 1933, is as follows:

'Executive Order 'Code of Fair Competition for the Petroleum Industry. 'An application having been duly made, pursuant to and in full compliance with the provisions of Title I of the National Industrial Recovery Act, approved June 16, 1933, for my approval of a Code of Fair Competition for the Petroleum Industry, and hearings having been held thereon and the Administrator having rendered his report together with his recommendations and findings with respect thereto, and the Administrator having found that the said Code of Fair Competition complies in all respects with the pertinent provisions of Title I of said Act and that the requirements of clauses (1) and (2) of subsection (a) of Section 3 of the said Act have been met: 'Now, Therefore, I, Franklin D. Roosevelt, President of the United States, pursuant to the authority vested in me by Title I of the National Industrial Recovery Act, approved June 16, 1933, and otherwise, do adopt and approve the report, recommendations and findings of the Administrator and do order that the said Code of Fair Competition be and it is hereby approved. 'Franklin D. Roosevelt. 'Approval Recommended: 'Hugh S. Johnson, Administrator. 'The White House, 'August 19, 1933.'

[ Footnote 4 ] The government states that, although the second paragraph of section 4 of article III was a part of the code for a short period prior to September 13, 1933, no legal basis exists for prosecution for production in Texas during that period.

[ Footnote 5 ] See United States v. The Schooner Peggy, 1 Cranch, 103, 109, 110; Dinsmore v. Southern Express Co., 183 U.S. 115 ;, 120, 22 S.Ct. 45; Crozier v. Fried Krupp Aktiengesellschaft, 224 U.S. 290, 302 , 32 S.Ct. 488; Gulf, Colorado & Santa Fe R. Co. v. Dennis, 224 U.S. 503, 507 , 32 S.Ct. 542; Watts, Watts & Co. v. Unione Austriaca, 248 U.S. 9, 21 , 39 S.Ct. 1, 3 A.L.R. 323; Duplex Printing Press Co. v. Deering, 254 U.S. 443, 464 , 41 S.Ct. 172, 16 A.L.R. 196; American Steel Foundries v. Tri-City Council, 257 U.S. 184, 201 , 42 S.Ct. 72, 27 A.L.R. 360; Texas Company v. Brown, 258 U.S. 466, 474 , 42 S.Ct. 375.

[ Footnote 6 ] The text of section 1 is as follows:

'Section 1. A national emergency productive of widespread unemployment and disorganization of industry, which burdens interstate and foreign commerce, affects the public welfare, and undermines the standards of living of the American people, is hereby declared to exist. It is hereby declared to be the policy of Congress to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof; and to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups, to induce and maintain united action of labor and management under adequate governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry and to conserve natural resources.'

[ Footnote 7 ] Acts of June 4, 1794, 1 Stat. 372; March 3, 1795, 1 Stat. 444; June 13, 1798, 1 Stat. 565, 566; February 9, 1799, 1 Stat. 613, 615; February 27, 1800, 2 Stat. 7, 9, 10; March 3, 1805, 2 Stat. 339, 341, 342; February 28, 1806, 2 Stat. 351, 352; April 22, 1808, 2 Stat. 490.

[ Footnote 8 ] Marshall's Life of Washington, vol. 2, p. 319 et seq.

[ Footnote 9 ] Thus, prior to the Act of June 4, 1794 (1 Stat. 372), the Congress had laid embargoes, for limited periods, upon vessels in ports of the United States bound to foreign ports. Resolutions of March 26, 1794, and April 18, 1794, 1 Stat. 400, 401. Fearing that the national safety might be endangered, the President, by the Act of June 4, 1794, was

authorized to lay an embargo, with appropriate regulations, whenever he found that 'the public safety shall so require' (section 1), the authority not to be exercised while the Congress was in session and the embargo to be limited in any case to 15 days after the commencement of the next session. The Act of March 3, 1795 (1 Stat. 444), authorizing the President to permit the exportation of arms, etc., was 'in cases connected with the security of the commercial interest of the United States, and for public purposes only.' By the Act of June 13, 1798 (1 Stat. 565), commercial intercourse was suspended between the United States and France and its dependencies. The act was to continue only until the end of the next session of Congress, and it was provided (section 5) that if, before the next session, the government of France 'shall clearly disavow, and shall be found to refrain from the aggressions, depredations and hostilities' against the vessels and other property of citizens of the United States, and shall acknowledge the neutrality of the United States, 'it shall be lawful for the President,' 'being well ascertained of the premises,' to remit and discontinue the prohibitions and restraints imposed by the act and to make proclamation accordingly. (continued on p. 423)

The Act of February 9, 1799 (1 Stat. 613), further suspended commercial intercourse between the United States and France and its dependencies until March 3, 1800, and gave a similar authority (section 4) to the President to remit and discontinue the restraints and prohibitions of the act, 'if he shall deem it expedient and consistent with the interest of the United States,' either with respect to the French Republic or to any place belonging to that republic, 'with which a commercial intercourse may safely be renewed,' and to revoke such order if he found that the interest of the United States so required. The suspension of commercial intercourse was renewed by the Act of February 27, 1800 (2 Stat. 7) until March 3, 1801, with a similar provision as to the authority of the President. The Act of March 3, 1805 (2 Stat. 339), related to persons committing treason, felony, etc., within the jurisdiction of the United States and taking refuge in foreign armed vessels, and the authority to the President to permit or prevent the entry of such vessels into the waters of the United States (section 4) was 'in order to prevent insults to the authority of the laws, whereby the peace of the United States with foreign nations may be endangered.' See, also, Act of April 22, 1808, 2 Stat. 490. See, also, Proclamations of President Adams, 'Works of John Adams,' vol. IX, pp. 176, 177.

[ Footnote 10 ] See Act of June 28, 1809, 2 Stat. 550.

[ Footnote 11 ] Acts of March 3, 1815, 3 Stat. 224; March 3, 1817, 3 Stat. 361; January 7, 1824, 4 Stat. 2; May 24, 1828, 4 Stat. 308; May 31, 1830, 4 Stat. 425; March 6, 1866, 14 Stat. 3; March 3, 1883, 22 Stat. 490; June 26, 1884, 23 Stat. 57; October 1, 1890, 26 Stat. 616; R.S. 2493, 2494, 4219, 4228. Proclamations of Presidents: 3 Stat.App. 1; 4 Stat.App. 3, pp. 814- 818; 9 Stat.App. 1001, 1004; 11 Stat.App. 795; 13 Stat.App. 739; 14 Stat. App. 818, 819; 16 Stat.App. 1127; 17 Stat.App. 954, 956, 957; 21 Stat. 800; 23 Stat. 841, 842, 844.

For other analogous statutes, see Acts of December 17, 1813, 3 Stat. 88, 93; June 19, 1886, 24 Stat. 79, 82 (section 17 (46 USCA 142)); March 3, 1887, 24 Stat. 475 (46 USCA 143); August 30, 1890, 26 Stat. 414, 415 ( sections 4, 5 (21 USCA 18; 19 USCA 181)); February 15, 1893, 27 Stat. 449, 452 (section 7 (42 USCA 111)); March 2, 1895, 28 Stat. 727, 733; September 8, 1916, 39 Stat. 756, 799 (15 USCA 75-77); June 15, 1917, 40 Stat. 217, 225; August 10, 1917, 40 Stat. 276; October 6, 1917, 40 Stat. 411, 422 (section 11 (50 USCA Appendix, 11)); March 4, 1919, 40 Stat. 1348, 1350; June 17, 1930, 46 Stat. 590, 704 (section 338 (19 USCA 1338 )). Resolutions of March 14, 1912, 37 Stat. 630; January 31, 1922, 42 Stat. 361 (22 USCA 236, 237). Proclamations: 24 Stat. 1024, 1025, 1028, 1030; 27 Stat. 995, 1011; 38 Stat. 1960; 39 Stat. 1756; 40 Stat. 1683, 1689, et seq.

[ Footnote 12 ] See, also, sections 4(b) and 5(a) of the Trading with the Enemy Act, 40 Stat. 411, 414, 415, 50 USCA Appendix 4(b), 5(a).

[ Footnote 13 ] Act of March 28, 1928, 5 (amending section 9 of the Radio Act of 1927) 45 Stat. 373.

[ Footnote 14 ] See Acts and Proclamations cited in note 11, supra.

[ Footnote 15 ] See Philadelphia & T.R.R. Co. v. Stimpson, 14 Pet. 448, 458; Martin v. Mott, 12 Wheat. 19, 30, 32; Dakota Central Telephone Co. v. South Dakota, 250 U.S. 163, 182 , 184 S., 39 S.Ct. 507, 4 A.L.R. 1623; United States v. Chemical Foundation, 272 U.S. 1, 14 , 15 S., 47 S.Ct. 1; Sterling v. Constantin, 287 U.S. 378, 399 , 53 S.Ct. 190.

[ Footnote 1 ] 'Section 1. ... It is hereby declared to be the policy of Congress to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof; and to provide for the general welfare by

promoting the organization of industry for the purpose of cooperative action among trade groups, to induce and maintain united action of labor and management under adequate governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry and to conserve natural resources.'

The act as a whole is entitled as one 'To encourage national industrial recovery, to foster fair competition, and to provide for the construction of certain useful public works, and for other purposes,' and the heading of title I, which includes sections 1 to 10, is 'Industrial Recovery.'

[ Footnote 2 ] 2 Stat. 411, December 19, 1806; 3 Stat. 224, March 3, 1815; 23 Stat. 31, 32, May 29, 1884; 25 Stat. 659, February 9, 1889; 38 Stat. 717 (15 USCA 41 et seq.), September 26, 1914; 41 Stat. 593 (8 USCA 157), May 10, 1920; Williams v. United States, 138 U.S. 514 , 11 S.Ct. 457; Buttfield v. Stranahan, 192 U.S. 470 , 24 S.Ct. 349; Inter-Mountain Rate Case (U.S. v. Atchison, T. & S.F.R. Co.), 234 U.S. 476 , 34 S.Ct. 986; Mahler v. Eby, 264 U.S. 32 , 44 S.Ct. 283. Cf. Emergency Banking Act of March 9, 1933, 48 Stat. 1; Agricultural Adjustment Act of May 12, 1933, 48 Stat. 51, 53, 43.

[ Footnote 3 ] 'Executive Order. Prohibition of Transportation in Interstate and Foreign Commerce of Petroleum and the Products Thereof Unlawfully Produced or Withdrawn from Storage. By virtue of the authority vested in me by the Act of Congress entitled 'An Act To encourage national industrial recovery, to foster fair competition, and to provide for the construction of certain useful public works, and for other purposes,' approved June 16, 1933 ( Public No. 67, 73d Congress), the transportation in interstate and foreign commerce of petroleum and the products thereof produced or withdrawn from storage in excess of the amount permitted to be produced or withdrawn from storage by any State law or valid regulation or order prescribed thereunder, by any board, commission, officer, or other duly authorized agency of a State, is hereby prohibited. Franklin D. Roosevelt. The White House, July 11, 1933.' No. 6199.

RAILROAD RETIREMENT BOARD v. ALTON R. CO., 295 U.S. 330 (1935)

295 U.S. 330

RAILROAD RETIREMENT BOARD et al. v.

ALTON R. CO. et al. No. 566.

Argued March 13, 14, 1935.

Decided May 6, 1935.

[295 U.S. 330, 334] The Attorney General, and Messrs. Harold M. Stephens, Asst. Atty. Gen ., and Harry Shulman, of New Haven, Conn., for petitioners.

[295 U.S. 330, 340] Messrs. Jacob Aronson, of New York City, and Emmett E. McInnis, of Chicago, Ill., for respondents.

[295 U.S. 330, 344]

Mr. Justice ROBERTS delivered the opinion of the Court.

The respondents, comprising 134 class I railroads, two express companies, and the Pullman Company, brought this suit in the Supreme Court of the District of Columbia, asserting the unconstitutionality of the Railroad Retirement Act1 and praying an injunction against its enforcement. From a decree granting the relief sought, an appeal was perfected to the Court of Appeals. Before hearing in that tribunal, the petitioners applied for a writ of certiorari, representing that no

serious or difficult questions of fact were involved, and urging the importance of an early and final decision of the controversy. In the exercise of power conferred by statute,2 we issued the writ. 3

The act establishes a compulsory retirement and pension system for all carriers subject to the Interstate Commerce Act (49 USCA 1 et seq.). There is provision for the creation of a fund to be deposited in the United States Treasury (sections 5, 8 (45 USCA 205, 208)) and administered by a Board denominated an independent agency in the executive branch of the government (section 9 (45 USCA 209)). The retirement fund for payment of these pensions and for the expenses of administration of the system will arise from compulsory contributions from present and future employees and the carriers. The sums payable by the employees are to be percentages of their current compensation, and those by each carrier double the total payable by its employees. The Board is to determine from [295 U.S. 330, 345] time to time what percentage is required to provide the necessary funds, but, until that body otherwise determines, the employee contribution is to be 2 per cent. of compensation (section 5 (45 USCA 205)). Out of this fund annuities are to be paid to beneficiaries.

The classes of persons eligible for such annuities are (1) employees of any carrier on the date of passage of the act; (2) those who subsequently become employees of any carrier; (3) those who within one year prior to the date of enactment were in the service of any carrier. Section 1(b) of the act, 45 USCA 201(b).

To every person in any of the three categories an annuity becomes payable (a) when he reaches the age of 65 years, whether then in carrier service or not (section 3 (45 USCA 203)); if still in such service he and his employer may agree that he shall remain for successive periods of one year until he attains 70, at which time he must retire (section 4 (45 USCA 204)); (b) at the option of the employee, at any time between the ages of 51 and 65, if he has served a total of 30 years in the employ of one or more carriers, whether continuously or not (section 3, and section 1(f) of the act, 45 USCA 201(f), 203). The compulsory retirement provision is not applicable to those in official positions until five years after the effective date of the act (section 4).

The annuity is payable monthly (section 1(d) of the act, 45 USCA 201(d). The amount is ascertained by multiplying the number of years of service, not exceeding 30, before as well as subsequent to the date the Act was adopted, whether for a single carrier or a number of carriers, and whether continuous or not, by graduated percentages of the employee's average monthly compensation (excluding all over $300). If one who has completed 30 years of service elects to retire before attaining the age of 65 years, the annuity is reduced by one-fifteenth for each year he lacks of that age, unless the retirement is due to physical or mental disability ( section 3).

Upon the death of an employee, before or after retirement, his estate is to be repaid all that he has contributed [295 U.S. 330, 346] to the fund, with 3 per cent. interest compounded annually, less any annuity payments received by him (section 3).

The Supreme Court of the District of Columbia declared the establishment of such a system within the competence of Congress, but though several inseparable features of the act transcended the legislative power to regulate interstate commerce, and required a holding that the law is unconstitutional in its entirety. Our duty, like that of the court below, is fairly to construe the powers of Congress, and to ascertain whether or not the enactment falls within them, uninfluenced by predilection for or against the policy disclosed in the legislation. The fact that the compulsory scheme is novel is, of course, no evidence of unconstitutionality. Even should we consider the act unwise and prejudicial to both public and private interest, if it be fairly within delegated power, our obligation is to sustain it. On the other hand, though we should think the measure embodies a valuable social plan and be in entire sympathy with its purpose and intended results, if the provisions go beyond the boundaries of constitutional power we must so declare.

The admitted fact that many railroads have voluntarily adopted pension plans does not aid materially in determining the authority of Congress to compel conformance to the one embodied in the Railroad Retirement Act, nor does the establishment of compulsory retirement plans in European countries, to which petitioners refer, for in many of these railroads are operated under government ownership, and none has a constitutional system comparable to ours.

The federal government is one of enumerated powers; those not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states or to the people. The Constitution is not a statute, but the supreme law of the land to which all [295 U.S. 330, 347] statutes must conform, and the powers conferred upon the

federal government are to be reasonably and fairly construed, with a view to effectuating their purposes. But recognition of this principle cannot justify attempted exercise of a power clearly beyond the true purpose of the grant. All agree that the pertinent provision of the Constitution is article 1, 8, cl. 3, which confers power on the Congress 'to regulate Commerce ... among the several States; ...' and that this power must be exercised in subjection to the guarantee of due process of law found in the Fifth Amendment. 4

The petitioners assert that the questioned act, fairly considered, is a proper and necessary regulation of interstate commerce; its various provisions have reasonable relation to the main and controlling purposes of the enactment, the promotion of efficiency, economy, and safety; consequently it falls within the power conferred by the commerce clause and does not offend the principle of due process. The respondents insist that numerous features of the act contravene the due process guaranty, and further that the requirement of pensions for employees of railroads is not a regulation of interstate commerce within the meaning of the Constitution. These conflicting views open two fields of inquiry which to some extent overlap. 5 If we assume that under the power to [295 U.S. 330, 348] regulate commerce between the states Congress may require the carriage to make some provision for retiring and pensioning their employees, then the contention that various provisions of the act are arbitrary and unreasonable and bear no proper relation to that end must be considered. If any are found which deprive the railroads of their property without due process, we must determine whether the remainder may nevertheless stand. Broadly, the record presents the question whether a statutory requirement that retired employees shall be paid pensions is regulation of commerce between the states within article 1, 8.

1. We first consider the provisions affecting former employees. The act makes eligible for pensions all who were in carrier service within one year prior to its passage, irrespective of any future re-employment. About 146,000 persons fall within this class, which, as found below, includes those who have been discharged for cause, who have been retired, who have resigned to take other gainful employment, who have been discharged because their positions were abolished, who were temporarily employed, or who left the service for other reasons. These persons were not in carrier service at the date of the act, and it is certain thousands of them never again will be. The petitioners say the provision was inserted to assure those on furlough, or temporarily relieved from duty subject to call, the benefit of past years of service, in the event of re-employment, and to prevent the carriers from escaping their just obligations by omitting to recall these persons to service. And it is said that to attempt nicely to adjust the provisions of the act to furloughed men [295 U.S. 330, 349] would involve difficulties of interpretation and inequalities of operation which the blanket provision avoids. We cannot accept this view. 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.

In addition to the 146,000 who left the service during the year preceding the passage of the act, over 1,000,000 persons have been, but are not now, in the employ of the carriers. The statute provides that, if any of them is re-employed at any time, for any period, however brief, and in any capacity, his prior service with any carrier shall be reckoned in computing the annuity payable upon his attaining 65 years of age. Such a person may have been out of railroad work for years; his employment may have been terminated for cause; he may have elected to enter some other industry and may have devoted the best years of his life to it; yet if, perchance, some carrier in a distant part of the country should accept him for work of any description, even temporarily, the act throws the burden of his pension on all the railroads, including, it may be, the very one which for just cause dismissed him. Plainly this requirement alters contractual rights; plainly it imposes for the future a burden never contemplated by either party when the earlier relation existed or when it was terminated. The statute would take from the railroads' future earnings amounts to be paid for services fully compensated when rendered in accordance with contract, with no thought on the part of either employer or employee that further sums must be provided by the carrier. The [295 U.S. 330, 350] provision is not only retroactive in that it resurrects for new burdens transactions long since past and closed; but as to some of the railroad companies it constitutes a naked appropriation of private property upon the basis of transactions with which the owners of the property were never connected. Thus the act denies due process of law by taking the property of one and bestowing it upon another. This onerous financial burden cannot be justified upon the plea that it is in the interest of economy, or will promote efficiency or safety. The petitioners say that one who is taken back into service will no doubt render more loyal service since he will know he is to receive a bonus for earlier work. But he will not attribute this benefaction to his employer. The argument comes merely to the contentment and satisfaction theory discussed elsewhere. The petitioners also argue that, if the provision in question threatens an unreasonable burden, the carriers have in their own control the means of

avoidance, since no carrier need employ any person who has heretofore been in the railroad business. The position is untenable for several reasons. A carrier may wish to employ one having experience, who has been in another's service. Must it forego the opportunity because to choose the servant will impose a financial obligation arising out of an earlier employment with some other railroad? Would that promote efficiency and safety? The testimony shows that 22 per cent. of all railway employees have had prior service on some railroad. Must a carrier at its peril exercise, through dozens of employment agencies scattered over a vast territory, an unheard of degree of care to exclude all former railroad workers at the risk of incurring the penalty of paying a pension for work long since performed for some other employer? So to hold would be highly unreasonable and arbitrary.

2. Several features of the act, touching those now or hereafter in railroad employment, are especially challenged by the respondents. [295 U.S. 330, 351] No specified length of service is required for eligibility to pension, though the amount of the annuity is proportionately reduced if the total term of employment be less than 30 years. One may take a position with a carrier at 20, remain until he is 30, resign after gaining valuable skill and aptitude for his work, enter a more lucrative profession, and, though never thereafter in carrier employ, at 65 receive a pension calculated on his 10 years of service. Or after 10 years he may be discharged for peculation, and still be entitled to the gratuity. Or he may be relieved of duty for gross negligence, entailing loss of life or property, and yet collect his pension at 65. May these results be fairly denominated the indicia of reasonable regulating of commerce? May they be cited in favor of this pension system as an aid to economy, efficiency, or safety? We cannot so hold. The petitioners' explanation of this feature of the act is that no 'real assurance' of 'oldage security' is possible 'when pension rights may be lost at any time by loss of employment'; that such a provision is reasonable 'because it improves the morale of the employees while they are in the service.' Assurance of security it truly gives, but, quite as truly, if 'morale' is intended to connote efficiency, loyalty, and continuity of service, the surest way to destroy it in any privately owned business is to substitute legislative largess for private bounty and thus transfer the drive for pensions to the halls of Congress and transmute loyalty to employer into gratitude to the Legislature.

The act assumes that, in fairness, both employer and employee should contribute in fixed proportions to a liberal pension. But we find that, in contradiction of this recognized principle, thousands of those in the service at the date of the act will at once become entitled to annuities, though they will have contributed nothing to the fund. The burden thus cast on the carriers is found to be for the first year of administration over $9,000,000, [295 U.S. 330, 352] and, until the termination of payments to these annuitants, not less than $ 78,000,000. All that has been said of the irrelevance of the requirement of payments based upon services heretofore terminated to any consideration of efficiency or safety applies here with equal force. The petitioners say that the retention of these men will be injurious and costly to the service. This view assumes they will be retained for years and are incompetent to do what they are now doing. Evidence is lacking to support either supposition. Next it is said 'that they will receive from the fund more than they will have contributed is not significant for all retired employees receive more than they contribute.' This attempted but futile justification is significant of the fault in the feature sought to be supported.

One who has served a total of 30 years is entitled to retire on pension at his election, at whatever his then attained age. Thus many who are experienced and reliable may at their own election deprive a carrier of their services, enter another gainful occupation, cease to contribute to the fund, and go upon the pension roll years before the fixed retirement age of 65. The finding is that there are not less than 100,000 in the service of the carriers between 51 and 65 years of age who have had 30 or more years of service. The option is not extended to them to retire on pension in order to improve transportation, for the choice is the employee's to be exercised solely on grounds personal to himself; and the provisions cannot promote economy, for the retiring workers' place will be filled by another who will receive the same wage. The court below properly found that 'it is to the interest of the service of plaintiffs and is to the interest of the public that those of such employees who are competent and efficient be retained in carrier service for the benefit of their skill and experience.' The petitioners say 'clearly the provision in question is not arbitrary and unreason [295 U.S. 330, 353] able so as to be unlawful'; but in support of this statement they adduce only the following considerations: As the pension is reduced one-fifteenth for each year the annuitant lacks of 65 at the date of retirement, his separation, it is said, will impose no greater burden on the fund than if he had waited until 65; the reduction in the amount payable will discourage early retirement, and so tend to counteract the loss of skilled workers; and, finally, 'the justification for this provision is that employees who have completed thirty years of service may find it necessary, and it may be in the interest of the industry, for them to retire before age 65.' We search in vain for any assertion that the feature under discussion will promote economy, efficiency, or safety, and the absence of any such claim is not surprising. The best that can be said, it seems, is that the burden incident to the privilege of early retirement will not be as heavy as others imposed by the statute.

On June 27, 1934, when the act was approved, there were 1,164,707 people in carrier employ. The act, by conferring a statutory right to a pension, based in part on past service, gave the work theretofore performed by these persons a new quality. Although completed and compensated in full in conformity with the agreement of the parties, that work, done over a period of 30 years past, is to be the basis for further compulsory payment. While, as petitioners point out, the bounties are payable only in the future, any continuance of the relation, however brief, subsequent to the passage of the act, matures a right which reaches back to the date of original employment. And to the amount payable in virtue of all these prior years' service the employees contribute nothing. It is no answer to say that from the effective date of the law they will have to contribute from their wages half as much as do their employers. The future accrues its own annuities. The finding, accepted by the petitioners as veracious, is that the annuities payable for service performed prior to June [295 U.S. 330, 354] 27, 1934, would in the year 1935 amount to $68,749,000, and would increase yearly until 1953, in which year the portion of the aggregate pension payments attributable to work antedating the passage of the act would be $ 137,435,000. These figures apply only to pensions to those now employed and exclude payments to those who left the service during the year prior to the adoption of the act, and to those former employees who may hereafter be re-employed.

This clearly arbitrary imposition of liability to pay again for services long since rendered and fully compensated is not permissible legislation. The court below held the provision deprived the railroads of their property without due process, and we agree with that conclusion. Here again the petitioners insist that the requirement is appropriate, because, they say, it does not demand additional pay for past services, but expenditure 'for a present and future benefit through improvement of the personnel of the carriers.' But the argument ends with mere statement. Moreover, if it were correct in its assumption, which we shall presently show it is not, nevertheless there can be no constitutional justification for arbitrarily imposing millions of dollars of additional liabilities upon the carriers in respect of transactions long closed on a basis of cost with reference to which their rates were made and their fiscal affairs adjusted.

The act defines as an employee entitled to its benefits an official or representative of an employee organization who during or following employment by a carrier acts for such an organization in behalf of employees. Such an one may retire and receive a pension provided in future he pays an amount equal to the sum of the contributions of an employee and of an employer. The petitioners say the burden thus imposed is not great; but the provision exhibits the same arbitrary and unreasonable features [295 U.S. 330, 355] as those heretofore discussed, and seems irrelevant to any enhancement of safety or efficiency in transportation.

3. Certain general features of the system violate the Fifth Amendment. Under the statutory plan the draft upon the pension fund will be at a given rate, while the contributions of individual carriers to build up the fund will be at a disparate rate. This results from the underlying theory of the act, which is that all the railroads shall be treated as a single employer. The report of the Senate subcommittee announced:6

'It is agreed that all railroads which have been subjected to the jurisdiction of Congress are to be treated together as one employer. All persons in the service of the railroads are to be regarded as employees of the one employer. ... The old age pension or annuity is to be based upon the wages and the length of service upon all railroads, with specified maximum limits.'

The petitioners themselves showed at the trial that the probable age of entry into service of typical carriers differs materially; for one it is 28.4, for another 32.4, for a third 29.3, and for a fourth 34.2. Naturally the age of a pensioner at date of employment will affect the resultant burden upon the contributors to the fund. The statute requires that all employees of age 70 must retire immediately. It is found that 56 of the respondents have no employees in that class. Nevertheless they must contribute toward the pensions of such employees of other respondents nearly $4,000,000 the first year and nearly $33,000,000 in the total. The petitioners admit that these are the facts, but attempt to avoid their force by the assertion that 'the cost differentials which are involved are negligible as compared with the total cost.' This can only mean that, in view of the enormous total cost to all [295 U.S. 330, 356] the railroads, the group thus discriminated against should not complain of the disregard of their ownership of their own assets, because in comparison with gross cost the additional payments due to the inequality mentioned are small.

The evidence shows that some respondents are solvent and others not, a situation which often may recur. The petitioners concede that the plan is intended to furnish assurance of payment of pensions to employees of all the carriers, with the result that solvent railroads must furnish the money necessary to meet the demands of the system upon

insolvent carriers, since the very purpose of the act is that the pension fund itself shall be kept solvent and able to answer all the obligations placed upon it.

In recent years many carriers subject to the Interstate Commerce Act have gone out of existence. The petitioners admit that the employees of these defunct carriers are treated upon exactly the same basis as the servants of existing carriers. In other words, past service for a carrier no longer existing is to be added to any service hereafter rendered to an operating carrier, in computing a pension the whole burden of payment of which falls on those carriers still functioning. And all the future employees of any railroad which discontinues operation must be paid their pensions by the surviving roads. Again the answer of the petitioners is that the amount will be negligible. The fact that millions of dollars are involved in other features of the act will not serve to obscure this violation of due process.

All the carriers must make good the contributions of all employees, for section 3 (45 USCA 203) directs that upon the death of an employee the Board shall pay him from the fund what he has contributed to it with 3 per cent. interest compounded annually, less any payments he has received. The railroads are not only liable for their own contributions, but are, in a measure, made insurers of those of [295 U.S. 330, 357] the employees. This appears to be an unnecessarily harsh and arbitrary imposition, if the plan is to be what on its face it imports, a joint adventure with mutuality of obligation and benefit.

This court has repeatedly had occasion to say that the railroads, though their property be dedicated to the public use, remain the private property of their owners, and that their assets may not be taken without just compensation. 7 The carriers have not ceased to be privately operated and privately owned, however much subject to regulation in the interest of interstate commerce. There is no warrant for taking the property or money of one and transferring it to another without compensation, whether the object of the transfer be to build up the equipment of the transferee or to pension its employees.

The petitioners insist that, since the adoption of the Transportation Act 1920 (41 Stat. 456), and as the logical consequence of decisions of this court, we must recognize that Congress may deal with railroad transportation as a whole and regulate the carriers generally and in classes, with an eye to improvement and development of railway service as a whole; that the interstate carriers use common facilities, make through rates, and interact amongst themselves in various ways, with the result that, where any link in the chain lacks efficiency, the system as a whole is affected. The argument is that, since the railroads and the public have a common interest in the efficient performance of the whole transportation chain, it is proper and necessary to require all carriers to contribute to the cost of a plan designed to serve this end. It is said that the pooling principle is desirable because there are many small carriers whose employees are too few to justify maintenance of a separate retirement plan for each. And, finally, the [295 U.S. 330, 358] claim is that, in fixing carrier contributions, any attempt to give consideration to difference in age, classification, and service periods of employees would involve grave administrative difficulties and unduly increase the cost of administration. With these considerations in view, the petitioners urge that our decisions sanction the exercise of the power involved in the pooling feature of the statute. They rely upon the New England Divisions Case, 261 U.S. 184 , 43 S.Ct. 270. That case, however, dealt purely with rates; and, while the policy of awarding a larger share of the division of a joint rate to the weaker carrier, in consideration of its need for revenue, was approved, the approval was definitely conditioned upon the circumstance that the share or division of the joint rate awarded to the stronger carrier was not so low as to require it to serve for an unreasonable rate. Thus the principle that Congress has no power to confiscate the property of one carrier for the benefit of another was fully recognized.

Dayton-Goose Creek R. Co. v. United States, 263 U.S. 456 , 44 S.Ct. 169, 33 A.L.R. 472, approved the provision of the Transportation Act 1920 (49 USCA 15a), which required the carriers to contribute one-half of their excess earnings to a revolving fund to be used by the Interstate Commerce Commission for making loans to carriers to meet capital expenditures and to refund maturing obligations, or to purchase equipment and facilities which might be leased to carriers. This case is relied upon as sustaining the principle underlying the Pension Act, but we think improperly. The provision was sustained upon the ground that it must be so administered as to leave to each carrier a reasonable return upon its property devoted to transportation, and the holding is clear that, if this principle were not observed in administration, the act would invade constitutional rights.

Atlantic Coast Line Railroad Co. v. Riverside Mills, 219 U.S. 186 , 31 S.Ct. 164, 31 L.R.A.(N.S.) 7, which the petitioners cite, is even wider of the mark. There this court upheld the Carmack Amendment (49 USCA 20), [295 U.S. 330, 359] which made the initial carrier liable to the consignor for loss of goods contracted to be delivered over connecting

lines. The legislation merely attached certain consequences to a given form of contract. It was recognized that initial carriers in fact enter into contracts for delivery of goods beyond their own lines and make through or joint rates over independent lines. This being so, it was held a proper exercise of the power of regulation to require one so contracting to be liable in the first instance to the shipper. So to regulate a recognized form of contract is not offensive to the Fifth Amendment.

It is claimed that several other decisions confirm the legality of the pooling principle, when reasonably applied. For this position petitioners cite Mountain Timber Co. v. Washington, 243 U.S. 219 , 37 S.Ct. 260, Ann. Cas. 1917D, 642; Noble State Bank v. Haskell, 219 U.S. 104 , 31 S.Ct. 186, 32 L.R.A.(N.S.) 1062, Ann. Cas. 1912A, 487, and Thornton v. Duffy, 254 U.S. 361 , 41 S.Ct. 137. In the first of these the Washington Workmen's Compensation Act, which required employers in extra-hazardous employment to pay into a state fund certain premiums based upon the percentage of estimated pay roll of the workmen employed, was under attack. For the purpose of payments into the fund accounts were to be kept with each industry in accordance with a statutory classification, and it was definitely provided that no class should be liable for the depletion of the accident fund by reason of accidents happening in any other class. The act therefore clearly recognized the difference in drain or burden on the fund arising from different industries and sought to equate the burden in accordance with the risk. The challenge of the employers was that the statute failed of equitable apportionment as between the constituted classes. But no proof was furnished to that effect, and this court assumed that the classification was made in an effort at fairness and equity as between classes. The Railroad Retirement Act, on the contrary, makes no classification, but, as above said, [295 U.S. 330, 360] treats all the carriers as a single employer, irrespective of their several conditions.

In the second case this court upheld a statute which required state banks to contribute a uniform percentage of their deposits to a state guaranty fund established for the purpose of making good losses to the depositors of banks which might become insolvent. The act was sustained upon the principle that an ulterior public advantage may justify the taking of a comparatively insignificant amount of private property for what in its immediate purpose is a private use. It was further said that there may be cases other than those of taxation in which the share of each party in the benefit of a scheme of mutual protection is sufficient compensation for the correlative burden which it is compelled to assume. These considerations clearly distinguish that case from the one now under discussion.

In the case last cited it was asserted that the Workmen's Compensation Act of Ohio unfairly discriminated because it allowed employers in certain cases to pay directly to workmen or their dependents the compensation provided by law, in lieu of contributing to the state fund established to secure such payments. This court held that the classification did not amount to a denial of due process.

We conclude that the provisions of the act which disregard the private and separate ownership of the several respondents, treat them all as a single employer, and pool all their assets, regardless of their individual obligations and the varying conditions found in their respective enterprises, cannot be justified as consistent with due process.

The act is said to be unconstitutional because unreasonably and unconscionably burdensome and oppressive upon the respondents, and we are referred to a finding of the court below to which petitioners do not assign error. [295 U.S. 330, 361] The facts as found are: Based upon present pay rolls, the carriers' contributions for the first year will aggregate not less than $60,000,000; at the rates fixed in the act, total employee and carrier contributions will, on the basis of present pay rolls, be approximately $90,000,000 per year; unless the amount of the contributions is increased by the Board, the drain on the fund for payment of pensions will result in a deficit of over $11,000,000 by the year 1942. To keep the fund in operation, it will be necessary for the Board to increase the percentages of contributions named in the act. The petitioners' actuary testified that in the tenth year of operation the payments from the fund will be upwards of $137,000, 000. The railroads' total contribution to pensions on account of prior service of employees in service at the date of the act may amount to $2, 943,966,000. We are not prepared to hold that, if the law were in other respects within the legislative competence, the enormous cost involved in its administration would invalidate it; but the recited facts at least emphasize the burdensome and perhaps destructive effect of the contraventions of the due process of law clause which we find exist. Moreover, they exhibit the inconsistency of the petitioners' position that the law is necessary because in times of depression the voluntary systems of the carriers are threatened by loss of revenue. It is difficult to perceive how the vast increase in pension expense entailed by the statute will, without provision of additional revenue, relieve the difficulty experienced by some railroads in meeting the demands of the plans now in force.

4. What has been said sufficiently indicates our agreement with the holding of the trial court respecting the disregard of due process exhibited by a number of the provisions of the act. We also concur in that court's views concerning the inseverability of certain of them. The statute contains a section broadly declaring the intent that invalid provisions shall not operate to destroy [295 U.S. 330, 362] the law as a whole. 8 Such a declaration provides a rule which may aid in determining the legislative intent, but is not an inexorable command. Dorchy v. Kansas, 264 U.S. 286 , 44 S.Ct. 323. It has the effect of reversing the presumption which would otherwise be indulged, of an intent that, unless the act operates as an entirety, it shall be wholly ineffective. Williams v. Standard Oil Co., 278 U.S. 235, 242 , 49 S.Ct. 115, 60 A.L.R. 596; Utah Power & Light Co. v. Pfost, 286 U.S. 165, 184 , 52 S.Ct. 548. But, notwithstanding the presumption in favor of divisibility which arises from the legislative declaration, we cannot rewrite a statute and give it an effect altogether different from that sought by the measure viewed as a whole. Compare Hill v. Wallace, 259 U.S. 44, 70 , 42 S.Ct. 453. In this view we are confirmed by the petitioners' argument that, as to some of the features we hold unenforceable, it is 'unthinkable' and 'impossible' that the Congress would have created the compulsory pension system without them. They so affect the dominant aim of the whole statute as to carry it down with them.

5. 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.

Several purposes are expressed in section 2(a), of the act (45 USCA 202(a), amongst them: To provide 'adequately for the satisfactory retirement of aged employees'; 'to make possible greater [295 U.S. 330, 363] employment opportunity and more rapid advancement'; to provide by the administration and construction of the act 'the greatest practicable amount of relief from unemployment and the greatest possible use of resources available for said purpose and for the payment of annuities for the relief of superannuated employees.' The respondents assert and the petitioners admit that though these may in and of themselves be laudable objects, they have no reasonable relation to the business of interstate transportation. The clause, however, states a further purpose, the promotion of 'efficiency and safety in interstate transportation,' and the respondents concede that an act, the provisions of which show that it actually is directed to the attainment of such a purpose, falls within the regulatory power conferred upon the Congress; but they contend that here the provisions of the statute emphasize the necessary conclusion that the plan is conceived solely for the promotion of the stated purposes other than efficient and safe operation of the railroads. The petitioners' view is that this is the true and only purpose of the enactment, and the other objects stated are collateral to it and may be disregarded if the law is found apt for the promotion of this legitimate purpose.

From what has already been said with respect to sundry features of the statutory scheme, it must be evident that petitioners' view is that safety and efficiency are promoted by two claimed results of the plan; the abolition of excessive superannuation, and the improvement of morale.

The parties are at odds respecting the existing superannuation of railway employees. Petitioners say it is much greater than that found in the heavy industries. Respondents assert it is less, and the court below so found. The finding is challenged as being contrary to the evidence. We may, for present purposes, assume that 'superannuation' as petitioners use the term, i.e., the [295 U.S. 330, 364] attainment of 65 years, is as great or greater in the railroad industry than in comparable employments. It does not follow, as contended, that the man of that age is inefficient or incompetent. The facts indicate a contrary conclusion. Petitioners say the seniority rules and the laying off of younger men first in reducing forces, necessarily tend to keep an undue proportion of older men in the service. They say this tendency has long been marked in the railroad industry and has been most noticeable in recent years of depression when forces have been greatly reduced. But what are the uncontradicted facts as to efficiency and safety of operation? Incontrovertible statistics obtained from the records of the Interstate Commerce Commission show a steady increase in safety of operation, during this period of alleged increasing superannuation. 9

[]

Total Frt. Frequency Psgr. and Per Motor Train Million Miles Total Train Train Year (Thousands) Accidents Miles []

1923 1,207,714 27,497 22.77 1924 1,171,812 22,368 19.09 1925 1,187,731 20,785 17.50 1926 1,211,617 21,077 17.39 1927 1,184,455 18,976 16.02 1928 1,169,442 16,949 14.49 1929 1,178,585 17,185 14.58 1930 1,082,306 12,313 11.38 1931 951,220 8,052 8.46 1932 813,091 5,770 7.09

[]

Decrease in frequency, 69%. [295 U.S. 330, 365] Indeed, one of the petitioners, and one of their most important witnesses, has written, referring to railroads: 'Experience seems to have proved, moreover, that older workers cause fewer accidents than do younger; hence there is little necessity for removing them on that ground.' 10

There is overwhelming evidence in the record to the same effect. All that petitioners offer on the subject in their brief is: 'In an industry having as many hazardous

[]

[]

Total employees killed and injured Total manhours Total worked casualty Year by all rate all employees employees (thousands) Killed Injured Total per million man-hours

[]

1923 4,856,964 1,866 148,146 150,012 30.89 1924 4,473,186 1,403 120,912 122,315 27.34 1925 4,448,377 1,460 114,639 116,099 26.10 1926 4,557,537 1,528 107,218 108,746 23.86 1927 4,406,627 1,427 83,883 85,310 19.36 1928 4,191,065 1,187 66,744 67,931 16.21 1929 4,225,292 1,302 57,164 58,466 13.84 1930 3,641,412 898 33,184 34,082 9.36 1931 2,930,657 621 21,417 22,038 7.52 1932 2,286,561 532 16,359 16,891 7.39

[]

Decrease in frequency, 76%

Total Man-hours Casualty worked by Number Number Total Rate Per Trainmen Trainmen Trainmen Trainmen's Million Year (Thousands) Killed Injured Casualties Man- hours

[]

1923 915,084 896 35,342 36,238 39.60 1924 829,533 628 28,438 29,066 35.04 1925 831,682 691 28,297 28,989 34.86 1926 858,598 691 29,864 30,555 35.59 1927 812,853 639 24,462 25,101 30.88 1928 776,184 501 20,943 21,444 27.63 1929 785,504 587 19,116 19,703 24.96 1930 673,208 423 11,771 12,194 18.11 1931 546,277 292 8,259 8,551 15.65 1932 431,083 265 6,318 6,583 15.27

Decrease in frequency, 61%

10 Latimer, Industrial Pension Systems, vol. II, 724. [295 U.S. 330, 366] occupations as the railway industry, improvement in personnel conditions is likely to mean increased safety.' We think it not unfair to say that the claim for promotion of safety is virtually abandoned.

How stands the case for efficiency? Here again the record without contradiction demonstrates that in step with the alleged progressive superannuation on the railroads their operations have increased in efficiency. 11 The trial court found, and its finding is not assigned as error: 'Railroads were, when the Act was enacted, and are now, operated efficiently and safely and more efficiently and much more safely than at any time in history.'

Lastly, the petitioners suggest that diminution of superannuation promotes economy, because younger and lower paid men will replace the retired older men. But the argument is based upon inadvertent disregard of the wage structure of the carriers, especially in the train and engine service, whereby contract compensation is based not on age but upon the nature of the duties performed. The replacement of one by another who is to do the same work will therefore beget no saving in wages.

When to these considerations is added that, as heretofore said, the act disregards fitness to work, pensions the worker who retires at his opinion before any suggested superannuation, irrespective of skill or ability, pensions those who are presently compelled by the law to retire, irrespective of their fitness to labor, and grants annuities to those who are discharged for dishonesty or gross care lessness, [295 U.S. 330, 367] it becomes perfectly clear that, though the plan may bring about the social benefits mentioned in section 2(a), of the act, 45 USCA 202(a), it has and can have no relation to the promotion of efficiency, economy, or safety by separating the unfit from the industry. If these ends demand the elimination of aged employees, their retirement from the service would suffice to accomplish the object. For these purposes the prescription of a pension for those dropped from service is wholly irrelevant. The petitioners, conscious of the truth of this statement, endeavor to avoid its force by the argument that social and humanitarian considerations demand the support of the retired employee. They assert that it would be unthinkable to retire a man without pension, and add that attempted separation of retirement and pensions is unreal in any practical sense, since it would be impossible to require carriers to cast old workers aside without means of support. The supposed impossibility arises from a failure to distinguish constitutional power from social desirability. The relation of retirement to safety and efficiency is distinct from the relation of a pension to the same ends, and the two relationships are not to be confused.

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 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. [295 U.S. 330, 368] 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. The answer of the petitioners is that not all such means of promoting contentment have such a close relation to interstate commerce as pensions. This is in truth no answer, for we must deal with the principle involved and not the means adopted. If contentment of the employee were an object for the attainment of which the regulatory power could be exerted, the courts could not question the wisdom of methods adopted for its advancement.

No support for a plan which pensions those who have retired from the service of the railroads can be drawn from the decisions of this court sustaining measures touching the relations of employer and employee in the carrier field in the interest of a more efficient system of transpor- [295 U.S. 330, 369] tation. The Safety Appliance Acts (45 USCA 1 et seq.), the Employers' Liability Acts (45 USCA 51 et seq.), hours of service laws, and others of analogous character, cited in support of this act, have a direct and intimate connection with the actual operation of the railroads. No less inapposite are the statutes which deal with exchange of facilities, joint facilities, joint rates, etc. For these have an obvious and direct bearing on the obligations of public service incident to the calling of the railroads. The railway labor act was upheld by this court upon the express ground that to facilitate the amicable settlement of disputes which threatened the service of the necessary agencies of interstate transportation tended to prevent interruptions of service and was therefore within the delegated power of regulation. It was pointed out that the act did not interfere with the normal right of the carrier to select its employees or discharge them. Texas & New Orleans R. Co. v. Brotherhood of Railway & S. S. Clerks, 281 U.S. 548, 570 , 571 S., 50 S.Ct. 427. The legislation considered in Wilson v. New, 243 U.S. 332 , 37 S.Ct. 298, L.R.A. 1917E,

938, Ann. Cas. 1918A, 1024, was drafted to meet a particular exigency, and its validity depended upon circumstances so unusual that this court's decision respecting it cannot be considered a precedent here.

Stress is laid upon the supposed analogy between workmen's compensation laws and the challenged statute. It is said that while Congress has not adopted a compulsory and exclusive system of workmen's compensation applicable to interstate carriers, no one doubts the power so to do; and the Retirement Act cannot in principle be distinguished. The contention overlooks fundamental differences. Every carrier owes to its employees certain duties the disregard of which render it liable at common law in an action sounding in tort. Each state has developed or adopted, as part of its jurisprudence, rules as to the employer's liability in particular circumstances. These are not the same in all the states. In the absence of a rule applicable to all engaged in interstate transpor- [295 U.S. 330, 370] tation, the right of recovery for injury or death of an employee may vary depending upon the applicable state law. That Congress may, under the commerce power, prescribe an uniform rule of liability and a remedy uniformly available to all those so engaged is not open to doubt. The considerations upon which we have sustained compulsory workmen's compensation laws passed by the states in the sphere where their jurisdiction is exclusive apply with equal force in any sphere wherein Congress has been granted paramount authority. Such authority it may assert whenever its exercise is appropriate to the purpose of the grant. A case in point is the Longshoremen's and Harbor Workers' Compensation Act ( 33 USCA 901 et seq.) passed pursuant to the delegation of admiralty jurisdiction to the United States. Modern industry, and this is particularly true of railroads, involves instrumentalities, tasks, and dangers unknown when the doctrines of the common law as to negligence were developing. The resultant injuries to employees, impossible of prevention by the utmost care, may well demand new and different redress from that afforded in the past. In dealing with the situation it is permissible to substitute a new remedy for the common-law right of action; to deprive the employer of common-law defenses and substitute a fixed and reasonable compensation commuted the degree of injury; to replace uncertainty and protracted litigation with certainty and celerity of payment; to eliminate waste; and to make the rule of compensation uniform throughout the field of interstate transportation, in contrast with inconsistent local systems. By the very certainty that compensation must be paid for every injury such legislation promotes and encourages precaution on the part of the employer against accident and tends to make transportation safer and more efficient. The power to prescribe an uniform rule for the transportation industry through- [295 U.S. 330, 371] out the country justifies the modification of commonlaw rules by the Safety Appliance Acts and the Employers' Liability Acts applicable to interstate carriers, and would serve to sustain compensation acts of a broader scope, like those in force in many states. The collateral fact that such a law may produce contentment among employees, an object which as a separate and independent matter is wholly beyond the power of Congress, would not, of course, render the legislation unconstitutional. It is beside the point that compensation would have to be paid despite the fact that the carrier has performed its contract with its employee and has paid the agreed wages. Liability in tort is imposed without regard to such considerations; and in view of the risks of modern industry the substituted liability for compensation likewise disregards them. Workmen's compensation laws deal with existing rights and liabilities by readjusting old benefits and burdens incident to the relation of employer and employee. Before their adoption the employer was bound to provide a fund to answer the lawful claims of his employees; the change is merely in the required disbursement of that fund in consequence of the recognition that the industry should compensate for injuries occurring with or without fault. The act with which we are concerned seeks to attach to the relation of employer and employee a new incident, without reference to any existing obligation or legal liability, solely in the interest of the employee, with no regard to the conduct of the business, or its safety or efficiency, but purely for social ends.

The petitioners, in support of their argument as to morale, rely upon the voluntary systems adopted in past years by almost all the carriers, and now in operation. The argument runs that these voluntary plans were adopted in the industry for two principal reasons; the creation of loyalty, and the encouragement of continuity [295 U.S. 330, 372] in service. The petitioners quote from a statement by the National Industrial Conference Board the following: 'More specifically, the efficiency of the individual workers is stimulated by the feeling of security and hopefulness that results when the individual is relieved of the fear of destitution and dependency in old age and by the sentiment of loyalty and good will fostered by the pension plan, which thus operates as a spur to the ambition of the worker and incites him to more intensive and sustained effort. Similarly the efficiency of the organization as a whole is increased by the improvement of industrial relations, the development of a cooperative spirit, and the promotion of constancy and continuity of employment.'

They assert that the Railroad Retirement Act, 'although it embodies the first compulsory retirement and pension plan enacted in this country, is but the development of voluntary plans which have been in use in this country, particularly among the railroads, for more than a third of a century.' The argument is self-contradictory. If, as is conceded, the

purpose of the voluntary establishment of pensions is to create loyalty to the employer who establishes them, and continuity in his service, it seems axiomatic that the removal of the voluntary character of the pension and the imposition of it in such form as Congress may determine, upon all employers, and irrespective of length of service, or of service for the same employer, will eliminate all sense of loyalty or gratitude to the employer, and remove every incentive to continuance in the service of a single carrier. In fact the petitioners so admit, for they say in their brief: 'That the benefits which respondents expected to derive from their voluntary pension plans (said to be (1) greater continuity of service and ( 2) improved employee loyalty) differ from those emphasized in the Retirement Act does not affect the Act's validity, so long as it is calculated in other ways to promote efficiency and safety.' [295 U.S. 330, 373] We are left to surmise what these 'other ways' may be unless they are the contentment and assurance of security so much stressed in the argument. The petitioners, in effect, say: The carriers with certain objects and purposes have adopted voluntary systems; this proves that pensions are germane to the railroad business; Congress may legislate on any subject germane to interstate transportation; therefore Congress may for any reason or with any motive impose any type of pension plan. The contention comes very near to this; that whatever some carriers choose to do voluntarily in the management of their business at once invests Congress with the power to compel all carriers to do. The fallacy is obvious. The meaning of the Commerce and Due Process Clauses of the Constitution is not so easily enlarged by the voluntary acts of individuals or corporations.

Counsel for the petitioners admit that 'it may well be' voluntary plans are intended to promote efficiency and safety by 'inducing loyalty and continuity,' and 'it could also be true that these means were ignored in the Retirement Act.' They add: 'Congress has deliberately chosen the means of providing old age security for all railroad employees, measured by years of service, but not dependent upon continuity of service with any particular carrier, as is required under the existing railway pension systems. If it were true, as claimed, that the Act will not encourage continuity of service and will remove the incentives for employee loyalty to employer, it has other virtues, as has been indicated; for example, it provides greater assurance to employees of old age security than has been the case under the carriers' pension plans, and is likely to be productive of efficiency through improvement of employee morale.'

Certainly the argument is inconsistent with any thought that a plan imposed by statute, requiring the [295 U.S. 330, 374] payment of a pension, will promote the same loyalty and continuity of service which were the ends and objects of the voluntary plans. It is going far to say, as petitioners do, that Congress chose the more progressive method 'already tried in the laboratory of industrial experience,' which they claim has been approved and recommended by those qualified to speak. In support of the assertion, however, they cite general works dealing with voluntary pension plans, and not with any such compulsory system as that with which we are concerned. We think it cannot be denied, and, indeed, is in effect admitted, that the sole reliance of the petitioners is upon the theory that contentment and assurance of security are the major purposes of the act. We cannot agree that these ends if dictated by statute, and not voluntarily extended by the employer, encourage loyalty and continuity of service. 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 fulfillment of the railroads' duty to serve the public in interstate transportation.

The judgment of the Supreme Court of the District of Columbia is affirmed.

The CHIEF JUSTICE (dissenting).

I am unable to concur in the decision of this case. The gravest aspect of the decision is that it does not rest simply upon a condemnation of particular features of the Railroad Retirement Act (45 USCA 201-214), but denies to Congress the power to pass any compulsory pension act for railroad [295 U.S. 330, 375] employees. If the opinion were limited to the particular provisions of the act, which the majority find to be objectionable and not severable, the Congress would be free to overcome the objections by a new statute. Classes of persons held to be improperly brought within the range of the act could be eliminated. Criticisms of the basis of payments, of the conditions prescribed for the receipt of benefits, and of the requirements of contributions, could be met. Even in place of a unitary retirement system another sort of plan could be worked out. What was thus found to be inconsistent with the requirements of due process could be excised and other provisions substituted. But after discussing these matters, the majority finally raise a barrier against all legislative action of this nature by declaring that the subject-matter itself lies beyond the reach of the congressional authority to regulate interstate commerce. In that view, no matter how suitably limited a pension act for railroad

employees might be with respect to the persons to be benefited, or how appropriate the measure of retirement allowances, or how sound actuarily the plan, or how well-adjusted the burden, still under this decision Congress would not be at liberty to enact such a measure. That is a conclusion of such serious and far-reaching importance that it overshadows all other questions raised by the act. Indeed, it makes their discussion superfluous. The final objection goes, as the opinion states, 'to the heart of the law, even if it could survive the loss of the unconstitutional features' which the opinion perceives. I think that the conclusion thus reached is a departure from sound principles, and places an unwarranted limitation upon the Commerce Clause of the Constitution.

First. In defining the power vested in Congress to regulate interstate commerce, we invariably refer to the classic statement of Chief Justice Marshall. It is the power 'to prescribe the rule by which commerce is to be governed.' [295 U.S. 330, 376] The power 'is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the constitution.' Gibbons v. Ogden, 9 Wheat. 1, 196. It is a power to enact 'all appropriate legislation for the protection or advancement' of interstate commerce. The Daniel Ball, 10 Wall. 557, 564. 'To regulate,' we said in the Mondou v. New York, N.H. & H.R. Co. (Second Employers' Liability Cases), 223 U.S. 1, 47 , 32 S.Ct. 169, 174, 38 L.R.A.(N.S.) 44, 'in the sense intended, is to foster, protect, control, and restrain, with appropriate regard for the welfare of those who are immediately concerned and of the public at large.' And the exercise of the power, thus broadly defined, has had the widest range in dealing with railroads, which are engaged as common carriers in interstate transportation. As their service is vital to the nation, nothing which has a real or substantial relation to the suitable maintenance of that service, or to the discharge of the responsibilities which inhere in it, can be regarded as beyond the power of regulation. Houston, E. & W.T.R. Co. v. U. S. (The Shreveport Case), 234 U.S. 342, 351 , 34 S.Ct. 833; Dayton-Goose Creek Railway Co. v. United States, 263 U.S. 456, 478 , 44 S. Ct. 169, 33 A.L.R. 472; State of Colorado v. United States, 271 U.S. 153, 163 , 164 S., 46 S.Ct. 452; New York Central Securities Corp. v. United States, 287 U.S. 12, 24 , 25 S., 53 S.Ct. 45.

It was inevitable that, with the development of the transportation system of the country, requiring a vast number of employees, there should have been a growing appreciation of the importance of conditions of employment. It could not be denied that the sovereign power to govern interstate carriers extends to the regulation of their relations with their employees who likewise are engaged in interstate commerce. The scope of this sort of regulation has been extensive. There has been not only the paramount consideration of safety, but also the recognition of the fact that fair treatment in other respects aids in conserving the peace and good order which are essential to the maintenance of the service without disastrous interruptions, and in promoting the efficiency which inevi- [295 U.S. 330, 377] tably suffers from a failure to meet the reasonable demands of justice. An absolute duty to furnish safety appliances has been imposed, restrictions of hours of continuous service have been prescribed, standards of a day's work have been established for work and wages, the liability of carriers for injuries to employees has been regulated by the abrogation of the fellow-servant rule and the limitation of defenses as to contributory negligence and assumption of risk, and provisions have been enacted to facilitate the amicable settlement of disputes and to protect employees in their freedom to organize for the purpose of safeguarding their interests. St. Louis, Iron Mountain & S.R. Co. v. Taylor, 210 U.S. 281 , 28 S.Ct. 616; Baltimore & Ohio R. Co. v. Interstate Commerce Commission, 221 U.S. 612 , 31 S.Ct. 621; Wilson v. New,243 U.S. 332 , 37 S.Ct. 298, L.R.A. 1917E, 938, Ann. Cas. 1918A, 1024; Texas & New Orleans R. Co. v. Brotherhood of Railway & S. S. Clerks, 281 U.S. 548 , 50 S.Ct. 427

The argument that a pension measure, however sound and reasonable as such, is per se outside the pale of the regulation of interstate carriers, because such a plan could not possibly have a reasonable relation to the ends which Congress is entitled to serve, is largely answered by the practice of the carriers themselves. Following precedents long established in Europe, certain railroad companies in the United States set up voluntary pension systems many years ago. It appears that the first of these was established in 1884, another was adopted in 1900. By 1910, formal pension plans covered 50 per cent. of all railroad employees, and, by 1927, over 82 per cent. In establishing these plans the carriers were not contemplating the payment of a largess unrelated to legitimate transportation ends. Their witnesses say the carriers aimed at loyalty and continuity of service. However limited their motives, they acted upon business principles. Pension plans were not deemed to be essentially foreign to the proper conduct of their enterprises. But if retirement or pension plans are not per se unrelated to the government [295 U.S. 330, 378] of transportation operations, Congress could consider such plans, examine their utility, and reach its own conclusions. If the subject-matter was open to consideration, Congress was not limited to the particular motives which inspired the plans of the carriers.

The government stresses the importance of facilitating the retirement of superannuated employees. The argument points to the conclusions of expert students as given in the testimony below, and to the reports of investigating committees and

boards of leading business organizations. 'Employees' Retirement Annuities,' Chamber of Commerce of the United States, 1932, pp. 7, 8; 'Elements of Industrial Pension Plans,' National Industrial Conference Board, 1931, pp. 8, 10. Mr. Eastman, the Federal Coordinator of Transportation, in his affidavit on the hearing below, expressed the view that there was excessive superannuation among railroad employees. He says: 'This excessive superannuation is detrimental to railroad service in several ways. Men who have grown old in the service decline in efficiency. The carrier pays in wages an amount out of proportion to the service rendered. These conditions exist upon the railroads at the present time. There is now a large body of superannuated employees in the railroad service who, for the good of the service, ought to be retired. Pension systems, of one sort or another, have been in existence in the railroad industry for as long as 50 years. The need for them was recognized by the more progressive carriers at an early date. In late years, particularly, with the voluntary systems in danger, the matter of retirement and pensions has been a crucial issue in railroad employment. Withdrawal or extensive curtailment of existing pensions in the railroad industry would impair the morale of railroad employees and play havoc with railroad labor relations. It would, in addition, increase the existing excessive superannuation among railroad employees and block the employment and promotion of younger men.' [295 U.S. 330, 379] The carriers deny that there is excessive superannuation. They assert that the removal of older employees has no reasonable relation to either safety or efficiency. The opinion of the Court enters this field of controversy, reviews statistics as to the increase of safety and efficiency in operation during the period of the alleged increasing superannuation, and supports the finding that railroads are now operated more efficiently and safely than at any time in history. But that gratifying fact does not establish that further improvement is not needed or obtainable, or that a sound pension plan would not be of considerable benefit to the carriers' operations. At best, the question as to the extent of superannuation, and its effect, is a debatable one, and hence one upon which Congress was entitled to form a legislative judgment. As we said in Radice v. New York, 264 U.S. 292, 294 , 44 S.Ct. 325, 326: 'Where the constitutional validity of a statute depends upon the existence of facts, courts must be cautious about reaching a conclusion respecting them contrary to that reached by the Legislature; and if the question of what the facts establish be a fairly debatable one, it is not permissible for the judge to set up his opinion in respect of it against the opinion of the lawmaker.' See Stephenson v. Binford, 287 U.S. 251, 272 , 53 S.Ct. 181, 87 A.L.R. 721.

Laying that question on one side, I think that it is clear that the morale of railroad employees has an important bearing upon the efficiency of the transportation service, and that a reasonable pension plan by its assurance of security is an appropriate means to that end. Nor should such a plan be removed from the reach of constitutional power by classing it with a variety of conceivable benefits which have no such close and substantial relation to the terms and conditions of employment. The appropriate relation of the exercise of constitutional power to the legitimate objects of that power is always a subject of judicial scrutiny. With approximately 82 per cent. of [295 U.S. 330, 380] railroad employees, 90 per cent. of those employed in cable, telephone, and telegraph companies, and about one-half of those in the service of electric railways, light, heat, and power companies under formal pension plans,1 with the extensive recognition by national, state and local governments of the benefit of retirement and pension systems for public employees in the interest of both efficiency and economy,2 it is evident that there is a widespread conviction that the assurance of security through a pension plan for retired employees is closely and substantially related to the proper conduct of business enterprises.

But with respect to the carriers' plans, we are told that as they were framed in the desire to promote loyalty and continuity of service in the employment of particular carriers, the accruing advantages were due to the fact that the plans were of a voluntary character. In short, that the reaction of the employees would be simply one of gratitude for an act of grace. I find no adequate basis for a conclusion that the advantages of a pension plan can be only such as the carriers contemplated or that the benefit which may accrue to the service from a sense of security on the part of employees should be disregarded. In that aspect, it would be the fact that protection was assured, and not the motive in supplying it, which would produce the desired result. That benefit would not be lost because the sense of security was fostered by a pension plan enforced as an act of justice. Indeed, voluntary plans may have the defect of being voluntary, of being subject to curtailment or withdrawal at will. And the danger of such curtailment or abandonment, with the consequent frustration of the hopes of a vast number of railroad workers and its effect upon labor relations in this enterprise of [295 U.S. 330, 381] outstanding national importance, might well be considered as an additional reason for the adoption of a compulsory plan. Wilson v. New, supra, 243 U.S. 332 , pages 347, 348, 37 S.Ct. 298, L.R.A. 1917E, 938, Ann. Cas. 1918A, 1024. There was also testimony (by Mr. Eastman) that 'the experience with the voluntary pension systems has been unsatisfactory,' that 'the depression brought clearly to light their many weaknesses and uncertainties.'

The argument in relation to voluntary plans discloses the fundamental contention on the question of constitutional authority. In substance, it is that the relation of the carriers and their employees is the subject of contract; that the

contract prescribes the work and the compensation; and that a compulsory pension plan is an attempt for social ends to impose upon the relation noncontractual incidents in order to insure to employees protection in their old age. And this is said to lie outside the power of Congress in the government of interstate commerce. Congress may, indeed, it seems to be assumed, compel the elimination of aged employees. A retirement act for that purpose might be passed. But not a pension act. The government's power is conceived to be limited to a requirement that the railroads dismiss their superannuated employees, throwing them out helpless, without any reasonable provision for their protection.

The argument pays insufficient attention to the responsibilities which inhere in the carriers' enterprise. Those responsibilities, growing out of their relation to their employees, cannot be regarded as confined to the contractual engagement. The range of existing federal regulation of interstate carriers affords many illustrations of the imposition upon the employer-employee relation of noncontractual incidents for social ends. A close analogy to the provision of a pension plan is suggested by the familiar examples of compensation acts. The power of Congress to pass a compensation act to govern interstate carriers and their employees engaged in interstate[295 U.S. 330, 382] commerce does not seem to be questioned. The carriers might thus be compelled to provide appropriate compensation for injuries or death of employees, although caused without fault on the carriers' part. A thorough examination of the question of constitutional authority to adopt such a compulsory measure was made some years ago by a commission constituted under a Joint Resolution of Congress, of which Senator Sutherland (now Mr. Justice Sutherland) was chairman. 3 36 Stat. 884. Its elaborate and unanimous report, transmitted to Congress by President Taft with his complete approval, considered the constitutional question in all aspects, upheld the congressional power, and proposed its exercise. Sen. Doc. No. 338, 62d Cong.2d Sess. Among the principles announced was that: 'If the proposed legislation effectuates any constitutional power, it is not rendered unconstitutional because to a greater or less extent it may accomplish or tend to accomplish some other result which, as a separate and independent matter, would be wholly beyond the power of Congress to deal with.' Id., p. 26. The legislation was deemed to be a regulation of interstate commerce because, among other specified things, of its effect on the state of mind of the employee. On this point the commission said: 'By insuring to every employee engaged in interstate commerce definite compensation in case of his injury, and to his widow and children, or other dependents, in case of his death, irrespective of fault, the mind of the employee will, to a great extent, be relieved from anxiety for the future and he will be able to render better and more efficient, and consequently safer, service.' Id., p. 28. The commission explicitly pointed out that the legislation which it recommended was not based [295 U.S. 330, 383] on any wrong or neglect of the carrier, 'but upon the fact of injury resulting from accident in the course of the employment,' that is, that accidents should be regarded 'as risks of the industry.' Id., p. 15. The circumstance that such a compensation measure has not been enacted by Congress is readily attributable to questions of policy rather than to any doubt of constitutional power.

The effort to dispose of the analogy serves only to make it the more impressive. Compensation acts are said to be a response to the demands which inhere in the development of industry, requiring new measures for the protection of employees. But pension measures are a similar response. If Congress may supply a uniform rule in the one case, why not in the other? If affording certainty of protection is deemed to be an aid to efficiency, why should that consideration be ruled out with respect to retirement allowances and be admitted to support compensation allowances for accidents which happen in the absence of fault? Compensation acts do not simply readjust old burdens and benefits. They add new ones, outside and beyond former burdens and benefits, and thus in truth add a new incident to the relation of employer and employee.

When we go to the heart of the subject, we find that compensation and pension measures for employees rest upon similar basic considerations. In the case of compensation acts, the carrier has performed its contract with the employee, has paid the agreed wages, has done its best to protect the employee from injury, is guilty of no neglect, but yet is made liable for compensation for injury or for death which ends the possibility of future service, because in the development of modern enterprises, in which accidents are inevitable, it has come to be recognized that the industry itself should bear its attendant risks. New York Central R. Co. v. White,243 U.S. 188 , 37 S.Ct. 247, L.R.A. 1917D, 1, Ann. Cas. 1917D, 629; Mountain Timber Company v. Washington, 243 U.S. 219 , 37 S.Ct. 260, Ann. Cas. 1917D, 642. An [295 U.S. 330, 384] attempted distinction as to pension measures for employees retired by reason of age, because old age is not in itself a consequency of employment, is but superficial. The common judgment takes note of the fact that the retirement of workers by reason of incapacity due to advancing years is an incident of employment and that a fair consideration of their plight justifies retirement allowances as a feature of the service to which they have long been devoted. This is recognized as especially fitting in the case of large industrial enterprises, and of municipal undertakings such as police and fire protection, where there are stable conditions of employment in which workers normally continue so long as they are able to give service and should be retired when efficiency is impaired by age. What sound distinction, from a

constitutional standpoint, is there between compelling reasonable compensation for those injured without any fault of the employer, and requiring a fair allowance for those who practically give their lives to the service and are incapacitated by the wear and tear of time, the attrition of the years? I perceive no constitutional ground upon which the one can be upheld and the other condemned.

The fundamental consideration which supports this type of legislation is that industry should take care of its human wastage, whether that is due to accident or age. That view cannot be dismissed as arbitrary or capricious. It is a reasoned conviction based upon abundant experience. The expression of that conviction in law is regulation. When expressed in the government of interstate carriers, with respect to their employees likewise engaged in interstate commerce, it is a regulation of that commerce. As such, so far as the subject-matter is concerned, the commerce clause should be held applicable.

Second. With this opinion as to the validity of a pension measure if it is reasonably conceived, we are brought to the question of due process- whether the particular pro- [295 U.S. 330, 385] visions of the retirement act now before us violate the requirement of due process which, under the Fifth Amendment, limits the exercise of the commerce power.

The most serious of the objections, sustained by the Court on this score, relates to the establishment of a unitary or pooling system for all railroads. It is said that in this respect the plan disregards the private and separate ownership of the respective carriers, treating them as a single employer, and illustrations are given to show that unequal burdens are thus imposed.

The objection encounters previous decisions of this Court. We have sustained a unitary or group system under state compensation acts against the argument under the due process clause of the Fourteenth Amendment. Mountain Timber Company v. Washington, supra. The Washington compensation act established a state fund for the compensation of workmen injured in hazardous employment, and the fund was maintained by compulsory contributions from employers in such industries. While classes of industries were established, each class was made liable for the accidents occurring in that class. The Court described the law as so operating that 'the enforced contributions of the employer are to be made whether injuries have befallen his own employees or not; so that, however prudently one may manage his business, even to the point of immunity to his employees from accidental injury or death, he nevertheless is required to make periodical contributions to a fund for making compensation to the injured employees of his perhaps negligent competitors.' Id., 243 U.S. 219 , pages 236, 237, 37 S.Ct. 260, 264, Ann. Cas. 1917D, 642. The statute was sustained in the view that its provisions did not rest upon the wrong or neglect of employers, but upon the responsibility which was deemed to attach to those who conducted such industries. The Court concluded 'that the state acted within its power in declaring that no employer should conduct such an industry without making [295 U.S. 330, 386] stated and fairly apportioned contributions adequate to maintain a public fund for indemnifying injured employees and the dependents of those killed, irrespective of the particular plant in which the accident might happen to occur.' Id., 243 U.S. 219 , page 244, 37 S.Ct. 260, 267, Ann. Cas. 1917D, 642. We followed the reasoning which had led to the upholding of state laws imposing assessments on state banks generally in order to create a guaranty fund to make good the losses of deposits in insolvent banks. Noble State Bank v. Haskell, 219 U.S. 104 , 31 S.Ct. 186, 32 L.R.A. (N.S.) 1062, Ann. Cas. 1912A, 487. See Abie State Bank v. Weaver, 282 U.S. 765 , 51 S.Ct. 252.

But, aside from these analogies, this Court has directly sustained the grouping of railroads for the purpose of regulation in enforcing a common policy deemed to be essential to an adequate national system of transportation, even though it resulted in taking earnings of a strong road to help a weak one. This was the effect of the recapture clause of Transportation Act, 1920 (49 USCA 15a), which required carriers to contribute their earnings in excess of a certain amount in order to provide a fund to be used by the Interstate Commerce Commission in making loans to other carriers. Dayton-Goose Creek Railway Co. v. United States, 263 U.S. 456 , 44 S.Ct. 169, 33 A.L.R. 472. A distinction is sought to be made because the carriers, which were required to contribute, were permitted to retain a reasonable return upon their property. But what the strong roads were compelled to contribute were their own earnings resulting from just and reasonable rates-earnings which they were as clearly entitled to retain for their own benefit as the moneys which in the present instance are to be devoted to retirement allowances. The fact that the recapture provisions failed of their purpose and have been abandoned does not disturb the decision as to constitutional power. The principle that was applied had been made clear in the New England Divisions Case (Akron, C. & Y.R. Co. v. U.S.) 261 U.S. 184 , 43 S.Ct. 270. Transportation Act, 1920, had introduced into the federal legislation a new railroad policy. To attain its purpose, 'new rights [295 U.S. 330, 387] new obligations, new machinery, were created.' 'To preserve for the nation substantially the whole transportation system was deemed important.' 'The existence of the varying needs of the several lines and of

their widely varying earning power was fully realized.' To attain the object 'two new devices were adopted: The group system of rate making and the division of joint rates in the public interest. Through the former, weak roads were to be helped by recapture from prosperous competitors of surplus revenues. Through the latter, the weak were to be helped by preventing needed revenue from passing to prosperous connections. Thus, by marshaling the revenues, partly through capital account, it was planned to distribute augmented earnings, largely in proportion to the carrier's needs.' Id., 261 U.S. pages 189-191, 43 S.Ct. 270, 273.

This object of adequately maintaining the whole transportation system may be served in more than these two ways. The underlying principle is that Congress has the power to treat the transportation system of the country as a unit for the purpose of regulation in the public interest, so long as particular railroad properties are not subjected to confiscation. In the light of that principle, and of applications which have been held valid, I am unable to see that the establishment of a unitary system of retirement allowances for employees is beyond constitutional authority. Congress was entitled to weigh the advantages of such a system, as against inequalities which it would inevitably produce, and reach a conclusion as to the policy best suited to the needs of the country. See Atlantic Coast Line R. Co. v. Riverside Mills, 219 U.S. 186, 203 , 31 S.Ct. 164, 31 L.R.A.(N.S.) 7; Railroad Commission v. Southern Pacific Company, 264 U.S. 331 ,343, 344, 44 S.Ct. 376.

Third. Questions are raised as to the classes of persons to be benefited. In considering these objections we should have regard to the explicit provision of the act as to severability. It states that if 'any provision,' 'or the [295 U.S. 330, 388] application thereof to any person or circumstances,' is held invalid, 'the remainder of the Act or application of such provision to other persons or circumstances shall not be affected.' This, of course, does not permit us to rewrite the statute but it does allow the excision of invalid provisions, or inclusions, which can be severed without destroying its structure.

(1) The court below held the act to be invalid in the view that its provisions were extended to persons not engaged in interstate commerce. In the special findings, classes of persons were listed, numbering 211,107, which were thought to fall within that description. It is manifest that the list was prepared under a misapprehension of the extent of the authority of Congress with respect to employees of interstate carriers and of the application of the decision in the first Employers' Liability Cases ( Howard v. Illinois Cent. R. Co.), 207 U.S. 463 , 28 S.Ct. 141. Large numbers of employees were thus deemed to be improperly included whose work, while not immediately connected with the movement of traffic, did have such relation to the activities of the carriers in interstate commerce as to bring them within the range of congressional power. Thus the list embraced general officers and their staffs who were not in the operating departments connected with transportation, employees who dealt with the receipt and disbursement of moneys, some 86,493 employees in the maintenance-of-equipment departments, who were engaged in the reconstruction or major repair of equipment, withdrawn for that purpose from service, such as locomotives, cars, platform trucks, frogs, switches, etc., as distinguished from light or running repairs, and 36,996 employees whose duties lay in auditing, accounting, and bookkeeping. It should be observed that the decisions under the Second Employers' Liability Act of 1908 (45 USCA 51 et seq.), with respect to the necessity of the employee being engaged at the time of his injury in interstate transportation or in work so closely related to transportation as to [295 U.S. 330, 389] be a part of it, are based upon the limitations of that statute and do not define the scope of constitutional authority as to employees of interstate carriers. Illinois Central Railroad Company v. Behrens, 233 U.S. 473, 477 , 34 S.Ct. 646, Ann. Cas. 1914C, 163; Chicago & Northwestern Railway Co. v. Bolle, 284 U.S. 74, 78 , 52 S.Ct. 59.

Interstate carriers cannot conduct their interstate operations without general officers and their staffs, without departments for major repairs and those for administering finances and keeping accounts. General management is as important to the interstate commerce of the carriers as is the immediate supervision of traffic, and the proper maintenance of equipment and the handling of moneys and the keeping of books are as necessary as the loading and moving of cars. In the administration of the act there would be ample opportunity to make all necessary distinctions between employees engaged in interstate commerce and any others who might be found to be otherwise exclusively employed, so as to exclude the latter from its benefits without impairing the general operation of the act.

(2) A more serious objection relates to the eligibility for allowances of all those who were in the service within one year prior to the enactment, although they may never be reemployed. Such persons may have been discharged for cause; in any event, for one reason or another, they had left the service and may not return.

I agree with the conclusion that the requirement that the carriers shall pay retiring allowances to such persons is arbitrary and beyond the power of Congress. But I think it clear that the provision for their benefit is within the clause as to

severability. That application of the act may be condemned and such persons may be excluded from benefits without destroying the measure as a whole.

Fourth. Other questions relate to the details of the pension plan- principally with respect to the basis of the retirement allowances and the method of their computation. [295 U.S. 330, 390] With the excision of those whose employment was terminated before the act was passed, the plan would cover those in carrier service at that time and those subsequently employed. Retirement is compulsory at the age of 65, but the service may be extended by agreement for successive periods of one year each until the age of 70. An employee may retire upon completing 30 years of service, but in such case provision is made for reducing the annuity by one-fifteenth for each year below the age of 65. Annuities are calculated by applying graduated percentages of the employee's average monthly compensation (excluding all over $300) to the number of years of his service, not exceeding 30. The maximum annuity thus payable would be $ 1,440, and to receive that amount, it would be necessary for the employee to have been in service 30 years and to have attained the age of 65, and to have been paid an average monthly compensation of $300. Contributions to the pension fund are to be made by employees of a certain percentage of their compensation and the contribution of each carrier is to be twice that of its employees.

An examination of pension plans in operation reveals a variety of possible methods, and Congress was entitled to make its choice. As a basis for the allowance, Congress could select either age or length of service or both, In the selection of any age, or any period of service, anomalies would inevitably occur in particular applications. Extreme illustrations can always be given of the application of regulations which require the drawing of a line with respect to age, time, distances, weights, sizes, etc. To deny the right to select such criteria, or to make scientific precision a criterion of constitutional authority, would be to make impossible the practical exercise of power. Compare Sproles v. Binford, 286 U.S. 374, 388 , 389 S., 52 S.Ct. 581; Stanley v. Public Utilities Commission of Maine, 295 U.S. 76 , 55 S.Ct. 628, 79 L.Ed. --, decided April 15, 1935. Whatever may be said of the capacity of many men after they have attained 65 years, the fixing [295 U.S. 330, 391] of that age or a period of 30 years' service, or a combination of both, for general application, cannot be regarded as an arbitrary choice for railroad employees.

The principal criticism is the bringing into the reckoning of past periods of service-antedating the passage of the act. The objection is strongly put with respect to those who were in the employment of the carriers when the act was passed, and it is even more earnestly urged as to those who had left the service and later are reemployed. It is said that the reckoning of their prior periods of employment compels payment for services fully completed and paid for before the enactment. But it seems to be assumed that Congress could compel the dismissal of aged employees, and if it has that power and also has power to establish a pension system, I can find no ground for erecting a constitutional limitation which would make it impossible to provide for employees who were thus severed from the service. The question simply is: What is a fair basis for computing a retirement allowance? Is the plan adopted by Congress destitute of rational support?

Congress could have provided for a retirement allowance in a flat sum, or could have based it upon the amount of compensation which the employee was receiving at the time of retirement, or upon the amount he had received for the preceding year or his average compensation of a longer time. Selecting a period not to exceed 30 years, or the period of service prior to age 65, merely gives a measure for the computation of the retirement allowance. It is in no proper sense a payment for the prior service, any more than would be the fixing of the allowance at a flat figure or on the basis of the last compensation received. The result in dollars and cents might not vary to any great extent whatever method of calculation was chosen.

The power committed to Congress to govern interstate commerce does not require that its government should be wise, much less that it should be perfect. The power [295 U.S. 330, 392] implies a broad discretion and thus permits a wide range even of mistakes. Expert discussion of pension plans reveals different views of the manner in which they should be set up and a close study of advisable methods is in progress. It is not our province to enter that field, and I am not persuaded that Congress in entering it for the purpose of regulating interstate carriers, has transcended the limits of the authority which the Constitution confers.

I think the decree should be reversed.

I am authorized to state that Mr. Justice BRANDEIS, Mr. Justice STONE, and Mr. Justice CARDOZO join in this opinion.

Footnotes

[ Footnote 1 ] Act June 27, 1934, c. 868, 48 Stat. 1283 (45 USCA 201-214).

[ Footnote 2 ] U.S.C. tit. 28, 347(a), 28 USCA 347(a).

[ Footnote 3 ] 293 U.S. 552 , 55 S.Ct. 240, 79 L.Ed. --.

[ Footnote 4 ] See Gibbons v. Ogden, 9 Wheat. 1, 196, 197; Monongahela Navigation Co. v. United States, 148 U.S. 312, 336 , 13 S.Ct. 622; Champion v. Ames (Lottery Case), 188 U.S. 321, 362 , 363 S., 23 S.Ct. 321; United States v. Chicago, M., St. P. & P.R. Co., 282 U.S. 311, 327 , 51 S.Ct. 159.

[ Footnote 5 ] When the question is whether the Congress has properly exercised a granted power the inquiry is whether the means adopted bear any reasonable relation to the ostensible exertion of the power. Mugler v. Kansas, 123 U.S. 623, 661 , 8 S.Ct. 273; Hammer v. Dagenhart, 247 U.S. 251, 276 , 38 S.Ct. 529, 3 A.L.R. 649, Ann. Cas. 1918E, 724; Bailey v. Drexel Furniture Co., 259 U.S. 20, 37 , 42 S.Ct. 449, 21 A.L.R. 1432. When the question is whether legislative action transcends the limits of due process guaranteed by the Fifth Amendment, decision is guided by the principle that the law shall not be unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained. Nebbia v. New York, 291 U.S. 502, 525 , 54 S.Ct. 505, 89 A.L.R. 1469.

[ Footnote 6 ] Cong. Rec., vol. 78, p. 5699.

[ Footnote 7 ] Interstate Commerce Commission v. Oregon-Washington R. & Nav. Co., 288 U.S. 14, 40 , 53 S.Ct. 266, and cases cited.

[ Footnote 8 ] Sec. 14. If any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of the Act or application of such provision to other persons or circumstances shall not be affected thereby. 45 USCA 214.

[ Footnote 9 ] Tables included in the record are as follows:

Year: 1905, 1 passenger killed for each 1,376,000 carried. 1910, 1 passenger killed for each 3,000,000 carried. 1915, 1 passenger killed for each 4,954,000 carried. 1920, 1 passenger killed for each 5,673,000 carried. 1925, 1 passenger killed for each 5,237,000 carried. 1930, 1 passenger killed for each 11,658,000 carried. 1932, 1 passenger killed for each 17,921,000 carried. Decrease in frequency, 77%.

[ Footnote 11 ] Thus it appears that the average speed of freight trains between terminals in 1928 was 10.9 miles per hour, in 1929 was 13.2 miles per hour, and in 1933 was 15.7 miles per hour. Excluding weight of locomotive and tender, each freight train hour in 1923 produced 16,764 gross ton-miles; in 1929 produced 24,539 gross ton-miles; and in 1933 produced 27,343 gross ton-miles; and net ton-miles per freight train hour increased 41.2 per cent. from 1923 to 1933, and 3.7 per cent. from 1929 to 1933. Cost of transportation is also shown to have decreased in the same periods.

[ Footnote 1 ] Latimer, 'Industrial Pension Plans,' 1932, vol. I, p. 55.

[ Footnote 2 ] 'Public Service Retirement Systems,' Bureau of Labor Statistics (U. S.) Bulletin No. 477, 1929.

[ Footnote 3 ] The members of the commission were Senators George Sutherland and George E. Chamberlain, Representatives William G. Brantley and Reuben O. Moon, William C. Brown, president of the New York Central lines, and D. L. Cease, the editor of The Railroad Commission.

A.L.A. SCHECHTER POULTRY CORPORATION v. UNITED STATES, 295 U.S. 495 (1935)

295 U.S. 495

A.L.A. SCHECHTER POULTRY CORPORATION et al. v.

UNITED STATES.

UNITED STATES v.

A.L.A. SCHECHTER POULTRY CORPORATION et al.

Nos. 854, 864. Argued May 2, 3, 1935. Decided May 27, 1935.

Phrase 'unfair methods of competition' within Federal Trade Commission Act has broader meaning than common-law term 'unfair competition,' but its scope cannot be precisely defined, and what constitutes 'unfair methods of competition' must be determined in particular instances, upon evidence, in light of particular competitive conditions and of what is found to be a specific and substantial public interest (Federal Trade Commission Act 5 (15 USCA 45)).[ A.L.A. Schechter Poultry Corporation v. United States 295 U.S. 495 (1935) ]

[295 U.S. 495, 500] Messrs. Joseph Heller, Frederick H. Wood, and Jacob E. Heller, all of New York City, for petitioner A.L.A. Schechter Corporation and others.

[295 U.S. 495, 508] The Attorney General and Messrs. Stanley F. Reed, Sol. Gen., and Donald R. Richberg, both of Washington, D.C., for the United States.

[295 U.S. 495, 519]

Mr. Chief Justice HUGHES delivered the opinion of the Court.

Petitioners in No. 854 were convicted in the District Court of the United States for the Eastern District of New York on eighteen counts of an indictment charging violations of what is known as the 'Live Poultry Code,'1 and on an additional count for conspiracy to commit such violations. 2 By demurrer to the indictment and appropriate motions on the trial, the defendants contended (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. [295 U.S. 495, 520] 'The Circuit Court of Appeals sustained the conviction on the conspiracy count and on sixteen counts for violation of the code, but reversed the conviction on two counts which charged violation of requirements as to minimum wages and maximum hours of labor, as these were not deemed to be within the congressional power of regulation. 76 F.(2d) 617. On the respective applications of the defendants (No. 854) and of the government (No. 864), this Court granted writs of certiorari April 15, 1935. 295 U.S. 723 , 55 S.Ct. 651, 79 L.Ed. --.

New York City is the largest live poultry market in the United States. Ninety-six per cent. of the live poultry there marketed comes from other states. Three-fourths of this amount arrives by rail and is consigned to commission men or receivers. Most of these freight shipments (about 75 per cent.) come in at the Manhattan Terminal of the New York Central Railroad, and the remainder at one of the four terminals in New Jersey serving New York City. The commission men transact by far the greater part of the business on a commission basis, representing the shippers as agents, and remitting to them the proceeds of sale, less commissions, freight, and handling charges. Otherwise, they buy for their own account. They sell to slaughterhouse operators who are also called marketmen.

The defendants are slaughterhouse operators of the latter class. A.L. A. Schechter Poultry Corporation and Schechter Live Poultry Market are corporations conducting wholesale poultry slaughterhouse markets in Brooklyn, New York City. Joseph Schechter operated the latter corporation and also guaranteed the credits of the former corporation, which was operated by Martin, Alex, and Aaron Schechter. Defendants ordinarily purchase their live poultry from commission men

at the West Washington Market in New York City or at the railroad terminals serving the city, but occasionally they purchase from commission men in Philadelphia. They buy the [295 U.S. 495, 521] poultry for slaughter and resale. After the poultry is trucked to their slaughterhouse markets in Brooklyn, it is there sold, usually within twenty-four hours, to retail poultry dealers and butchers who sell directly to consumers. The poultry purchased from defendants is immediately slaughtered, prior to delivery, by shochtim in defendants' employ. Defendants do not sell poultry in interstate commerce.

The 'Live Poultry Code' was promulgated under section 3 of the National Industrial Recovery Act. 3 That section, the pertinent provisions of which are set forth in the margin,4 authorizes the President to approve 'codes of [295 U.S. 495, 522] fair competition.' SUCH A CODE may be approved for a trade or industry, upon application by one or more trade or industrial associations or groups, if the President finds (1) that such associations or groups 'impose no inequitable restrictions on admission to membership therein and are truly representative,' and (2) that such codes are not designed 'to promote monopolies or to eliminate or oppress small enterprises and will not operate to discrimi-

___ '(c) The several district courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of any code of fair competition approved under this title (chapter); and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations.

'(d) Upon his own motion, or if complaint is made to the President that abuses inimical to the public interest and contrary to the policy herein declared are prevalent in any trade or industry or subdivision thereof, and if no code of fair competition therefor has theretofore been approved by the President, the President, after such public notice and hearing as he shall specify, may prescribe and approve a code of fair competition for such trade or industry or subdivision thereof, which shall have the same effect as a code of fair competition approved by the President under subsection (a) of this section. ... '(f) When a code of fair competition has been approved or prescribed by the President under this title (chapter), any violation of any provision thereof in any transaction in or affecting interstate or foreign commerce shall be a misdemeanor and upon conviction thereof an offender shall be fined not more than $500 for each offense, and each day such violation continues shall be deemed a separate offense.' [295 U.S. 495, 523] nate against them, and will tend to effectuate the policy' of title 1 of the act (15 USCA 701 et seq.). Such codes 'shall not permit monopolies or monopolistic practices.' As a condition of his approval, the President may 'impose such conditions (including requirements for the making of reports and the keeping of accounts) for the protection of consumers, competitors, employees, and others, and in furtherance of the public interest, and may provide such exceptions to and exemptions from the provisions of such code as the President in his discretion deems necessary to effectuate the policy herein declared.' Where such a code has not been approved, the President may prescribe one, either on his own motion or on complaint. Violation of any provision of a code (so approved or prescribed) 'in any transaction in or affecting interstate or foreign commerce' is made a misdemeanor punishable by a fine of not more than $500 for each offense, and each day the violation continues is to be deemed a separate offense.

The 'Live Poultry Code' was approved by the President on April 13, 1934. Its divisions indicate its nature and scope. The code has eight articles entitled (1) 'purposes,' (2) 'definitions,' (3) 'hours,' (4) 'wages,' (5) 'general labor provisions,' (6) 'administration,' (7) 'trade practice provisions,' and (8) 'general.'

The declared purpose is 'To effect the policies of title I of the National Industrial Recovery Act.' The code is established as 'a code for fair competition for the live poultry industry of the metropolitan area in and about the City of New York.' That area is described as embracing the five boroughs of New York City, the counties of Rockland, Westchester, Nassau, and Suffolk in the state of New York, the counties of Hudson and Bergen in the state of New Jersey, and the county of Fairfield in the state of Connecticut.

The 'industry' is defined as including 'every person engaged in the business of selling, purchasing of re- [295 U.S. 495, 524] sale, transporting, or handling and/or slaughtering live poultry, from the time such poultry comes into the New York metropolitan area to the time it is first sold in slaughtered form,' and such 'related branches' as may from time to time be included by amendment. Employers are styled 'members of the industry,' and the term 'employee' is defined to embrace 'any and all persons engaged in the industry, however compensated,' except 'members.'

The code fixes the number of hours for workdays. It provides that no employee, with certain exceptions, shall be permitted to work in excess of forty hours in any one week, and that no employees, save as stated, 'shall be paid in any pay period less than at the rate of fifty (50) cents per hour.' The article containing 'general labor provisions' prohibits the employment of any person under 16 years of age, and declares that employees shall have the right of 'collective bargaining' and freedom of choice with respect to labor organizations, in the terms of section 7(a) of the act (15 USCA 707(a). The minimum number of employees, who shall be employed by slaughterhouse operators, is fixed; the number being graduated according to the average volume of weekly sales.

Provision is made for administration through an 'industry advisory committee,' to be selected by trade associations and members of the industry, and a 'code supervisor,' to be appointed, with the approval of the committee, by agreement between the Secretary of Agriculture and the Administrator for Industrial Recovery. The expenses of administration are to be borne by the members of the industry proportionately upon the basis of volume of business, or such other factors as the advisory committee may deem equitable, 'subject to the disapproval of the Secretary and/or Administrator.'

The seventh article, containing 'trade practice provisions,' prohibits various practices which are said to consti- [295 U.S. 495, 525] tute 'unfair methods of competition.' The final article provides for verified reports, such as the Secretary or Administrator may require, '(1) for the protection of consumers, competitors, employees, and others, and in furtherance of the public interest, and (2) for the determination by the Secretary or Administrator of the extent to which the declared policy of the act is being effectuated by this code.' The members of the industry are also required to keep books and records which 'will clearly reflect all financial transactions of their respective businesses and the financial condition thereof,' and to submit weekly reports showing the range of daily prices and volume of sales' for each kind of produce.

The President approved the code by an executive order (No. 6675-A) in which he found that the application for his approval had been duly made in accordance with the provisions of title 1 of the National Industrial Recover Act; that there had been due notice and hearings; that the code constituted 'a code of fair competition' as contemplated by the act and complied with its pertinent provisions, including clauses (1) and (2) of subsection (a) of section 3 of title 1 (15 USCA 703(a)(1, 2); and that the code would tend 'to effectuate the policy of Congress as declared in section 1 of Title I.' 5 [295 U.S. 495, 526] The executive order also recited that the Secretary of Agriculture and the Administrator of the National Industrial Recovery Act had rendered separate reports as to the provisions within their respective jurisdictions. The Secretary of Agriculture reported that the provisions of the code 'establishing standards of fair competition (a) are regulations of transactions in or affecting the current of interstate and/or foreign commerce and (b) are reason- [295 U.S. 495, 527] able,' and also that the code would tend to effectuate the policy declared in title 1 of the act, as set forth in section 1 (15 USCA 701). The report of the Administrator for Industrial Recovery dealt with wages, hours of labor, and other labor provisions. 6

Of the eighteen counts of the indictment upon which the defendants were convicted, aside from the count for conspiracy, two counts charged violation of the minimum wage and maximum hour provisions of the code, and ten counts were for violation of the requirement (found in the 'trade practice provisions') of 'straight killing.' This requirement was really one of 'straight' selling. The term 'straight killing' was defined in the code as 'the practice of requiring persons purchasing poultry for resale to accept the run of any half coop, coop, or coops, as purchased by slaughterhouse operators, except for culls.' 7 The charges in the ten counts, respectively, were [295 U.S. 495, 528] that the defendants in selling to retail dealers and butchers had permitted 'selections of individual chickens taken from particular coops and half coops.'

Of the other six counts, one charged the sale to a butcher of an unfit chicken; two counts charged the making of sales without having the poultry inspected or approved in accordance with regulations or ordinances of the city of New York; two counts charged the making of false reports or the failure to make reports relating to the range of daily prices and volume of sales for certain periods; and the remaining count was for sales to slaughterers or dealers who were without licenses required by the ordinances and regulations of the city of New York.

First. Two preliminary points are stressed by the government with respect to the appropriate approach to the important questions presented. 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. 8 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 [295 U.S. 495, 529] imposed limits because they believe that more or different power is necessary. Such assertions of extraconstitutional 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.'

The further point is urged that the national crisis demanded a broad and intensive co-operative effort by those engaged in trade and industry, and that this necessary co-operation was sought to be fostered by permitting them to initiate the adoption of codes. But the statutory plan is not simply one for voluntary effort. It does not seek merely to endow voluntary trade or industrial associations or groups with privileges or immunities. It involves the coercive exercise of the lawmaking power. The codes of fair competition which the statute attempts to authorize are codes of laws. If valid, they place all persons within their reach under the obligation of positive law, binding equally those who assent and those who do not assent. Violations of the provisions of the codes are punishable as crimes.

Second. The Question of the Delegation of Legislative Power.-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 , 55 S.Ct. 241, 79 L.Ed . 446. 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.' Article 1, 1. And the Congress is authorized 'To make all Laws which shall be necessary and proper for carrying into Execution' its general powers. Article 1, 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 [295 U.S. 495, 530] legislation to complex conditions involving a host of details with which the national Legislature cannot deal directly. We pointed out in the Panama Refining 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. Id., 293 U.S. 388 , page 421, 55 S.Ct. 241.

Accordingly, we look to the statute to see whether Congress has overstepped these limitations-whether Congress in authorizing 'codes of fair competition' has itself established the standards of legal obligation, thus performing its essential legislative function, or, by the failure to enact such standards, has attempted to transfer that function to others.

The aspect in which the question is now presented is distinct from that which was before us in the case of the Panama Refining Company. There the subject of the statutory prohibition was defined. National Industrial Recovery Act, 9(c), 15 USCA 709(c). That subject was the transportation in interstate and foreign commerce of petroleum and petroleum products which are produced or withdrawn from storage in excess of the amount permitted by state authority. The question was with respect to the range of discretion given to the President in prohibiting that transportation. Id., 293 U.S. 388 , pages 414, 415, 430, 55 S.Ct. 241. As to the 'codes of fair competition,' under section 3 of the act, the question is more funda- [295 U.S. 495, 531] mental. It is whether there is any adequate definition of the subject to which the codes are to be addressed.

What is meant by 'fair competition' as the term is used in the act? Does it refer to a category established in the law, and is the authority to make codes limited accordingly? Or is it used as a convenient designation for whatever set of laws the formulators of a code for a particular trade or industry may propose and the President may approve ( subject to certain restrictions), or the President may himself prescribe, as being wise and beneficient provisions for the government of the trade or industry in order to accomplish the broad purposes of rehabilitation, correction, and expansion which are stated in the first section of title 1? 9

The act does not define 'fair competition.' 'Unfair competition,' as known to the common law, is a limited concept. Primarily, and strictly, it relates to the palming off of one's goods as those of a rival trader. Good- year's Rubber Manufacturing Co. v. Good-year Rubber Co., 128 U.S. 598 , [295 U.S. 495, 532] 604, 9 S.Ct. 166; Howe Scale Co. v. Wyckoff, Seamans & Benedict, 198 U.S. 118, 140 , 25 S.Ct. 609; Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 413 , 36 S.Ct. 357. In recent years, its scope has been extended. It has been held to apply to misappropriation as well as

misrepresenation, to the selling of another's goods as one's own-to misappropriation of what equitably belongs to a competitor. International News Service v. Associated Press, 248 U.S. 215, 241 , 242 S., 39 S.Ct. 68, 2 A.L.R. 293. Unfairness in competition has been predicated of acts which lie outside the ordinary course of business and are tainted by fraud or coercion or conduct otherwise prohibited by law. 10 Id., 248 U.S. 315 , page 258, 39 S.Ct. 68, 2 A.L.R. 293. But it is evident that in its widest range, 'unfair competition,' as it has been understood in the law, does not reach the objectives of the codes which are authorized by the National Industrial Recovery Act. The codes may, indeed, cover conduct which existing law condemns, but they are not limited to conduct of that sort. The government does not contend that the act contemplates such a limitation. It would be opposed both to the declared purposes of the act and to its administrative construction.

The Federal Trade Commission Act [section 5 (15 USCA 45 11 introduced the expression 'unfair methods of competition,' which were declared to be unlawful. That was an expression new in the law. Debate apparently convinced the sponsors of the legislation that the words 'unfair competition,' in the light of their meaning at common law, were too narrow. We have said that the substituted phrase has a broader meaning, that it does not admit of precise definition; its scope being left to judicial determination as controversies arise. Federal Trade Commission v. Raladam Co., 283 U.S. 643, 648 , 649 S., 51 S.Ct. 587, 79 A.L.R. 1191; Federal Trade Commission v. R. F. Keppel, 291 U.S. 304 , 310-312, 54 S.Ct. 423. What are [295 U.S. 495, 533] 'UNFAIR METHODS OF COMPETITION' ARE THUS to be determined in particular instances, upon evidence, in the light of particular competitive conditions and of what is found to be a specific and substantial public interest. Federal Trade Commission v. Beech-Nut Packing Co., 257 U.S. 441, 453 , 42 S.Ct. 150, 19 A.L.R. 882; Federal Trade Commission v. Klesner, 280 U.S. 19, 27 , 28 S., 50 S.Ct. 1, 68 A.L.R. 838; Federal Trade Commission v. Raladam Co., supra; Federal Trade Commission v. R. F. Keppel, supra; Federal Trade Commission v. Algoma Lumber Co., 291 U.S. 67, 73 , 54 S.Ct. 315. To make this possible, Congress set up a special procedure. A commission, a quasi judicial body, was created. Provision was made for formal complaint, for notice and hearing, for appropriate findings of fact supported by adequate evidence, and for judicial review to give assurance that the action of the commission is taken within its statutory authority. Federal Trade Commission v. Raladam Co., supra; Federal Trade Commission v. Klesner, supra. 12

In providing for codes, the National Industrial Recovery Act dispenses with this administrative procedure and with any administrative procedure of an analogous character. But the difference between the code plan of the Recovery Act and the scheme of the Federal Trade Commission Act lies not only in procedure but in subject- [295 U.S. 495, 534] matter. We cannot regard the 'fair competition' of the codes as antithetical to the 'unfair methods of competition' of the Federal Trade Commission Act. The 'fair competition' of the codes has a much broader range and a new significance. The Recovery Act provides that it shall not be construed to impair the powers of the Federal Trade Commission, but, when a code is approved, its provisions are to be the 'standards of fair competition' for the trade or industry concerned, and any violation of such standards in any transaction in or affecting interstate or foreign commerce is to be deemed 'an unfair method of competition' within the meaning of the Federal Trade Commission Act. Section 3(b) of the act, 15 USCA 703(b).

For a statement of the authorized objectives and content of the 'codes of fair competition,' we are referred repeatedly to the 'Declaration of Policy' in section 1 of title 1 of the Recovery Act (15 USCA 701). Thus the approval of a code by the President is conditioned on his finding that it 'will tend to effectuate the policy of this title.' Section 3(a) of the act, 15 USCA 703(a). The President is authorized to impose such conditions 'for the protection of consumers, competitors, employees, and others, and in furtherance of the public interest, and may provide such exceptions to and exemptions from the provisions of such code, as the President in his discretion deems necessary to effectuate the policy herein declared.' Id. The 'policy herein declared' is manifestly that set forth in section 1. That declaration embraces a broad range of objectives. Among them we find the elimination of 'unfair competitive practices.' But, even if this clause were to be taken to relate to practices which fall under the ban of existing law, either common law or statute, it is still only one of the authorized aims described in section 1. It is there declared to be 'the policy of Congress'- 'to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount [295 U.S. 495, 535] thereof; and to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups, to induce and maintain united action of labor and management under adequate governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry and to conserve natural resources.' 13

Under section 3, whatever 'may tend to effectuate' these general purposes may be included in the 'codes of fair competition.' We think the conclusion is inescapable that the authority sought to be conferred by section 3 was not merely to deal with 'unfair competitive practices' which offend against existing law, and could be the subject of judicial condemnation without further legislation, or to create administrative machinery for the application of established principles of law to particular instances of violation. Rather, the purpose is clearly disclosed to authorize new and controlling prohibitions through codes of laws which would embrace what the formulators would propose, and what the President would approve or prescribe, as wise and beneficient measures for the government of trades and industries in order to bring about their rehabilitation, correction, and development, according to the general declaration of policy in section 1. Codes of laws of this sort are styled 'codes of fair competition.'

We find no real controversy upon this point and we must determine the validity of the code in question in this aspect. As the government candidly says in its [295 U.S. 495, 536] brief: 'The words 'policy of this title' clearly refer to the 'policy' which Congress declared in the section entitled 'Declaration of Policy'- Section 1. All of the policies there set forth point toward a single goal- the rehabilitation of industry and the industrial recovery which unquestionably was the major policy of Congress in adopting the National Industrial Recovery Act.' And that this is the controlling purpose of the code now before us appears both from its repeated declarations to that effect and from the scope of its requirements. It will be observed that its provisions as to the hours and wages of employees and its 'general labor provisions' were placed in separate articles, and these were not included in the article on 'trade practice provisions' declaring what should be deemed to constitute 'unfair methods of competition.' The Secretary of Agriculture thus stated the objectives of the Live Poultry Code in his report to the President, which was recited in the executive order of approval:

'That said code will tend to effectuate the declared policy of title I of the National Industrial Recovery Act as set forth in section 1 of said act in that the terms and provisions of such code tend to: (a) Remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof: (b) to provide for the general welfare by promoting the organization of industry for the purpose of cooperative action among trade groups; (c) to eliminate unfair competitive practices; (d) to promote the fullest possible utilization of the present productive capacity of industries; (e) to avoid undue restriction of production (except as may be temporarily required); (f) to increase the consumption of industrial and agricultural products by increasing purchasing power; and (g) otherwise to rehabilitate industry and to conserve natural resources.' [295 U.S. 495, 537] The government urges that the codes will 'consist of rules of competition deemed fair for each industry by representative members of that industry-by the persons most vitally concerned and most familiar with its problems.' Instances are cited in which Congress has availed itself of such assistance; as, e.g., in the exercise of its authority over the public domain, with respect to the recognition of local customs or rules of miners as to mining claims, 14 or, in matters of a more or less technical nature, as in designating the standard height of drawbars. 15 But would it be seriously contended that Congress could delegate its legislative authority to trade or industrial associations or groups so as to empower them to enact the laws they deem to be wise and beneficent for the rehabilitation and expansion of their trade or industries? Could trade or industrial associations or groups be constituted legislative bodies for that purpose because such associations or groups are familiar with the problems of their enterprises? And could an effort of that sort be made valid by such a preface of generalities as to permissible aims as we find in section 1 of title 1? The answer is obvious. Such a delegation of legislative power is unknown to our law, and is utterly inconsistent with the constitutional prerogatives and duties of Congress.

The question, then, turns upon the authority which section 3 of the Recovery Act vests in the President to approve or prescribe. If the codes have standing as penal statutes, this must be due to the effect of the executive action. But Congress cannot delegate legislative power to the President to exercise an unfettered discretion to make [295 U.S. 495, 538] whatever laws he thinks may be needed or advisable for the rehabilitation and expansion of trade or industry. See Panama Refining Company v. Ryan, supra, and cases there reviewed.

Accordingly we turn to the Recovery Act to ascertain what limits have been set to the exercise of the President's discretion: First, the President, as a condition of approval, is required to find that the trade or industrial associations or groups which propose a code 'impose no inequitable restrictions on admission to membership' and are 'truly representative.' That condition, however, relates only to the status of the initiators of the new laws and not to the permissible scope of such laws. Second, the President is required to find that the code is not 'designed to promote monopolies or to eliminate or oppress small enterprises and will not operate to discriminate against them.' And to this is added a proviso that the code 'shall not permit monopolies or monopolistic practices.' But these restrictions leave

virtually untouched the field of policy envisaged by section 1, and, in that wide field of legislative possibilities, the proponents of a code, refraining from monopolistic designs, may roam at will, and the President may approve or disapprove their proposals as he may see fit. That is the precise effect of the further finding that the President is to make-that the code 'will tend to effectuate the policy of this title.' While this is called a finding, it is really but a statement of an opinion as to the general effect upon the promotion of trade or industry of a scheme of laws. These are the only findings which Congress has made essential in order to put into operation a legislative code having the aims described in the 'Declaration of Policy.'

Nor is the breadth of the President's discretion left to the necessary implications of this limited requirement as to his findings. As already noted, the President in approving a code may impose his own conditions, adding to [295 U.S. 495, 539] or taking from what is proposed, as 'in his discretion' he thinks necessary 'to effectuate the policy' declared by the act. Of course, he has no less liberty when he prescribes a code on his own motion or on complaint, and he is free to prescribe one if a code has not been approved. The act provides for the creation by the President of administrative agencies to assist him, but the action or reports of such agencies, or of his other assistants-their recommendations and findings in relation to the making of codes-have no sanction beyond the will of the President, who may accept, modify, or reject them as he pleases. Such recommendations or findings in no way limit the authority which section 3 undertakes to vest in the President with no other conditions than those there specified. And this authority relates to a host of different trades and industries, thus extending the President's discretion to all the varieties of laws which he may deem to be beneficial in dealing with the vast array of commercial and industrial activities throughout the country.

Such a sweeping delegation of legislative power finds no support in the decisions upon which the government especially relies. By the Interstate Commerce Act (49 USCA 1 et seq.), Congress has itself provided a code of laws regulating the activities of the common carriers subject to the act, in order to assure the performance of their services upon just and reasonable terms, with adequate facilities and without unjust discrimination. Congress from time to time has elaborated its requirements, as needs have been disclosed. To facilitate the application of the standards prescribed by the act, Congress has provided an expert body. That administrative agency, in dealing with particular cases, is required to act upon notice and hearing, and its orders must be supported by findings of fact which in turn are sustained by evidence. Interstate Commerce Commission v. Louisville & Nashville Railroad Company, 227 U.S. 88 , 33 S.Ct. 185; State of Florida v. United States, 282 U.S. 194 , 51 S.Ct. 119; United States [295 U.S. 495, 540] v. Baltimore & Ohio Railroad Company, 293 U.S. 454 , 55 S.Ct. 268. When the Commission is authorized to issue, for the construction, extension, or abandonment of lines, a certificate of 'public convenience and necessity,' or to permit the acquisition by one carrier of the control of another, if that is found to be 'in the public interest,' we have pointed out that these provisions are not left without standards to guide determination. The authority conferred has direct relation to the standards prescribed for the service of common carriers, and can be exercised only upon findings, based upon evidence, with respect to particular conditions of transportation. New York Central Securities Corporation v. United States, 287 U.S. 12, 24 , 25 S., 53 S.Ct. 45; Texas & Pacific Railway Co. v. Gulf, Colorado & Santa Fe Railway Co., 270 U.S. 266, 273 , 46 S.Ct. 263; Chesapeake & Ohio Railway Co. v. United States, 283 U.S. 35, 42 , 51 S.Ct. 337.

Similarly, we have held that the Radio Act of 192716 established standards to govern radio communications, and, in view of the limited number of available broadcasting frequencies, Congress authorized allocation and licenses. The Federal Radio Commission was created as the licensing authority, in order to secure a reasonable equality of opportunity in radio transmission and reception. The authority of the Commission to grant licenses 'as public convenience, interest or necessity requires' was limited by the nature of radio communications, and by the scope, character, and quality of the services to be rendered and the relative advantages to be derived through distribution of facilities. These standards established by Congress were to be enforced upon hearing and evidence by an administrative body acting under statutory restrictions adapted to the particular activity. Federal Radio Commission v. Nelson Brothers Bond & Mtg. Co., 289 U.S. 266 , 53 S.Ct. 627

[295 U.S. 495, 541] In Hampton, Jr. & Company v. United States, 276 U.S. 394 , 48 S.Ct. 348, 350 the question related to the 'flexible tariff provision' of the Tariff Act of 1922.17 We held that Congress had described its plan 'to secure by law the imposition of customs duties on articles of imported merchandise which should equal the difference between the cost of producing in a foreign country the articles in question and laying them down for sale in the United States, and the cost of producing and selling like or similar articles in the United States.' As the differences in cost might vary from time to time, provision was made for the investigation and determination of these differences by the executive branch so as to make 'the adjustments necessary to conform the duties to the standard underlying that policy and plan.' Id. 276 U.S. 394 , pages 404, 405, 48 S.Ct. 348, 350. The Court found the same principle to be applicable in fixing customs duties as

that which permitted Congress to exercise its rate-making power in interstate commerce, 'by declaring the rule which shall prevail in the legislative fixing of rates,' and then remitting 'the fixing of such rates' in accordance with its provisions 'to a rate-making body.' Id. 276 U.S. 394 , page 409, 48 S.Ct. 348, 352. The Court fully recognized the limitations upon the delegation of legislative power. Id. 276 U.S. 394 , pages 408-411, 48 S.Ct. 348.

To summarize and conclude upon this point: Section 3 of the Recovery Act (15 USCA 703 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 expansion described in section 1. In view of the scope of that broad declaration and of the [295 U.S. 495, 542] 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.

Third. The Question of the Application of the Provisions of the Live Poultry Code to Intrastate Transactions.-Although the validity of the codes (apart from the question of delegation) rests upon the commerce clause of the Constitution, section 3(a) of the act (15 USCA 703(a) is not in terms limited to interstate and foreign commerce. From the generality of its terms, and from the argument of the government at the bar, it would appear that section 3(a) was designed to authorize codes without that limitation. But under section 3(f) of the act (15 USCA 73(f) penalties are confined to violations of a code provision 'in any transaction in or affecting interstate or foreign commerce.' This aspect of the case presents the question whether the particular provisions of the Live Poultry Code, which the defendants were convicted for violating and for having conspired to violate, were within the regulating power of Congress.

These provisions relate to the hours and wages of those employed by defendants in their slaughterhouses in Brooklyn and to the sales there made to retail dealers and butchers.

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. But the code provisions, as here applied, do not concern the transportation of the poultry from other states to New York, or the transactions of the commission men or others to whom it is consigned, or the sales made by such consignees to defendants. When defendants had made their purchases, whether at the West Washington Market in New York City or at the railroad [295 U.S. 495, 543] terminals serving the city, or elsewhere, the poultry was trucked to their slaughterhouses in Brooklyn for local disposition. The interstate transactions in relation to that poultry then ended. Defendants held the poultry at their slaughterhouse markets for slaughter and local sale to retail dealers and butchers who in turn sold directly to consumers. Neither the slaughtering nor the sales by defendants were transactions in interstate commerce. Brown v. Houston, 114 U.S. 622, 632 , 633 S., 5 S.Ct. 1091; Public Utilities Commission v. Landon, 249 U.S. 236, 245 , 39 S.Ct. 268; Industrial Association v. United States, 268 U.S. 64, 78 , 79 S., 45 S.Ct. 403; Atlantic Coast Line R. Co. v. Standard Oil Co., 275 U.S. 257, 267 , 48 S.Ct. 107.

The undisputed facts thus afford no warrant for the argument that the poultry handled by defendants at their slaughterhouse markets was in a 'current' or 'flow' of interstate commerce, and was thus subject to congressional regulation. The mere fact that there may be a constant flow of commodities into a state does not mean that the flow continues after the property has arrived and has become commingled with the mass of property within the state and is there held solely for local disposition and use. So far as the poultry here in question is concerned, the flow in interstate commerce had ceased. The poultry had come to a permanent rest within the state. It was not held, used, or sold by defendants in relation to any further transactions in interstate commerce and was not destined for transportation to other states. Hence decisions which deal with a stream of interstate commerce-where goods come to rest within a state temporarily and are later to go forward in interstate commerce-and with the regulations of transactions involved in that practical continuity of movement, are not applicable here. See Swift & Company v. United States,196 U.S. 375, 387 , 388 S., 25 S.Ct. 276; Lemke v. Farmers' Grain Company, 258 U.S. 50, 55 , 42 S.Ct. 244; Stafford v. Wallace, 258 U.S. 495, 519 , 42 S.Ct. 397, 23 A.L.R. 229; Board of Trade of City of Chi- [295 U.S. 495, 544] cago v. Olsen, 262 U.S. 1, 35 , 43 S.Ct. 470; Tagg Bros. & Moorhead v. United States, 280 U.S. 420, 439 , 50 S.Ct. 220.

Did the defendants' transactions directly 'affect' interstate commerce so as to be subject to federal regulation? The power of Congress extends, not only to the regulation of transactions which are part of interstate commerce, but to the protection of that commerce from injury. It matters not that the injury may be due to the conduct of those engaged in

intrastate operations. Thus, Congress may protect the safety of those employed in interstate transportation, 'no matter what may be the source of the dangers which threaten it.' Southern Railway Company v. United States, 222 U.S. 20, 27 , 32 S.Ct. 2, 4. We said in Mondou v. New York, N.H. & H.R. Co. (Second Employers' Liability Cases), 223 U.S. 1, 51 , 32 S.Ct. 169, 38 L.R.A.(N.S.) 44, that it is the 'effect upon interstate commerce,' not 'the source of the injury,' which is 'the criterion of congressional power.' We have held that, in dealing with common carriers engaged in both interstate and intrastate commerce, the dominant authority of Congress necessarily embraces the right to control their intrastate operations in all matters having such a close and substantial relation to interstate traffic that the control is essential or appropriate to secure the freedom of that traffic from interference or unjust discrimination and to promote the efficiency of the interstate service. Houston, E. & W.T.R. Co. v. U.S. (The Shreveport Case), 234 U.S. 342, 351 , 352 S., 34 S.Ct. 833; Railroad Commission of State of Wisconsin v. Chicago, Burlington & Quincy R. Co., 257 U.S. 563, 588 , 42 S.Ct. 232, 22 A.L.R. 1086. And combinations and conspiracies to restrain interstate commerce, or to monopolize any part of it, are none the less within the reach of the Anti-Trust Act (15 USCA 1 et seq.) because the conspirators seek to attain their end by means of intrastate activities. Coronado Coal Company v. United Mine Workers, 268 U.S. 295, 310 , 45 S.Ct. 551; Bedford Cut Stone Company v. Journeyman Stone Cutters' Association, 274 U.S. 37, 46 , 47 S.Ct. 522, 54 A.L.R. 791.

We recently had occasion, in Local 167 V. United States, 291 U.S. 293 , 54 S.Ct. 396, to apply this principle in connection with [295 U.S. 495, 545] the live poultry industry. That was a suit to enjoin a conspiracy to restrain and monopolize interstate commerce in violation of the Anti-Trust Act. It was shown that marketmen, teamsters, and slaughterers (shochtim) had conspired to burden the free movement of live poultry into the metropolitan area in and about New York City. Marketmen had organized an association, had allocated retailers among themselves, and had agreed to increase prices. To accomplish their objects, large amounts of money were raised by levies upon poultry sold, men were hired to obstruct the business of dealers who resisted, wholesalers and retailers were spied upon, and by violence and other forms of intimidation were prevented from freely purchasing live poultry. Teamsters refused to handle poultry for recalcitrant marketmen, and members of the shochtim union refused to slaughter. In view of the proof of that conspiracy, we said that it was unnecessary to decide when interstate commerce ended and when intrastate commerce began. We found that the proved interference by the conspirators 'with the unloading, the transportation, the sales by marketmen to retailers, the prices charged, and the amount of profits exacted' operated 'substantially and directly to restrain and burden the untrammelled shipment and movement of the poultry,' while unquestionably it was in interstate commerce. The intrastate acts of the conspirators were included in the injunction because that was found to be necessary for the protection of interstate commerce against the attempted and illegal restraint. Id. 291 U.S. 293 , pp. 297, 299, 300, 54 S.Ct. 396, 398.

The instant case is not of that sort. This is not a prosecution for a conspiracy to restrain or monopolize interstate commerce in violation of the Anti-Trust Act. Defendants have been convicted, not upon direct charges of injury to interstate commerce or of interference with persons engaged in that commerce, but of violations of certain provisions of the Live Poultry Code and of con- [295 U.S. 495, 546] spiracy to commit these violations. Interstate commerce is brought in only upon the charge that violations of these provisions-as to hours and wages of employees and local sales-'affected' interstate commerce.

In determining how far the federal government may go in controlling intrastate transactions upon the ground that they 'affect' interstate commerce, there is a necessary and well-established distinction between direct and indirect effects. The precise line can be drawn only as individual cases arise, but the distinction is clear in principle. Direct effects are illustrated by the railroad cases we have cited, as, e.g., the effect of failure to use prescribed safety appliances on railroads which are the highways of both interstate and intrastate commerce, injury to an employee engaged in interstate transportation by the negligence of an employee engaged in an intrastate movement, the fixing of rates for intrastate transportation which unjustly discriminate against interstate commerce. But where the effect of intrastate transactions upon interstate commerce is merely indirect, such transactions remain within the domain of state 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. Indeed, on such a theory, even the development of the state's commercial facilities would be subject to federal control. As we said in Simpson v. Shepard (Minnesota Rate Case), 230 U.S. 352, 410 , 33 S. Ct. 729, 745, 48 L.R.A. (N.S.) 1151, Ann. Cas. 1916A, 18: 'In the intimacy of commercial relations, much that is done in the superintendence of local matters may have an indirect bearing upon interstate commerce. The development of local resources and the extension of local facilities may have a very important effect upon communities less favored, and to an appreciable degree [295 U.S. 495, 547] alter

the course of trade. The freedom of local trade may stimulate interstate commerce, while restrictive measures within the police power of the state, enacted exclusively with respect to internal business, as distinguished from interstate traffic, may in their reflex or indirect influence diminish the latter and reduce the volume of articles transported into or out of the state.' See, also, Kidd v. Pearson, 128 U.S. 1, 21 , 9 S.Ct. 6; Heisler v. Thomas Colliery Co., 260 U.S. 245, 259 , 260 S., 43 S.Ct. 83.

The distinction between direct and indirect effects has been clearly recognized in the application of the Anti-Trust Act. Where a combination or conspiracy is formed, with the intent to restrain interstate commerce or to monopolize any part of it, the violation of the statute is clear. Coronado Coal Company v. United Mine Workers,268 U.S. 295, 310 , 45 S.Ct. 551. But, where that intent is absent, and the objectives are limited to intrastate activities, the fact that there may be an indirect effect upon interstate commerce does not subject the parties to the federal statute, notwithstanding its broad provisions. This principle has frequently been applied in litigation growing out of labor disputes. United Mine Workers v. Coronado Coal Company, 259 U.S. 344, 410 , 411 S., 42 S. Ct. 570, 27 A.L.R. 762; United Leather Workers' International Union v. Herkert, 265 U.S. 457 , 464-467, 44 S.Ct. 623, 33 A.L.R. 566; Industrial Association v. United States, 268 U.S. 64, 82 , 45 S.Ct. 403; Levering & Garrigues v. Morrin, 289 U.S. 103, 107 , 108 S., 53 S.Ct. 549, 551. In the case last cited we quoted with approval the rule that had been stated and applied in Industrial Association v. United States, supra, after review of the decisions, as follows: 'The alleged conspiracy, and the acts here complained of, spent their intended and direct force upon a local situation-for building is as essentially local as mining, manufacturing or growing crops-and if, by resulting diminution of the commercial demand, interstate trade was curtailed either generally or in specific instances that was a fortuitous consequence so remote and indirect [295 U.S. 495, 548] as plainly to cause it to fall outside the reach of the Sherman Act (15 USCA 1-7, 15 note).'

While these decisions related to the application of the Federal statute, and not to its constitutional validity, the distinction between direct and indirect effects of intrastate transactions upon interstate commerce must be recognized as a fundamental one, essential to the maintenance of our constitutional system. Otherwise, as we have said, there would be virtually no limit to the federal power, and for all practical purposes we should have a completely centralized government. We must consider the provisions here in question in the light of this distinction.

The question of chief importance relates to the provisions of the code as to the hours and wages of those employed in defendants' slaughterhouse markets. It is plain that these requirements are imposed in order to govern the details of defendants' management of their local business. The persons employed in slaughtering and selling in local trade are not employed in interstate commerce. Their hours and wages have no direct relation to interstate commerce. The question of how many hours these employees should work and what they should be paid differs in no essential respect from similar questions in other local businesses which handle commodities brought into a state and there dealt in as a part of its internal commerce. This appears from an examination of the considerations urged by the government with respect to conditions in the poultry trade. Thus, the government argues that hours and wages affect prices; that slaughterhouse men sell at a small margin above operating costs; that labor represents 50 to 60 per cent. of these costs; that a slaughterhouse operator paying lower wages or reducing his cost by exacting long hours of work translates his saving into lower prices; that this results in demands for a cheaper grade of goods: and that the cutting [295 U.S. 495, 549] of prices brings about a demoralization of the price structure. Similar conditions may be adduced in relation to other businesses. The argument of the government proves too much. 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.

The government also makes the point that efforts to enact state legislation establishing high labor standards have been impeded by the belief that, unless similar action is taken generally, commerce will be diverted from the states adopting such standards, and that this fear of diversion has led to demands for federal legislation on the subject of wages and hours. The apparent implication is that the federal authority under the commerce clause should be deemed to extend to the establishment of rules to govern wages and hours in intrastate trade and industry generally throughout the country, thus overriding the authority of the states to deal with domestic problems arising from labor conditions in their internal commerce.

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 [295 U.S. 495, 550] 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.

We are of the opinion that the attempt through the provisions of the code to fix the hours and wages of employees of defendants in their intrastate business was not a valid exercise of federal power.

The other violations for which defendants were convicted related to the making of local sales. Ten counts, for violation of the provision as to 'straight killing,' were for permitting customers to make 'selections of individual chickens taken from particular coops and half coops.' Whether or not this practice is good or bad for the local trade, its effect, if any, upon interstate commerce was only indirect. The same may be said of violations of the code by intrastate transactions consisting of the sale 'of an unfit chicken' and of sales which were not in accord with the ordinances of the city of New York. The requirement of reports as to prices and volumes of defendants' sales was incident to the effort to control their intrastate business. [295 U.S. 495, 551] In view of these conclusions, we find it unnecessary to discuss other questions which have been raised as to the validity of certain provisions of the code under the due process clause of the Fifth Amendment.

On both the grounds we have discussed, the attempted delegation of legislative power and the attempted regulation of intrastate transactions which affect interstate commerce only indirectly, we hold the code provisions here in question to be invalid and that the judgment of conviction must be reversed. No. 854 -reversed.

No. 864-affirmed.

Mr. Justice CARDOZO (concurring).

The delegated power of legislation which has found expression in this code is not canalized within banks that keep it from overflowing. It is unconfined and vagrant, if I may borrow my own words in an earlier opinion. Panama Refining Co. v. Ryan, 293 U.S. 388, 440 , 55 S.Ct. 241.

This court has held that delegation may be unlawful, though the act to be performed is definite and single, if the necessity, time, and occasion of performance have been left in the end to the discretion of the delegate. Panama Refining Co. v. Ryan, supra. I thought that ruling went too far. I pointed out in an opinion that there had been 'no grant to the Executive of any roving commission to inquire into evils and then, upon discovering them, do anything he pleases.' 293 U.S. 388 , at page 435, 55 S. Ct. 241, 254. Choice, though within limits, had been given him 'as to the occasion, but none whatever as to the means.' Id. Here, in the case before us, is an attempted delegation not confined to any single act nor to any class or group of acts identified or described by reference to a standard. Here in effect is a roving commission to inquire into evils and upon discovery correct them. [295 U.S. 495, 552] I have said that there is no standard, definite or even approximate, to which legislation must conform. Let me make my meaning more precise. If codes of fair competition are codes eliminating 'unfair' methods of competition ascertained upon inquiry to prevail in one industry or another, there is no unlawful delegation of legislative functions when the President is directed to inquire into such practices and denounce them when discovered. For many years a like power has been committed to the Federal Trade Commission with the approval of this court in a long series of decisions. Cf. Federal Trade Commission v. R.F. Keppel & Bro., 291 U.S. 304, 312 , 54 S.Ct. 423; Federal Trade Commission v. Raladam Co., 283 U.S. 643, 648 , 51 S.Ct. 587, 79 A.L.R. 1191; Federal Trade Commission v. Gratz, 253 U.S. 421 , 40 S.Ct. 572. Delegation in such circumstances is born

of the necessities of the occasion. The industries of the country are too many and diverse to make it possible for Congress, in respect of matters such as these, to legislate directly with adequate appreciation of varying conditions. Nor is the substance of the power changed because the President may act at the instance of trade or industrial associations having special knowledge of the facts. Their function is strictly advisory; it is the imprimatur of the President that begets the quality of law. Doty v. Love,295 U.S. 64 , 55 S.Ct. 558, 79 L.Ed. --. When the task that is set before one is that of cleaning house, it is prudent as well as usual to take counsel of the dwellers.

But there is another conception of codes of fair competition, their significance and function, which leads to very different consequences, though it is one that is struggling now for recognition and acceptance. By this other conception a code is not to be restricted to the elimination of business practices that would be characterized by general acceptation as oppressive or unfair. It is to include whatever ordinances may be desirable or helpful for the well-being or prosperity of the industry [295 U.S. 495, 553] affected. In that view, the function of its adoption is not merely negative, but positive; the planning of improvements as well as the extirpation of abuses. What is fair, as thus conceived, is not something to be contrasted with what is unfair or fraudulent or tricky. The extension becomes as wide as the field of industrial regulation. If that conception shall prevail, anything that Congress may do within the limits of the commerce clause for the betterment of business may be done by the President upon the recommendation of a trade association by calling it a code. 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.

The code does not confine itself to the suppression of methods of competition that would be classified as unfair according to accepted business standards or accepted norms of ethics. It sets up a comprehensive body of rules to promote the welfare of the industry, if not the welfare of the nation, without reference to standards, ethical or commercial, that could be known or predicted in advance of its adoption. One of the new rules, the source of ten counts in the indictment, is aimed at an established practice, not unethical or oppressive, the practice of selective buying. Many others could be instanced as open to the same objection if the sections of the code were to be examined one by one. The process of dissection will not be traced in all its details. Enough at this time to state what it reveals. Even if the statute itself had fixed the meaning of fair competition by way of contrast with practices that are oppressive or unfair, the code outruns the bounds of the authority conferred. What is excessive is not sporadic or superficial. It is deep- seated and per- [295 U.S. 495, 554] vasive. The licit and illicit sections are so combined and welded as to be incapable of severance without destructive mutilation.

But there is another objection, far-reaching and incurable, aside from any defect of unlawful delegation.

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 regulare commerce with foreign nations, and among the several States.' United States Constitution, art. 1, 8, cl. 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. As to this feature of the case, little can be added to the opinion of the court. There is a view of causation that would obliterate the distinction between what is national and what is local in the activities of commerce. Motion at the outer rim is communicated perceptibly, though minutely, to recording instruments at the center. A society such as ours 'is an elastic medium which transmits all tremors throughout its territory; the only question is of their size.' Per Learned Hand, J., in the court below. The law is not indifferent to considerations of degree. Activities local in their immediacy do not become interstate and national because of distant repercussions. What is near and what is distant may at times be uncertain. Cf. Board of Trade of City of Chicago v. Olsen, 262 U.S. 1 , 43 S.Ct. 470. There is no penumbra of uncertainty obscuring judgment here. To find immediacy or directness here is to find it almost everywhere. If centripetal forces are to be isolated to the exclusion of the forces that oppose and counteract them, there will be an end to our federal system.

To take from this code the provisions as to wages and the hours of labor is to destroy it altogether. If a trade or an industry is so predominantly local as to be exempt[295 U.S. 495, 555] from regulation by the Congress in respect of matters such as these, there can be no 'code' for it at all. This is clear from the provisions of section 7(a) of the act (15 USCA 707(a), with its explicit disclosure of the statutory scheme. Wages and the hours of labor are essential features of the plan, its very bone and sinew. There is no opportunity in such circumstances for the severance of the infected parts in the hope of saving the remainder. A code collapses utterly with bone and sinew gone.

I am authorized to state that Mr. Justice STONE joins in this opinion.

Footnotes

[ Footnote 1 ] The full title of the Code is 'Code of Fair Competition for the Live Poultry Industry of the Metropolitan Area in and about the City of New York.'

[ Footnote 2 ] The indictment contained 60 counts, of which 27 counts were dismissed by the trial court, and on 14 counts the defendants were acquitted.

[ Footnote 3 ] Act of June 16, 1933, c. 90, 48 Stat. 195, 196; 15 U.S.C. 703 (15 USCA 703).

[ Footnote 4 ] 'Codes of fair competition.

'Sec. 3. (a) Upon the application to the President by one or more trade or industrial associations or groups, the President may approve a code or codes of fair competition for the trade or industry or subdivision thereof, represented by the applicant or applicants, if the President finds (1) that such associations or groups impose no inequitable restrictions on admission to membership therein and are truly representative of such trades or industries or subdivisions thereof, and ( 2) that such code or codes are not designed to promote monopolies or to eliminate or oppress small enterprises and will not operate to discriminate against them, and will tend to effectuate the policy of this title: Provided, That such code or codes shall not permit monopolies or monopolistic practices: Provided further, That where such code or codes affect the services and welfare of persons engaged in other steps of the economic process, nothing in this section shall deprive such persons of the right to be heard prior to approval by the President of such code or codes. The President may, as a condition of his approval of any such code, impose such conditions (including requirements for the making of reports and the keeping of accounts) for the protection of consumers, competitors, employees, and others, and in furtherance of the public interest, and may provide such exceptions to and exemptions from the provisions of such code. as the President in his discretion deems necessary to effectuate the policy herein declared. '(b) After the President shall have approved any such code, the provisions of such code shall be the standards of fair competition for such trade or industry or subdivision thereof. Any violation of such standards in any transaction in or affecting interstate or foreign commerce shall be deemed an unfair method of competition in commerce within the meaning of the Federal Trade Commission Act, as amended ( chapter 2 of this title); but nothing in this title (chapter) shall be construed to impair the powers of the Federal Trade Commission under such Act, as amended (chapter 2).

[ Footnote 5 ] The executive order is as follows:

'Executive Order. 'Approval of Code of Fair Competition for the Live Poultry Industry of the Metropolitan Area in and about the City of New York. 'Whereas, the Secretary of Agriculture and the Administrator of the National Industrial Recovery Act having rendered their separate reports and recommendations and findings on the provisions of said code, coming within their respective jurisdictions, as set forth in the Executive Order No. 6182 of June 26, 1933, as supplemented by Executive Order No. 6207 of July 21, 1933, and Executive Order N. 6345 of October 20, 1933, as amended by Executive Order No. 6551 of January 8, 1934; 'Now, therefore, I, Franklin D. Roosevelt, President of the United States, pursuant to the authority vested in me by title I of the National Industrial Recovery Act, approved June 16, 1933, and otherwise, do hereby find that: '1. An application has been duly made, pursuant to and in full compliance with the provisions of title I of the National Industrial Recovery Act, approved June 16, 1933, for my approval of a code of fair competition for the live poultry industry in the metropolitan area in and about the City of New York; and '2. Due notice and opportunity for hearings to interested parties have been given pursuant to the provisions of the act and regulations thereunder; and, '3. Hearings have been held upon said code, pursuant to such notice and pursuant to the pertinent provisions of the act and regulations thereunder; and

'4. Said code of fair competition constitutes a code of fair competition, as contemplated by the act and complies in all respects with the pertinent provisions of the act, including clauses (1) and (2) of subsection (a) of section 3 of title I of the act; and '5. It appears, after due consideration, that said code of fair competition will tend to effectuate the policy of Congress as declared in section 1 of title I of the act. 'Now, therefore, I, Franklin D. Roosevelt, President of the United States, pursuant to the authority vested in me by title I of the National Industrial Recovery Act, approved June 16, 1933, and otherwise, do hereby approve said Code of Fair Competition for the Live Poultry Industry in the Metropolitan Area in and about the City of New York. 'Franklin D. Roosevelt, 'President of the United States. 'The White House, 'April 13, 1934.'

[ Footnote 6 ] The Administrator for Industrial Recovery stated in his report that the Code had been sponsored by trade associations representing about 350 wholesale firms, 150 retail shops, and 21 commission agencies; that these associations represented about 90 per cent. of the live poultry industry by numbers and volume of business; and that the industry as defined in the code supplies the consuming public with practically all the live poultry coming into the metropolitan area from forty-one states and transacted an aggreagate annual business of approximately $90,000,000. He further said that about 1,610 employees were engaged in the industry; that it had suffered severely on account of the prevailing economic conditions and because of unfair methods of competition and the abuses that had developed as a result of the 'uncontrolled methods of doing business'; and that these conditions had reduced the number of employees by approximately 40 per cent. He added that the report of the Research and Planning Division indicated that the code would bring about an increase in wages of about 20 per cent. in this industry and an increase in employment of 19.2 per cent.

[ Footnote 7 ] The prohibition in the code (article VII, 14) was as follows: 'Straight Killing.-The use, in the wholesale slaughtering of poultry, of any method of slaughtering other than 'straight killing' or killing on the basis of official grade. Purchasers may, however, make selection of a half coop, coop, or coops, but shall not have the right to make any selection of particular birds.'

[ Footnote 8 ] See Ex parte Milligan, 4 Wall. 2, 120, 121; Home Building & Loan Association v. Blaisdell, 290 U.S. 398, 426 , 54 S.Ct. 231, 88 A.L.R. 1481.

[ Footnote 9 ] That section (15 USCA 701), under the heading 'Declaration of Policy,' is as follows: 'Section 1. A national emergency productive of widespread unemployment and disoreganization of industry, which burdens interstate and foreign commerce, affects the public welfare, and undermines the standards of living of the American people, is hereby declared to exist. It is hereby declared to be the policy of Congress to remove obstructions to the free flow of interstate and foreign commerce which tend to diminish the amount thereof; and to provide for the general welfare by promoting the organization of industry for the purpose of co- operative action among trade groups, to induce and maintain united action of labor and management under adequate governmental sanctions and supervision, to eliminate unfair competitive practices, to promote the fullest possible utilization of the present productive capacity of industries, to avoid undue restriction of production (except as may be temporarily required), to increase the consumption of industrial and agricultural products by increasing purchasing power, to reduce and relieve unemployment, to improve standards of labor, and otherwise to rehabilitate industry and to conserve natural resources.'

[ Footnote 10 ] See cases collected in Nims on Unfair Competition and Trade-Marks, c. I, 4, p. 19, and chapter XIX.

[ Footnote 11 ] Act of September 26, 1914, c. 311, 38 Stat. 717, 719, 720 (section 5 (15 USCA 45)).

[ Footnote 12 ] The Tariff Act of 1930 (section 337, 46 Stat. 703 (19 USCA 1337 )), like the Tariff Act of 1922 (section 316, 42 Stat. 943 (19 USCA 174 et seq.)), employs the expressions 'unfair methods of competition' and 'unfair acts' in the importation of articles into the United States, and in their sale, 'the effect or tendency of which is to destroy or substantially injure an industry, efficiently and economically operated, in the United States, or to prevent the establishment of such an industry, or to restrain or monopolize trade and commerce in the United States.' Provision is made for investigation and findings by the Tariff Commission, for appeals upon questions of law to the United States Court of Customs and Patent Appeals, and for ultimate action by the President when the existence of any 'such unfair method or act' is established to his satisfaction.

[ Footnote 13 ] See note 9.

[ Footnote 14 ] Act of July 26, 1866, c. 262, 14 Stat. 251; Jackson v. Roby, 109 U.S. 440, 441 , 3 S.Ct. 301; Erhardt v. Boaro, 113 U.S. 527, 535 , 5 S.Ct. 560; Butte City Water Co. v. Baker, 196 U.S. 119, 126 , 25 S.Ct. 211.

[ Footnote 15 ] Act of March 2, 1893, c. 196, 27 Stat. 531 (45 USCA 1 et seq.); St. Louis, Iron Mountain & S. Railway Co. v. Taylor, 210 U.S. 281, 286 , 28 S.Ct. 616.

[ Footnote 16 ] Act of February 23, 1927, c. 169, 44 Stat. 1162, as amended by the Act of March 28, 1928, c. 263, 45 Stat. 373.

[ Footnote 17 ] Act of September 21, 1922, c. 356, title 3, 315, 42 Stat. 858, 941 (19 USCA 154 et seq.).

U.S. v. BUTLER, 297 U.S. 1 (1936)

297 U.S. 1

UNITED STATES v.

BUTLER et al. No. 401.

Argued Dec. 9, 10, 1935.

Decided Jan. 6, 1936.

[297 U.S. 1, 13] Messrs. Homer S. Cummings, Atty. Gen., and Stanley F. Reed, Sol. Gen., of Washington, D.C., for the United States.

Messrs. George Wharton Pepper, of Philadelphia, Pa., and Edward R. Hale and Bennett Sanderson, both of Boston, Mass., for respondents.

[297 U.S. 1, 53]

Mr. Justice ROBERTS delivered the opinion of the Court.

In this case we must determine whether certain provisions of the Agricultural Adjustment Act, 1933,1 conflict with the Federal Constitution.

Title 1 of the statute is captioned 'Agricultural Adjustment.' Section 1 (7 U.S.C.A. 601) recites that an economic emergency has arisen, due to disparity between the prices of agricultural and other commodities, with consequent destruction of farmers' purchasing power and breakdown in orderly exchange, which, in turn, have affected transactions in agricultural commodities with a national public interest and burdened and obstructed the normal currents of commerce, calling for the enactment of legislation. [297 U.S. 1, 54] Section 2 (7 U.S.C.A. 602) declares it to be the policy of Congress:

'To establish and maintain such balance between the production and consumption of agricultural commodities, and such marketing conditions therefor, as will reestablish prices to farmers at a level that will give agricultural commodities2 a purchasing power with respect to articles that farmers buy, equivalent to the purchasing power of agricultural commodities in the base period.'

The base period, in the case of cotton, and all other commodities except tobacco, is designated as that between August, 1909, and July, 1914

The further policies announced are an approach to the desired equality by gradual correction of present inequalities 'at as rapid a rate as is deemed feasible in view of the current consumptive demand in domestic and foreign markets,' and the protection of consumers' interest by readjusting farm production at such level as will not increase the percentage of the consumers' retail expenditures for agricultural commodities or products derived therefrom, which is returned to the farmer, above the percentage returned to him in the base period.

Section 8 (48 Stat. 34) provides, amongst other things, that, 'In order to effectuate the declared policy,' the Secretary of Agriculture shall have power

'(1) To provide for reduction in the acreage or reduction in the production for market, or both, of any basic agricultural commodity, through agreements with producers or by other voluntary methods, and to provide for rental or benefit payments in connection therewith or upon that part of the production of any basic agricultural commodity required for domestic consumption, in such amounts as the Secretary deems fair and reasonable, to [297 U.S. 1, 55] be paid out of any moneys available for such payments. ... '(2) To enter into marketing agreements with processors, associations of producers, and others engaged in the handling, in the current of interstate or foreign commerce of any agricultural commodity or product thereof, after due notice and opportunity for hearing to interested parties. ... '(3) To issue licenses permitting processors, associations of producers, and others to engage in the handling, in the current of interstate or foreign commerce, of any agricultural commodity or product thereof, or any competing commodity or product thereof.'

It will be observed that the Secretary is not required, but is permitted, if, in his uncontrolled judgment, the policy of the act will so be promoted, to make agreements with individual farmers for a reduction of acreage or production upon such terms as he may think fair and reasonable.

Section 9(a), 48 Stat. 35 enacts:

'To obtain revenue for extraordinary expenses incurred by reason of the national economic emergency, there shall be levied processing taxes as hereinafter provided. When the Secretary of Agriculture determines that rental or benefit payments are to be made with respect to any basic agricultural commodity, he shall proclaim such determination, and a processing tax shall be in effect with respect to such commodity from the beginning of the marketing year therefor next following the date of such proclamation. The processing tax shall be levied, assessed, and collected upon the first domestic proc ssing of the commodity, whether of domestic production or imported, and shall be paid by the processor.'

The Secretary may from time to time, if he finds it necessary for the effectuation of the policy of the act, readjust the amount of the exaction to meet the require- [297 U.S. 1, 56] ments of subsection (b). The tax is to terminate at the end of any marketing year if the rental or benefit payments are discontinued by the Secretary with the expiration of that year.

Section 9(b), 7 U.S.C.A. 609(b), fixes the tax 'at such rate as equals the difference between the current average farm price for the commodity and the fair exchange value,' with power in the Secretary, after investigation, notice, and hearing, to readjust the tax so as to prevent the accumulation of surplus stocks and depression of farm prices.

Section 9(c), 7 U.S.C.A. 609(c), directs that the fair exchange value of a commodity shall be such a price as will give that commodity the same purchasing power with respect to articles farmers buy as it had during the base period, and that the fair exchange value and the current average farm price of a commodity shall be ascertained by the Secretary from available statistics in his department.

Section 12(a), 7 U.S.C.A. 612(a), appropriates $100,000,000 'to be available to the Secretary of Agriculture for administrative expenses under this title (chapter) and for rental and benefit payments;' and Section 12(b), 7 U.S.C.A. 612(b), appropriates the proceeds derived from all taxes imposed under the act 'to be available to the Secretary of

Agriculture for expansion of markets and removal of surplus agricultural products. ... Administrative expenses, rental and benefit payments, and refunds on taxes.'

Section 15(d), 7 U.S.C.A. 615(d), permits the Secretary, upon certain conditions, to impose compensating taxes on commodities in competition with those subject to the processing tax.

By section 16 (see 7 U.S.C.A. 616) a floor tax is imposed upon the sale or other disposition of any article processed wholly or in chief value from any commodity with respect to which a processing tax is to be levied in amount equivalent to that of the processing tax which would be payable with respect to the commodity from which the article is processed if the processing had occurred on the date when the processing tax becomes effective. [297 U.S. 1, 57] On July 14, 1933, the Secretary of Agriculture, with the approval of the President, proclaimed that he had determined rental and benefit payments should be made with respect to cotton; that the marketing year for that commodity was to begin August 1, 1933; and calculated and fixed the rates of processing and floor taxes on cotton in accordance with the terms of the act.

The United States presented a claim to the respondents as receivers of the Hoosac Mills Corporation for processing and floor taxes on cotton levied under sections 9 and 16 of the act. The receivers recommended that the claim be disallowed. The District Court found the taxes valid and ordered them paid. 3 Upon appeal the Circuit Court of Appeals reversed the order. 4 The judgment under review was entered prior to the adoption of the amending act of August 24, 1935,5 and we are therefore concerned only with the original act.

First. At the outset the United States contends that the respondents have no standing to question the validity of the tax. The position is that the act is merely a revenue measure levying an excise upon the activity of processing cotton-a proper subject for the imposition of such a tax-the proceeds of which go into the federal Treasury and thus become available for appropriation for any purpose. It is said that what the respondents are endeavoring to do is to challenge the intended use of the money pursuant to Congressional appropriation when, by con ession, that money will have become the property of the government and the taxpayer will no longer have any interest in it. Massachusetts v. Mellon, 262 U.S. 447 , 43 S.Ct. 597, is claimed to foreclose litigation by the respondents or other taxpayers, as such, looking to restraint of the expenditure of government funds. That case might be an authority [297 U.S. 1, 58] in the petitioners' favor if we were here concerned merely with a suit by a taxpayer to restrain the expenditure of the public moneys. It was there held that a taxpayer of the United States may not question expenditures from its treasury on the ground that the alleged unlawful diversion will deplete the public funds and thus increase the burden of future taxation. Obviously the asserted interest of a taxpayer in the federal government's funds and the supposed increase of the future burden of taxation is minute and indeterminable. But here the respondents who are called upon to pay moneys as taxes, resist the exaction as a step in an unauthorized plan. This circumstance clearly distinguishes the case. The government in substance and effect asks us to separate the Agricultural Adjustment Act into two statutes, the one levying an excise on processors of certain commodities; the other appropriating the public moneys independently of the first. Passing the novel suggestion that two statutes enacted as parts of a single scheme should be tested as if they were distinct and unrelated, we think the legislation now before us is not susceptible of such separation and treatment.

The tax can only be sustained by ignoring the avowed purpose and operation of the act, and holding it a measure merely laying an excise upon processors to raise revenue for the support of government. Beyond cavil the sole object of the legislation is to restore the purchasing power of agricultural products to a parity with that prevailing in an earlier day; to take money from the processor and bestow it upon farmers6 who will reduce their acreage for [297 U.S. 1, 59] the accomplishment of the proposed end, and, meanwhile, to aid these farmers during the period required to bring the prices of their crops to the desired level.

The tax plays an indispensable part in the plan of regulation. As stated by the Agricultural Adjustment Administrator, it is 'the heart of the law'; a means of 'accomplishing one or both of two things intended to help farmers attain parity prices and purchasing power.' 7 A tax automatically goes into effect for a commodity when the Secretary of Agriculture determines that rental or benefit payments are to be made for reduction of production of that commodity. The tax is to cease when rental or benefit payments cease. The rate is fixed with the purpose of bringing about crop reduction and price raising. It is to equal the difference between the 'current average farm price' and 'fair exchange value.' It may be altered to such amount as will prevent accumulation of surplus stocks. If the Secretary finds the policy of the act will not be promoted by the levy of the tax for a given commodity, he may exempt it. Section 11. The whole revenue from the levy is appropriated in aid of crop control; none of it is made available for general governmental use. The entire

agricultural adjustment program embodied in title 1 of the act is to become inoperative when, in the judgment of the President, the national economic emergency ends; and as to any commodity he may terminate the provisions of the law, if he finds them no longer requisite to carrying out the declared policy with re pect to such commodity. Section 13, see 7 U.S.C.A. 613.

The statute not only avows an aim foreign to the procurement of revenue for the support of government, but by its operation shows the exaction laid upon processors to be the necessary means for the intended control of agricultural production. [297 U.S. 1, 60] In these aspects the tax, co-called, closely resembles that laid by the Act of August 3, 1882 (22 Stat. 314), entitled 'An Act to Regulate Immigration,' which came before this court in the Head Money Cases, 112 U.S. 580 , 5 S.Ct. 247. The statute directed that there should be levied, collected, and paid a duty of 50 cents for each alien passenger who should come by vessel from a foreign port to one in the United States. Payment was to be made to the collector of the port by the master, owner, consignee, or agent of the ship; the money was to be paid into the Treasury, was to be called the immigrant fund, and to be used by the Secretary of the Treasury to defray the expense of regulating immigration, for the care of immigrants, and relieving those in distress, and for the expenses of effectuating the act.

Various objections to the act were presented. In answering them the court said ( 112 U.S. 580 , page 595, 5 S.Ct. 247, 252):

'But the true answer to all these objections is that the power exercised in this instance is not the taxing power. The burden imposed on the ship-owner by this statute is the mere incident of the regulation of commerce-of that branch of foreign commerce which is involved in immigration. ... 'It is true, not much is said about protecting the ship-owner. But he is the man who reaps the profit from the transaction. ... The sum demanded of him is not, therefore, strictly speaking, a tax or duty within the meaning of the constitution. The money thus raised, though paid into the treasury, is appropriated in advance to the uses of the statute, and does not go to the general support of the government.'

While there the exaction was sustained as an appropriate element in a plan within the power of Congress 'to regulate commerce with foreign nations,' no question was made of the standing of the shipowner to raise the ques- [297 U.S. 1, 61] tion of the validity of the scheme, and consequently of the exaction which was an incident of it.

It is inaccurate and misleading to speak of the exaction from processors prescribed by the challenged act as a tax, or to say that as a tax it is subject to no infirmity. A tax, in the general understanding of the term, and as used in the Constitution, signifies an exaction for the support of the government. The word has never been thought to connote the expropriation of money from one group for the benefit of another. We may concede that the latter sort of imposition is constitutional when imposed to effectuate regulation of a matter in which both groups are interested and in respect of which there is a power of legislative regulation. But manifestly no justification for it can be found unless as an integral part of such regulation. The exaction cannot be wrested out of its setting, denominated an excise for raising revenue, and legalized by ignoring its purpose as a mere instrumentality for bringing about a desired end. To do this would be to shut our eyes to what all others than we can see and understand. Child Labor Tax Case, 259 U.S. 20, 37 , 42 S.Ct. 449, 21 A.L.R. 1432.

We conclude that the act is one regulating agricultural production; that the tax is a mere incident of such regulation; and that the respondents have standing to challenge the legality of the exaction.

It does not follow that, as the act is not an exertion of the taxing power and the exaction not a true tax, the statute is void or the exaction uncollectible. For, to paraphrase what was said in the Head Money Cases, supra, 112 U.S. 580 , page 596, 5 S.Ct. 247, 252, if this is an expedient regulation by Congress, f a subject within one of its granted powers, 'and the end to be attained powers, within that power, the act is not void because, within a loose and more extended sense than was used in the constitution,' the exaction is called a tax. [297 U.S. 1, 62] Second. The government asserts that even if the respondents may question the propriety of the appropriation embodied in the statute, their attack must fail because article 1, 8 of the Constitution, authorizes the contemplated expenditure of the funds raised by the tax. This contention presents the great and the controlling question in the case. 8 We approach its decision with a sense of our grave responsibility to render judgment in accordance with the principles established for the governance of all three branches of the government.

There should be no misunderstanding as to the function of this court in such a case. It is sometimes said that the court assumes a power to overrule or control the action of the people's representatives. This is a misconception. The Constitution is the supreme law of the land ordained and established by the people. All legislation must conform to the principles it lays down. When an act of Congress is appropriately challenged in the courts as not conforming to the constitutional mandate, the judicial branch of the government has only one duty; to lay the article of the Constitution which is invoked beside the statute which is challenged and to decide whether the latter squares with the former. All the court does, or can do, is to announce its considered judgment upon the ques- [297 U.S. 1, 63] tion. The only power it has, if such it may be called, is the power of judgment. This court neither approves nor condemns any legislative policy. Its delicate and difficult office is to ascertain and declare whether the legislation is in accordance with, or in contravention of, the provisions of the Constitution; and, having done that, its duty ends. 9

The question is not what power the federal government ought to have, but what powers in fact have been given by the people. It hardly seems necessary to reiterate that ours is a dual form of government; that in every state there are two governments; the state and the United States. Each state has all governmental powers save such as the people, by their Constitution, have conferred upon the United States, denied to the states, or reserved to themselves. The federal union is a government of delegated powers. It has only such as are expressly conferred upon it and such as are reasonably to be implied from those granted. In this respect we differ radically from nations where all legislative power, without restriction or limitation, is vested in a parliament or other legislative body subject to no restrictions except the discretion of its members.

Article 1, 8, of the Constitution, vests sundry powers in the Congress. But two of its clauses have any bea ing upon the validity of the statute under review.

The third clause endows the Congress with power 'to regulate Commerce ... among the several States.' Despite a reference in its first section to a burden upon, and an obstruction of the normal currents of, commerce, the act under review does not purport to regulate transactions in interstate or foreign10 commerce. Its stated pur- [297 U.S. 1, 64] pose is the control of agricultural production, a purely local activity, in an effort to raise the prices paid the farmer. Indeed, the government does not attempt to uphold the validity of the act on the basis of the commerce clause, which, for the purpose of the present case, may be put aside as irrelevant.

The clause thought to authorize the legislation, the first, confers upon the Congress power 'to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States. ...' It is not contended that this provision grants power to regulate agricultural production upon the theory that such legislation would promote the general welfare. The government concedes that the phrase 'to provide for the general welfare' qualifies the power 'to lay and collect taxes.' The view that the clause grants power to provide for the general welfare, independently of the taxing power, has never been authoritatively accepted. Mr. Justice Story points out that, if it were adopted, 'it is obvious that under color of the generality of the words, to 'provide for the common defence and general welfare', the government of the United States is, in reality, a government of general and unlimited powers, notwithstanding the subsequent enumeration of specific powers.' 11 The true construction undoubtedly is that the only thing granted is the power to tax for the purpose of providing funds for payment of the nation's debts and making provision for the general welfare.

Nevertheless, the government asserts that warrant is found in this clause for the adoption of the Agricultural Adjustment Act. The argument is that Congress may appropriate and authorize the spending of moneys for the 'general welfare'; that the phrase should be liberally [297 U.S. 1, 65] construed to cover anything conducive to national welfare; that decision as to what will promote such welfare rests with Congress alone, and the courts may not review its determination; and, finally, that the appropriation under attack was in fact for the general welfare of the United States.

The Congress is expressly empowered to lay taxes to provide for the general welfare. Funds in the Treasury as a result of taxation may be expended only through appropriation. Article 1, 9, cl. 7. They can never accomplish the objects for which they were collected, unless the power to appropriate is as broad as the power to tax. The necessary implication from the terms of the grant is that the public funds may be appropriated 'to provide for the general welfare of the United States.' These words cannot be meaningless, else they would not have been used. The conclusion must be that they were intended to limit and define the granted power to raise and to expend money. How shall they be construed to effectuate the intent of the instrument?

Since the foundation of the nation, sharp differences of opinion have persisted as to the true interpretation of the phrase. Madison asserted it amounted to no more than a reference to the other powers enumerated in the subsequent clauses of the same section; that, as the United States is a government of limited and enumerated powers, the grant of power to tax and spend for the general national welfare must be confined to the enumerated legislative fields committed to the Congress. In this view the phrase is mere tautology, for taxation and appropriation are or may be necessary incidents of the exercise of any of the enumerated legislative powers. Hamilton, on the other hand, maintained the clause confers a power separate and distinct from those later enumerated is not restricted in meaning by the grant of them, and Congress consequently has a substantive power to tax and to ap- [297 U.S. 1, 66] propriate, limited only by the requirement that it shall be exercised to provide for the general welfare of the United States. Each contention has had the support of those whose views are entitled to weight. This court has noticed the question, but has never found it necessary to decide which is the true construction. Mr. Justice Story, in his Commentaries, espouses the Hamiltonian position. 12 We shall not review the writings of public men and commentators or discuss the legislative practice. Study of all these leads us to conclude that the reading advocated by Mr. Justice Story is the correct one. While, therefore, the power to tax is not unlimited, its confines are set in the clause which confers it, and not in those of section 8 which bestow and define the legislative powers of the Congress. It results that the power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution.

But the adoption of the broader construction leaves the power to spend subject to limitations.

As Story says: 'The Constitution was, from its very origin, contemplated to be the frame of a national government, of special and enumerated powers, and not of general and unlimited powers.' 13

Again he says: 'A power to lay taxes for the common defence and general welfare of the United States is not in common sense a general power. It is limited to those objects. It cannot constitutionally transcend them.' 14

That the qualifying phrase must be given effect all advocates of broad construction admit. Hamilton, in his [297 U.S. 1, 67] well known Report on Manufactures, states that the purpose must be 'general, and not local.' 15 Monroe, an advocate of Hamilton's doctrine, wrote: 'Have Congress a right to raise and appropriate the money to any and to every purpose according to their will and pleasure? They certainly have not.' 16 Story says that if the tax be not proposed for the common defense or general welfare, but for other objects wholly extraneous, it would be wholly indefensible upon constitutional principles. 17 And he makes it clear that the powers of taxation and appropriation extend only to matters of national, as distinguished from local, welfare.

As elsewhere throughout the Constitution the section in question lays down principles which control the use of the power, and does not attempt meticulous or detailed directions. Every presumption is to be indulged in favor of faithful compliance by Congress with the mandates of the fundamental law. Courts are reluctant to adjudge any statute in contravention of them. But, under our frame of government, no other place is provided where the citizen may be heard to urge that the law fails to conform to the limits set upon the use of a granted power. When such a contention comes here we naturally require a showing that by no reasonable possibility can the challenged legislation fall within the wide range of discretion permitted to the Congress. How great is the extent of that range, when the subject is the promotion of the general welfare of the United States, we need hardly remark. But, despite the breadth of the legislative discretion, our duty to hear and to render judgment remains. If the statute plainly violates the stated principle of the Constitution we must so declare. [297 U.S. 1, 68] We are not now required to ascertain the scope of the phrase 'general welfare of the United States' or to determine whether an appropriation in aid of agriculture falls within it. Wholly apart from that question, another principle embedded in our Constitution prohibits the enforcement of the Agricultural adjustment Act. The act invades the reserved rights of the states. It is a statutory plan to regulate and control agricultural production, a matter beyond the powers delegated to the federal government. The tax, the appropriation of the funds raised, and the direction for their disbursement, are but parts of the plan. They are but means to an unconstitutional end.

From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted. 18 The same proposition, otherwise stated, is that powers not granted are prohibited. None to regulate agricultural production is given, and therefore legislation by Congress for that purpose is forbidden.

It is an established principle that the attainment of a prohibited end may not be accomplished under the pretext of the exertion of powers which are granted.

'Should congress, in the execution of its powers, adopt measures which are prohibited by the constitution; or should congress, under the pretext of executing its powers, pass laws for the accomplishment of objects not intrusted to the government; it would become the painful duty of this tribunal, should a case requiring such a de- [297 U.S. 1, 69] cision come before it, to say, that such an act was not the law of the land.' McCulloch v. Maryland, 4 Wheat. 316, 423. 'Congress cannot, under the pretext of executing delegated power, pass laws for the accomplishment of objects not intrusted to the federal government. And we accept as established doctrine that any provision of an act of Congress ostensibly enacted under power granted by the Constitution, not naturally and reasonably adapted to the effective exercise of such power, but solely to the achievement of something plainly within power reserved to the states, is invalid and cannot be enforced.' Linder v. United States, 268 U.S. 5, 17 , 45 S.Ct. 446, 449, 39 A.L.R. 229.

These principles are as applicable to the power to lay taxes as to any other federal power. Said the court, in McCulloch v. Maryland, supra, 4 Wheat. 316, 421: 'Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.'

The power of taxation, which is expressly granted, may, of course, be adopted as a means to carry into operation another power also expressly granted. But resort to the taxing power to effectuate an end which is not legitimate, not within the scope of the Constitution, is obviously inadmissible.

'Congress is not empowered to tax for those purposes which are within the exclusive province of the states.' Gibbons v. Ogden, 9 Wheat. 1, 199. 'There are, indeed, certain virtual limitations, arising from the principles of the Constitution itself. It would undoubtedly be an abuse of the (taxing) power if so exercised as to impair the separate existence and independent self-government of the States, or if exercised for ends [297 U.S. 1, 70] inconsistent with the limited grants of power in the Constitution.' Veazie Bank v. Fenno, 8 Wall. 533, 541.

In the Child Labor Tax Case, 259 U.S. 20 , 42 S.Ct. 449, 21 A.L.R. 1432, and in Hill v. Wallace, 259 U.S. 44 , 42 S.Ct. 453, this court had before it statutes which purported to be taxing measures. But their purpose was found to be to regulate the conduct of manufacturing and trading, not in interstate commerce, but in the states- matters not within any power conferred upon Congress by the Constitution- and the levy of the tax a means to force compliance. The court held this was not a constitutional use, but an unconstitutional abuse of the power to tax. In Linder v. United States, supra, we held that the power to tax could not justify the regulation of the practice of a profession, under the pretext of raising revenue. In United States v. Constantine, 296 U.S. 287 , 56 S.Ct. 223, we declared that Congress could not, in the guise of a tax, impose sanctions for violation of state law respecting the local sale of liquor. These decisions demonstrate that Congress could not, under the pretext of raising revenue, lay a tax on processors who refuse to pay a certain price for cotton and exempt those who agree so to do, with the purpose of benefiting producers.

Third. If the taxing power may not be used as the instrument to enforce a regulation of matters of state concern with respect to which the Congress has no authority to interfere, may it, as in the present case, be employed to raise the money necessary to purchase a compliance which the Congress is powerless to command? The government asserts that whatever might be said against the validity of the plan, if compulsory, it is constitutionally sound because the end is accomplished by voluntary co- operation. There are two sufficient answers to the contention. The regulation is not in fact voluntary. The farmer, of course, may refuse to comply, but the price of such refusal is the loss of benefits. The amount offered is intended to be sufficient to exert pressure on him to [297 U.S. 1, 71] agree to the proposed regulation. 19 The power to confer or withhold unlimited benefits is the power to coerce or destroy. If the cotton grower elects not to accept the benefits, he will receive less for his crops; those who receive payments will be able to undersell him. The result may well to financial ruin. The coercive purpose and intent of the statute is not obscured by the fact that it has not been perfectly successful. It is pointed out that, because there still remained a minority whom the rental and benefit payments were insufficient to induce to surrender their independence of action, the Congress has gone further, and, in the Bankhead Cotton Act, used the taxing power in a more directly minatory fashion to compel submission. This progression only serves more fully to expose the coercive purpose of the so-called tax imposed by the

present act. It is clear that the Department of Agriculture has properly described the plan as one to keep a nonco-operating minority in line. This is coercion by economic pressure. The asserted power of choice is illusory.

In Frost & Frost Trucking Company v. R.R. Commission, 271 U.S. 583 , 46 S.Ct. 605, 47 A.L.R. 457, a state act was considered which provided for supervision and regulation of transportation for hire by automobile on the public highways. Certificates of convenience and necessity were to be obtained by persons desiring to use the highways for this purpose. The regulatory [297 U.S. 1, 72] commission required that a private contract carrier should secure such a certificate as a condition of its operation. The effect of the commission's action was to transmute the private carrier into a public carrier. In other words, the privilege of using the highways as a private carrier for compensation was conditioned upon his dedicating his property to the quasi public use of public transportation. While holding that the private carrier was not obliged to submit himself to the condition, the commission denied him the privilege of using the highways if he did not do so. The argument was, as here, that the carrier had a free choice. This court said, in holding the act as construed unconstitutional: 'If so, constitutional guaranties, so carefully safeguarded against direct assault, are open to destruction by the indirect, but no less effective, process of requiring a surrender, which, though in form voluntary, in fact lacks none of the elements of compulsion. Having regard to form alone, the act here is an offer to the private carrier of a privilege, which the state may grant or deny, upon a condition which the carrier is free to accept or reject. In reality, the carrier is given no choice, except a choice between the rock and the whirlpool-an option to forego a privilege which may be vital to his livelihood or submit to a requirement which may constitute an intolerable burden.' 271 U.S. 583 , page 593, 46 S.Ct. 605, 607, 47 A.L.R. 457.

But if the plan were one for purely voluntary co-operation it would stand no better so far as federal power is concerned. At best, it is a scheme for purchasing with federal funds submission to federal regulation of a subject reserved to the states.

It is said that Congress has the undoubted right to appropriate money to executive officers for expenditure under contracts between the government and individuals; that much of the total expenditures is so made. But appropriations and expenditures under contracts for proper [297 U.S. 1, 73] governmental purposes cannot justify contracts which are not within federal power. And contracts for the reduction of acreage and the control of production are outside the range of that power. An appropriation to be expended by the United States under contracts calling for violation of a state law clearly would offend the Constitution. Is a statute less objectionable which authorizes expenditure of federal moneys to induce action in a field in which the United States has no power to intermeddle? The Congress cannot invade state jurisdiction to compel individual action; no more can it purchase such action.

We are referred to numerous types of federal appropriation which have been made in the past, and it is asserted no question has been raised as to their validity. We need not stop to examine or consider them. As was said in Commonwealth of Massachusetts v. Mellon, supra ( 262 U.S. 447 , page 487, 43 S.Ct. 597, 601): 'As an examination of the acts of Congress will disclose, a large number of statutes appropriating or involving the expenditure of moneys for nonfederal purposes have been enacted and carried into effect.'

As the opinion points out, such expenditures have not been challenged because no remedy was open for testing their constitutionality in the courts.

We are not here concerned with a conditional appropriation of money, nor with a provision that if certain conditions are not complied with the appropriation shall no longer be available. By the Agricultural Adjustment Act the amount of the tax is appropriated to be expended only in payment under contracts whereby the parties bind themselves to regulation by the federal government. There is an obvious difference between a statute stating the conditions upon which moneys shall be expended and one effective only upon assumption of a contractual obligation to submit to a regulation which otherwise could not be enforced. Many examples pointing the distinction might be cited. We are ref rred to appropriations in aid [297 U.S. 1, 74] of education, and it is said that no one has doubted the power of Congress to stipulate the sort of education for which money shall be expended. But an appropriation to an educational institution which by its terms is to become available only if the beneficiary enters into a contract to teach doctrines subversive of the Constitution is clearly bad. An affirmance of the authority of Congress so to condition the expenditure of an appropriation would tend to nullify all constitutional limitations upon legislative power.

But it is said that there is a wide difference in another respect, between compulsory regulation of the local affairs of a state's citizens and the mere making of a contract relating to their conduct; that, if any state objects, it may declare the contract void and thus prevent those under the state's jurisdiction from complying with its terms. The argument is plainly fallacious. The United States can make the contract only if the federal power to tax and to appropriate reaches the subject-matter of the contract. If this does reach the subject-matter, its exertion cannot be displaced by state action. To say otherwise is to deny the supremacy of the laws of the United States; to make them subordinate to those of a state. This would reverse the cardinal principle embodied in the Constitution and substitute one which declares that Congress may only effectively legislate as to matters within federal competence when the states do not dissent.

Congress has no power to enforce its commands on the farmer to the ends sought by the Agricultural Adjustment Act. It must follow that it may not indirectly accomplish those ends by taxing and spending to purchase compliance. The Constitution and the entire plan of our government negative any such use of the power to tax and to spend as the act undertakes to authorize. It does not help to declare that local conditions throughout the nation have created a situation of national concern; for this [297 U.S. 1, 75] is but to say that whenever there is a widespread similarity of local conditions, Congress may ignore constitutional limitations upon its own powers and usurp those reserved to the states. If, in lieu of compulsory regulation of subjects within the states' reserved jurisdiction, which is prohibited, the Congress could invoke the taxing and spending power as a means to accomplish the same end, clause 1 of section 8 of article 1 would become the instrument for total subversion of the governmental powers reserved to the individual states.

If the act before us is a proper exercise of the federal taxing power, evidently the regulation of all industry throughout the United States may be accomplished by similar exercises of the same power. It would be possible to exact money from one branch of an industry and pay it to another branch in every field of activity which lies within the province of the states. The mere threat of such a procedure might well induce the surrender of rights and the compliance with federal regulation as the price of continuance in business. A few instances will illustrate the thought.

Let us suppose Congress should determine that the farmer, the miner, or some other producer of raw materials is receiving too much for his products, with consequent depression of the processing industry and idleness of its employees. Though, by confession, there is no power vested in Congress to compel by statute a lowering of the prices of the raw material, the same result might be accomplished, if the questioned act be valid, by taxing the producer upon his output and appropriating the proceeds to the processors, either with or without conditions imposed as the consideration for payment of the subsidy.

We have held in A. L. A. Schechter Poultry Corp. v. United States, 295 U.S. 495 , 55 S.Ct. 837, 97 A.L.R. 947, that Congress has no power to regulate wages and hours of labor in a local business. If the petitioner is right, this very end may be accomplished by [297 U.S. 1, 76] a propriating money to be paid to employers from the federal treasury under contracts whereby they agree to comply with certain standards fixed by federal law or by contract.

Should Congress ascertain that sugar refiners are not receiving a fair profit, and that this is detrimental to the entire industry, and in turn has its repercussions in trade and commerce generally, it might, in analogy to the present law, impose an excise of 2 cents a pound on every sale of the commodity and pass the funds collected to such refiners, and such only, as will agree to maintain a certain price.

Assume that too many shoes are being manufactured throughout the nation; that the market is saturated, the price depressed, the factories running half time, the employees suffering. Upon the principle of the statute in question, Congress might authorize the Secretary of Commerce to enter into contracts with shoe manufacturers providing that each shall reduce his output, and that the United States will pay him a fixed sum proportioned to such reduction, the money to make the payments to be raised by a tax on all retail shoe dealers on their customers.

Suppose that there are too many garment workers in the large cities; that this results in dislocation of the economic balance. Upon the principle contended for, an excise might be laid on the manufacture of all garments manufactured and the proceeds paid to those manufacturers who agree to remove their plants to cities having not more than a hundred thousand population. Thus, through the asserted power of taxation, the federal government, against the will of individual states, might completely redistribute the industrial population.

A possible result of sustaining the claimed federal power would be that every business group which thought itself underprivileged might demand that a tax be laid on its vendors or vendees, the proceeds to be appropriated to the redress of its deficiency of income. [297 U.S. 1, 77] These illustrations are given, not to suggest that any of the purposes mentioned are unworthy, but to demonstrate the scope of the principle for which the government contends; to test the principle by its applications; to point out that, by the exercise of the asserted power, Congress would, in effect, under the pretext of exercising the taxing power, in reality accomplish prohibited ends. It cannot be said that they envisage improbable legislation. The supposed cases are no more improbable than would the present act have been deemed a few years ago.

Until recently no suggestion of the existence of any such power in the federal government has been advanced. The expressions of the framers of the Constitution, the decisions of this court interpreting that instrument and the writings of great commentators will be searched in vain for any suggestion that there exists in the clause under discussion or elsewhere in the Constitution, the authority whereby every provision and every fair, implication from that instrument may be subverted, the independence of the individual states obliterated, and the United States converted into a central government exercising uncontrolled police power in every state of the Union, superseding all local control or regulation of the affairs or concerns of the states.

Hamilton himself, the leading advocate of broad interpretation of the power to tax and to appropriate for the general welfare, never suggested that any power granted by the Constitution could be used for the destruction of local self-government in the states. Story countenances no such doctrine. It seems never to have occurred to them, or to those who have agreed with them, that the general welfare of the United States ( which has aptly been termed 'an indestructible Union, composed of indestructible States,') might be served by obliterating the constituent members of the Union. But to this fatal conclu- [297 U.S. 1, 78] sion the doctrine contended for would inevitably lead. And its sole premise is that, though the makers of the Constitution, in erecting the ederal government, intended sedulously to limit and define its powers, so as to reserve to the states and the people sovereign power, to be wielded by the states and their citizens and not to be invaded by the United States, they nevertheless by a single clause gave power to the Congress to tear down the barriers, to invade the states' jurisdiction, and to become a parliament of the whole people, subject to no restrictions save such as are self-imposed. The argument, when seen in its true character and in the light of its inevitable results, must be rejected.

Since, as we have pointed out, there was no power in the Congress to impose the contested exaction, it could not lawfully ratify or confirm what an executive officer had done in that regard. Consequently the Act of 1935, 30, adding section 21(b) to Act of May 12, 1933 (7 U.S.C.A. 623( b), does not affect the rights of the parties.

The judgment is affirmed.

Mr. Justice STONE (dissenting).

I think the judgment should be reversed.

The present stress of widely held and strongly expressed differences of opinion of the wisdom of the Agricultural Adjustment Act makes it important, in the interest of clear thinking and sound result, to emphasize at the outset certain propositions which should have controlling influence in determining the validity of the act. They are:

1. The power of courts to declare a statute unconstitutional is subject to two guiding principles of decision which ought never to be absent from judicial consciousness. One is that courts are concerned only with the power to enact statutes, not with their wisdom. The other is that while unconstitutional exercise of power [297 U.S. 1, 79] by the executive and legislative branches of the government is subject to judicial restraint, the only check upon our own exercise of power is our own sense of self-restraint. For the removal of unwise laws from the statute books appeal lies, not to the courts, but to the ballot and to the processes of democratic government.

2. The constitutional power of Congress to levy an excise tax upon the processing of agricultural products is not questioned. The present levy is held invalid, not for any want of power in Congress to lay such a tax to defray public expenditures, including those for the general welfare, but because the use to which its proceeds are put is disapproved.

3. As the present depressed state of agriculture is nation wide in its extent and effects, there is no basis for saying that the expenditure of public money in aid of farmers is not within the specifically granted power of Congress to levy taxes to 'provide for the ... general welfare.' The opinion of the Court does not declare otherwise.

4. No question of a variable tax fixed from time to time by fiat of the Secretary of Agriculture, or of unauthorized delegation of legislative power, is now presented. The schedule of rates imposed by the secretary in accordance with the original command of Congress has since been specifically adopted and confirmed by act of Congress, which has declared that it shall be the lawful tax. Act of August 24, 1935, 49 Stat. 750, 7 U. S.C.A. 602 et seq. That is the tax which the government now seeks to collect. Any defects there may have been in the manner of laying the tax by the secretary have now been removed by the exercise of the power of Congress to pass a curative statute validating an intended, though defective, tax. United States v. Heinszen & Co., 206 U.S. 370 , 27 S.Ct. 742, 11 Ann.Cas. 688; Graham & Foster v. Goodcell, 282 U.S. 409 , 51 S.Ct. 186; cf. Milliken v. United States, 283 U.S. 15 , 51 S.Ct. 324. The Agricultural Adjustment Act as thus amended de- [297 U.S. 1, 80] clares that none of its provisions shall fail because others are pronounced invalid.

It is with these preliminary and hardly controverted matters in mind that we should direct our attention to the pivot on which the decision of the Court is made to turn. It is that a levy unquestionably with n the taxing power of Congress may be treated as invalid because it is a step in a plan to regulate agricultural production and is thus a forbidden infringement of state power. The levy is not any the less an exercise of taxing power because it is intended to defray an expenditure for the general welfare rather than for some other support of government. Nor is the levy and collection of the tax pointed to as effecting the regulation. While all federal taxes inevitably have some influence on the internal economy of the states, it is not contended that the levy of a processing tax upon manufacturers using agricultural products as raw material has any perceptible regulatory effect upon either their production or manufacture. The tax is unlike the penalties which were held invalid in the Child Labor Tax Case, 259 U.S. 20 , 42 S.Ct. 449, 21 A.L.R. 1432, in Hill v. Wallace, 259 U.S. 44 , 42 S.Ct. 453, in Linder v. United States, 268 U.S. 5, 17, 45 S.Ct. 446, 39 A.L.R. 229, and in United States v. Constantine, 296 U.S. 287 , 56 S.Ct. 223, because they were themselves the instruments of regulation by virtue of their coercive effect on matters left to the control of the states. Here regulation, if any there be, is accomplished not by the tax, but by the method by which its proceeds are expended, and would equally be accomplished by any like use of public funds, regardless of their source.

The method may be simply stated. Out of the available fund payments are made to such farmers as are willing to curtail their productive acreage, who in fact do so and who in advance have filed their written undertaking to do so with the Secretary of Agriculture. In saying that this method of spending public moneys is an invasion of the reserved powers of the states, the Court does not assert [297 U.S. 1, 81] that the expenditure of public funds to promote the general welfare is not a substantive power specifically delegated to the national government, as Hamilton and Story pronounced it to be. It does not deny that the expenditure of funds for the benefit of farmers and in aid of a program of curtailment of production of agricultural products, and thus of a supposedly better ordered national economy, is within the specifically granted power. But it is declared that state power is nevertheless infringed by the expenditure of the proceeds of the tax to compensate farmers for the curtailment of their cotton acreage. Although the farmer is placed under no legal compulsion to reduce acreage, it is said that the mere offer of compensation for so doing is a species of economic coercion which operates with the same legal force and effect as though the curtailment were made mandatory by act of Congress. In any event it is insisted that even though not coercive the expenditure of public funds to induce the recipients to curtail production is itself an infringement of state power, since the federal government cannot invade the domain of the states by the 'purchase' of performance of acts which it has no power to compel.

Of the assertion that the payments to farmers are coercive, it is enough to say that no such contention is pressed by the taxpayer, and no such consequences were to be anticipated or appear to have resulted from the administration of the act. The suggestion of coercion finds no support in the record or in any data showing the actual operation of the act. Threat of loss, not hope of gain, is the essence of economic coercion. Members of a long-depressed industry have undoubtedly been tempted to curtail acreage by the hope of resulting better prices and by the proffered opportunity to obtain needed ready money. But there is nothing to indicate that those who accepted benefits were impelled by fear of lower prices if they did not accept, or that at any stage in the operation [297 U.S. 1, 82] of the plan a farmer could say whether, apart from the certainty of cash payments at specified times, the advantage would lie with curtailment of production plus c mpensation, rather than with the same or increased acreage plus the expected rise in prices which actually occurred. Although the Agricultural Adjustment Act was put into operation in June, 1933, the official reports of the Department of Agriculture show that 6,343,000 acres of productive cotton land, 14 per cent. of the total, did not participate in the

plan in 1934, and 2,790,000 acres, 6 per cent. of the total, did not participate in 1935. Of the total number of farms growing cotton, estimated at 1,500,000, 33 per cent. in 1934 and 13 per cent. in 1935 did not participate.

It is significant that in the congressional hearings on the bill that became the Bankhead Act, 48 Stat. 598, 7 U.S.C.A. 701 et seq., as amended by Act of June 20, 1934, 48 Stat. 1184, 7 U.S.C.A. 725, which imposes a tax of 50 per cent. on all cotton produced in excess of limits prescribed by the Secretary of Agriculture, there was abundant testimony that the restriction of cotton production attempted by the Agricultural Adjustment Act could not be secured without the coercive provisions of the Bankhead Act. See Hearing before Committee on Agriculture, U.S. Senate, on S. 1974, 73d Cong., 2d Sess.; Hearing before Committee on Agriculture, U.S. House of Representatives, on H.R. 8402, 73d Cong., 2d Sess. The Senate and House Committees so reported, Senate Report No. 283, 73d Cong., 2d Sess., p. 3; House Report No. 867, 73d Cong., 2d Sess., p. 3. The Report of the Department of Agriculture on the administration of the Agricultural Adjustment Act (February 15, 1934 to December 31, 1934), p. 50, points out that the Bankhead Act was passed in response to a strong sentiment in favor of mandatory production control 'that would prevent non-cooperating farmers from increasing their own plantings in order to capitalize upon the price advances that had resulted from the reductions made by contract [297 U.S. 1, 83] signers.' 1 The presumption of constitutionality of a statute is not to be overturned by an assertion of its coercive effect which rests on nothing more substantial than groundless speculation.

It is upon the contention that state power is infringed by purchased regulation of agricultural production that chief reliance is placed. It is insisted that, while the Constitution gives to Congress, in specific and unambiguous terms, the power to tax and spend, the power is subject to limitations which do not find their origin in any express provision of the Constitution and to which other expressly delegated powers are not subject.

The Constitution requires that public funds shall be spent for a defined purpose, the promotion of the general welfare. Their expenditure usually involves payment on terms which will insure use by the selected recipients within the limits of the constitutional purpose. Expenditures would fail of their purpose and thus lose their constitutional sanction if the terms of payment were not such that by their influence on the action of the recipients the permitted end would be attained. The power of Congress to spend is inseparable from persuasion to action over which Congress has no legislative control. Congress may not command that the science of agriculture be taught in state universities. But if it would aid the teaching of that science by grants to state institutions, it is appropriate, if not necessary, that the grant be on the condition, incorporated in the Morrill Act, 12 Stat. 503, 7 U.S.C.A. 301 et seq., 26 Stat. 417, 7 U.S.C.A. 321 et seq., that it be used for the intended purpose. Similarly it would seem to be compliance with the Constitution, not violation of it, for the government to take and the university to give a contract that the grant would be so used. It makes no dif- [297 U.S. 1, 84] ference that there is a promise to do an act which the condition is calculated to induce. Co dition and promise are alike valid since both are in furtherance of the national purpose for which the money is appropriated.

These effects upon individual action, which are but incidents of the authorized expenditure of government money, are pronounced to be themselves a limitation upon the granted power, and so the time-honored principle of constitutional interpretation that the granted power includes all those which are incident to it is reversed. 'Let the end be legitimate,' said the great Chief Justice, 'let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.' McCulloch v. Maryland, 4 Wheat. 316, 421. This cardinal guide to constitutional exposition must now be rephrased so far as the spending power of the federal government is concerned. Let the expenditure be to promote the general welfare, still if it is needful in order to insure its use for the intended purpose to influence any action which Congress cannot command because within the sphere of state government, the expenditure is unconstitutional. And taxes otherwise lawfully levied are likewise unconstitutional if they are appropriated to the expenditure whose incident is condemned.

Congress through the Interstate Commerce Commission has set aside intrastate railroad rates. It has made and destroyed intrastate industries by raising or lowering tariffs. These results are said to be permissible because they are incidents of the commerce power and the power to levy duties on imports. See Minnesota Rate Case 1913, 230 U.S. 352 , 33 S.Ct. 729, 48 L.R.A. (N.S.) 1151, Ann.Cas. 1916A, 18; Houston, E . & W.T.R. Co. v. U.S. (Shreveport Rate Case), 234 U.S. 342 , 34 S.Ct. 833; Board of Trustees of University of Illinois v. United States, 289 U.S. 48 , 53 S.Ct. 509. The only conclusion to be drawn is that re- [297 U.S. 1, 85] sults become lawful when they are incidents of those powers but unlawful when incident to the similarly granted power to tax and spend.

Such a limitation is contradictory and destructive of the power to appropriate for the public welfare, and is incapable of practical application. The spending power of Congress is in addition to the legislative power and not subordinate to it. This independent grant of the power of the purse, and its very nature, involving in its exercise the duty to insure expenditure within the granted power, presuppose freedom of selection among divers ends and aims, and the capacity to impose such conditions as will render the choice effective. It is a contradiction in terms to say that there is power to spend for the national welfare, while rejecting any power to impose conditions reasonably adapted to the attainment of the end which alone would justify the expenditure.

The limitation now sanctioned must lead to absurd consequences. The government may give seeds to farmers, but may not condition the gift upon their being planted in places where they are most needed or even planted at all. The government may give money to the unemployed, but may not ask that those who get it shall give labor in return, or even use it to support their families. It may give money to sufferers from earthquake, fire, tornado, pestilence, or flood, but may not impose conditions, health precautions, designed to prevent the spread of disease, or induce the movement of population to safer or more sanitary areas. All that, because it is purchased regulation infringing state powers, must be left for the states, who are unable or unwilling to supply the necessary relief. The government may spend its money for vocational rehabilitation, 48 Stat. 389, but it may not, with the consent of all concerned, supervise the process which it undertakes to aid. It may spend its money for the suppression of the boll weevil, but may [297 U.S. 1, 86] not compensate the farmers for suspending the growth of otton in the infected areas. It may aid state reforestation and forest fire prevention agencies, 43 Stat. 653 (see 16 U.S.C.A. 471, 499 note, 505, 515, 564 et seq.), but may not be permitted to supervise their conduct. It may support rural schools, 39 Stat. 929 (20 U.S.C.A. 11 et seq.), 45 Stat. 1151 (20 U.S.C.A. 15a to 15c), 48 Stat. 792 (20 U.S.C.A. 15d to 15g), but may not condition its grant by the requirement that certain standards be maintained. It may appropriate moneys to be expended by the Reconstruction Finance Corporation 'to aid in financing agriculture, commerce and industry,' and to facilitate 'the exportation of agricultural and other products.' Do all its activities collapse because, in order to effect the permissible purpose in myriad ways the money is paid out upon terms and conditions which influence action of the recipients within the states, which Congress cannot command? The answer would seem plain. If the expenditure is for a national public purpose, that purpose will not be thwarted because payment is on condition which will advance that purpose. The action which Congress induces by payments of money to promote the general welfare, but which it does not command or coerce, is but an incident to a specifically granted power, but a permissible means to a legitimate end. If appropriation in aid of a program of curtailment of agricultural production is constitutional, and it is not denied that it is, payment to farmers on condition that they reduce their crop acreage is constitutional. It is not any the less so because the farmer at his own option promises to fulfill the condition.

That the governmental power of the purse is a great one is not now for the first time announced. Every student of the history of government and economics is aware of its magnitude and of its existence in every civilized government. Both were well understood by the framers of the Constitution when they sanctioned the grant of the spending power to the federal government, and both were recognized by Hamilton and Story, whose views of the [297 U.S. 1, 87] spending power as standing on a parity with the other powers specifically granted, have hitherto been generally accepted.

The suggestion that it must now be curtailed by judicial fiat because it may be abused by unwise use hardly rises to the dignity of argument. So may judicial power be abused. 'The power to tax is the power to destroy,' but we do not, for that reason, doubt its existence, or hold that its efficacy is to be restricted by its incidental or collateral effects upon the states. See Veazie Bank v. Fenno, 8 Wall. 533; McCray v. United States, 195 U.S. 27 , 24 S.Ct. 769, 1 Ann.Cas. 561; compare Magnano Co. v. Hamilton, 292 U.S. 40 , 54 S.Ct. 599. The power to tax and spend is not without constitutional restraints. One restriction is that the purpose must be truly national. Another is that it may not be used to coerce action left to state control. Another is the conscience and patriotism of Congress and the Executive. 'It must be remembered that legislatures are ultimate guardians of the liberties and welfare of the people in quite as great a degree as the courts.' Justice Holmes, in Missouri, Kansas & Texas R. Co. v. May, 194 U.S. 267, 270 , 24 S. Ct. 638, 639.

A tortured construction of the Constitution is not to be justified by recourse to extreme examples of reckless congressional spending which might occur if courts could not prevent-expenditures which, even if they could be thought to effect any national purpose, would be possible only by action of a legislature lost to all sense of public responsibility. Such suppositions are addressed to the mind accustomed to believe that it is the business of courts to sit in judgment on the wisdom of legislative action. Courts are not the only agency of government that must be assumed to have capacity to govern. Congress and the courts both unhappily may falter or be mistaken in the performance of their constitutional duty But interpretation of our great charter of government which proceeds on any assumption that the responsibility for

the preservation of our institutions is the exclusive [297 U.S. 1, 88] concern of any one of the three branches of government, or that it alone can save them from destruction is far more likely, in the long run, 'to obliterate the constituent members' of 'an indestructible union of indestructible states' than the frank recognition that language, even of a constitution, may mean what it says: that the power to tax and spend includes the power to relieve a nationwide economic maladjustment by conditional gifts of money.

Mr. Justice BRANDEIS and Mr. Justice CARDOZO join in this opinion.

Footnotes

[ Footnote 1 ] May 12, 1933, c. 25, 48 Stat. 31 (see 7 U.S.C.A. 601 et seq.).

[ Footnote 2 ] Section 11 (48 Stat. 38) denominates wheat, cotton, field corn, hogs, rice, tobacco, and milk, and its products, 'basic agricultural commodities,' to which the act is to apply. Others have been added by later legislation.

[ Footnote 3 ] Franklin Process Co. v. Hoosac Mills Corp. (D.C.) 8 F.Supp. 552.

[ Footnote 4 ] Butler et al. v. United States (C.C.A.) 78 F.(2d) 1.

[ Footnote 5 ] Public No. 320, 74th Congress, 1st Sess. (7 U.S.C.A. 602 et seq.).

[ Footnote 6 ] U.S. Department of Agriculture, Achieving A Balanced Agriculture, p. 38: 'Farmers should not forget that all the processing tax money ends up in their own pockets. Even in those cases where they pay part of the tax, they get it all back. Every dollar collected in processing taxes goes to the farmer in benefit payments.'

U.S. Dept. of Agriculture, The Processing Tax, p. 1: 'Proceeds of processing taxes are passed to farmers as benefit payments.'

[ Footnote 7 ] U.S. Department of Agriculture, Agricultural Adjustment, p. 9.

[ Footnote 8 ] Other questions were presented and argued by counsel, but we do not consider or decide them. The respondents insist that the act in numerous respects delegates legislative power to the executive contrary to the principles announced in Panama Refining Company v. Ryan, 293 U.S. 388 , 55 S.Ct. 241, and A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 , 55 S.Ct. 837, 97 A.L.R. 947; that this unlawful delegation is not cured by the amending act of August 24, 1935 (7 U.S.C.A. 602 et seq.); that the exaction is in violation of the due process clause of the Fifth Amendment, since the legislation takes their property for a private use; that the floor tax is a direct tax and therefore void for lack of apportionment amongst the states, as required by article 1, 9; and that the processing tax is wanting in uniformity and so violates article 1, 8, cl. 1, of the Constitution.

[ Footnote 9 ] Compare Adkins v. Children's Hospital, 261 U.S. 525, 544 , 43 S.Ct. 394, 24 A.L.R. 1238; Commonwealth of Massachusetts v. Mellon, 262 U.S. 447, 488 , 43 S.Ct. 597.

[ Footnote 10 ] The enactment of protective tariff laws has its basis in the power to regulate foreign commerce. See Board of Trustees of University of Illinois v. United States, 289 U.S. 48, 58 , 53 S.Ct. 509.

[ Footnote 11 ] Story, Commentaries on the Constitution of the United States (5th Ed.) vol. I, 907.

[ Footnote 12 ] Loc. cit. chapter XIV, passim.

[ Footnote 13 ] Loc. cit. 909.

[ Footnote 14 ] Loc. cit. 922.

[ Footnote 15 ] Works, vol. III, p. 250.

[ Footnote 16 ] Richardson, Messages and Papers of the Presidents, vol. II, p. 167.

[ Footnote 17 ] Loc. cit. p. 673.

[ Footnote 18 ] The Tenth Amendment declares: '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.'

[ Footnote 19 ] U.S. Dept. of Agriculture, Agricultural Adjustment, p. 9. 'Experience of cooperative associations and other groups has shown that without such Government support, the efforts of the farmers to band together to control the amount of their product sent to market are nearly always brought to nothing. Almost always, under such circumstances, there has been a noncooperating minority, which, refusing to go along with the rest, has stayed on the outside and tried to benefit from the sacrifices the majority has made. ... It is to keep this noncooperating minority in line, or at least prevent it from doing harm to the majority, that the power of the Government has been marshaled behind the adjustment programs.'

[ Footnote 1 ] Whether coercion was the sole or the dominant purpose of the Bankhead Act, or whether the act was designed also for revenue or other legitimate ends, there is no occasion to consider now.

Carter v. Carter Coal Co., 298 U.S. 238 (1936)

Carter v. Carter Coal Co.

Nos. 636, 651, 649, and 650

Argued March 11, 12, 1936

Decided May 18, 1936

298 U.S. 238

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Syllabus

1. A stockholder may maintain a bill to enjoin the corporation and its directors from submitting to legislative exactions and regulations which are unconstitutional and would seriously injure the business of the corporation. P. 298 U. S. 286.

2. Where irreparable injury from unconstitutional legislation is certain and imminent, suit for an injunction need not be deferred until injury has been actually inflicted. P. 298 U. S. 287.

3. The "Bituminous Coal Conservation Act of 1935" declares, with specifications, that the mining and distribution of such coal are so affected with a national public interest and so related to the general welfare that the industry should be regulated. It recites further, with details, that such regulation is necessary because interstate commerce is directly and detrimentally affected by the state of the industry and its practices, and that the right of the miners to organize and collectively bargain for wages, hours of labor and working conditions should be guaranteed in order to prevent constant wage-cutting and disparate labor costs, detrimental to fair interstate commerce, and in order to prevent the obstructions to that commerce that arise from disputes over labor relations at the mines. The Act thereupon provides an elaborate scheme for the creation of a national commission, the organization of numerous coal districts, the setting up of

numerous boards in the districts, and the fixing of all prices for bituminous coal, and of the wages, hours and working conditions of the miners, throughout the country.

Held:

Page 298 U. S. 239

(1) That a so-called excise tax, imposed by the Act, of 15% of the sale price or market value at the mine of all bituminous coal produced in the country, subject to a draw-back of 13 1/2% allowed to those producers who submit to the price-fixing and labor, provisions of the Act, is not a tax, but a penalty to coerce submission, and cannot be upheld as an expression of the taxing power. P. 298 U. S. 288.

(2) The provisions of the Act looking to the control of the wages, hours, and working conditions of the miners engaged in the production of coal, and seeking to guarantee their right of collective bargaining in these matters, are beyond the powers of Congress, because --

(a) The Constitution grants to Congress no general power to regulate for the promotion of the general welfare. P. 298 U. S. 289.

(b) The power expressly granted Congress to regulate interstate commerce does not include the power to control the conditions in which coal is produced before it becomes an article of commerce. P. 298 U. S. 297.

(c) The effect on interstate commerce in the coal of labor conditions involved in its production, including disputes and strikes over wages, etc., is an indirect effect. P.298 U. S. 307.

(3) Since a mine owner, by refusing to accept the regulatory provisions, would incur a prohibitive tax and be deprived, by other provisions of the Act, of the right to sell coal to the United States or to any of its contractors for use in performing their contracts, the regulations are, in fact, compulsory. In view of this compulsion, provisions of the Act seeking to authorize part of the producers and miners to fix hours for the entire industry, and part of the producers and miners in the districts to fix minimum wages in their districts, are legislative delegation in its most obnoxious form, and clearly violate the Fifth Amendment. P. 298 U. S. 310.

(4) The price-fixing provisions are not separable from the provisions concerning labor, and therefore cannot stand independently. They are so related to and dependent upon the labor provisions, as conditions, considerations or compensations, as to make it clearly probable that, the latter being held bad, the former would not have been passed. P. 298 U. S. 312.

(5) The constitutionality of the price-fixing provisions is not considered. P. 298 U. S. 316.

4. Whether the end sought to be attained by an Act of Congress is legitimate is wholly a matter of constitutional power, and not

Page 298 U. S. 240

at all of legislative discretion. Beneficent aims, however great or well directed, can never serve in lieu of power. P. 298 U. S. 290.

5. To a constitutional end, many ways are open; but to an end not within the terms of the Constitution, all ways are closed. P. 298 U. S. 291.

6. The proposition, often advanced and as often discredited, that the power of the federal government inherently extends to all purposes affecting the Nation as a whole with which the States severally cannot deal, or deal adequately,

and the related notion that Congress, entirely apart from those powers delegated by the Constitution, may enact laws to promote the general welfare, have always been definitely rejected by this Court. P. 298 U. S. 291.

7. Those who framed and those who adopted the Constitution meant to carve from the general mass of legislative powers then possessed by the States only such portions as it was thought wise to confer upon the federal government, and, in order that there should be no uncertainty as to what was taken and what was left, the national powers of legislation were not aggregated, but enumerated -- with the result that what was not embraced by the enumeration remained vested in the States without change or impairment. P. 298 U. S. 294.

8. The States, in respect of all powers reserved to them, are supreme. And since every addition to the national legislative power to some extent detracts from or invades the power of the States, it is of vital moment that, in order to preserve the fixed balance intended by the Constitution, the powers of the general government be not so extended as to embrace any not within the express terms of the several grants or the implications necessarily to be drawn therefrom. P. 298 U. S. 294.

9. The general government possesses no inherent power over the internal affairs of the States, and emphatically not with regard to legislation. P. 298 U. S. 295.

10. The determination of the Framers Convention and the ratifying conventions to preserve complete and unimpaired state self-government in all matters not committed to the national government is one of the plainest facts in the history of their deliberations. Adherence to that determination is incumbent equally upon the federal government and the States. State powers can neither be appropriated, on the one hand, nor abdicated, on the other. P. 298 U. S. 295.

11. If the federal government once begins taking over the powers of the States, the States may be so despoiled of their powers, or -- what may amount to the same thing -- be so relieved of the responsibilities

Page 298 U. S. 241

which the possession of the powers necessarily enjoins, as to reduce them to little more than geographical divisions of the national domain. P. 298 U. S. 295.

12. The Constitution is a law -- the supreme law of the land. Judicial tribunals are required to apply the law to the facts in every case properly brought before them, and, in so doing, they are bound to give effect to this supreme law as against any mere statute conflicting with it. P. 298 U. S. 296.

13. In the discharge of that duty, the opinion of the lawmakers that a statute passed by them is valid must be given great weight; but their opinion, or the court's opinion, that the statute will prove greatly or generally beneficial is wholly irrelevant to the inquiry. P. 298 U. S. 297.

14. As used in the commerce clause of the Constitution, the term "commerce" is the equivalent of intercourse for the purposes of trade, and includes transportation, purchase, sale and exchange of commodities between citizens of the different States. The power to regulate commerce embraces the instruments by which commerce is carried on. P. 298 U. S. 297.

15. Production and manufacture of commodities are not commerce, even when done with intent to sell or transport the commodities out of the State. P. 298 U. S. 299.

16. The possibility or even certainty of the exportation of a product or an article from a State does not put it in interstate commerce before it has begun to move from the State. To hold otherwise would be to nationalize all industries. P. 298 U. S. 301.

17. One who produces or manufactures a commodity, subsequently sold and shipped by him in interstate commerce, whether such sale and shipment were originally intended or not, has engaged in two distinct and separate activities. So far as he produces or manufactures it, his business is purely local. So far as he sells or ships it, or contracts to do so, to

customers in another State, he engages in interstate commerce. In respect of the former, he is subject to regulation by the State; in respect of the latter, to regulation only by the federal government. Production is not commerce, but a step in preparation for commerce. P. 298 U. S. 303.

18. The incidents leading up to and culminating in the mining of coal -- the employment of men, the fixing of their wages, hours of labor and working conditions, the bargaining in respect of these things -- each and all constitute intercourse for the purposes of production, not of trade. Commerce in the coal is not brought into

Page 298 U. S. 242

being by force of these purely local activities, but by negotiations, agreements and circumstances entirely apart from production. Mining brings the subject matter of commerce into existence; commerce disposes of it. P. 298 U. S. 303.

19. To say that an activity or condition has a "direct" effect upon commerce implies that it operates proximately -- not mediately, remotely, or collaterally -- to produce the effect, without the presence of any efficient intervening agency or condition. P. 298 U. S. 307.

20. The distinction between a direct and an indirect effect upon interstate commerce is independent of the magnitude of the effect or of its cause. P. 298 U. S. 308.

21. The evils which come to interstate commerce from struggles between employer and employees over the matter of wages, working conditions, the right of collective bargaining, etc., and the resulting strikes, curtailment and irregularity of production and effect on prices, however extensive such evils may be, affect interstate commerce in a secondary and indirect way; they are local evils over which the federal government has no legislative control. P. 298 U. S. 308.

22. The want of power in the federal government is the same whether the wages, hours of service, and working conditions and the bargaining about them, are related to production before interstate commerce has begun, or to sale and distribution after it has ended. Schechter Poultry Corp. v. United States, 295 U. S. 495. P.298 U. S. 309.

23. A declaration in a statute that invalidity of any of its provisions shall not affect the others reverses the presumption of inseparability, but it does not alter the rule that, if one of two mutually dependent parts be unconstitutional, the other cannot be upheld. P. 298 U. S. 312.

63 Washington Law Rep. 986 affirmed in part and reversed in part. 12 F.Supp. 570 reversed.

NUMBERS 636 and 651 were cross-writs of certiorari, 296 U.S. 571, removing a case from the United States Court of Appeals for the District of Columbia, which had reached that court by appeal from the Supreme Court of the District, but which the upper court had not heard. It was a suit by Carter, stockholder and president of the Carter Coal Company, to enjoin the corporation, its officers and directors, from filing an acceptance of a code formulated under the Bituminous Coal Conservation Act

Page 298 U. S. 243

of 1935, and from paying the tax imposed by the Act. The Commissioner of Internal Revenue; a Collector of Internal Revenue, the Attorney General, and the United States Attorney for the District of Columbia, were joined as defendants, the bill praying that they be restrained from attempting to enforce the tax. The trial court found that the labor provisions of the Act and Code were unconstitutional, but that the price-fixing provisions were valid, and were separable from the labor provisions. It therefore denied relief, except for granting a permanent injunction against collection of taxes accrued during the suit.

The other two cases (Nos. 649 and 650) were removed to this Court by certiorari, 296 U.S. 571, 572, from the Circuit Court of Appeals, where they were pending on appeal from decrees of a District Court in Kentucky. One was a suit by several coal companies against a Collector to enjoin him from collecting the taxes sought to be imposed by the Act mentioned above. The other was a suit brought by a stockholder against his corporation and some of its officers, to

compel acceptance of the Act and Code, by mandatory injunction. In these cases, the District Court found the Act valid in its entirety, and decreed accordingly.

Page 298 U. S. 278

MR. JUSTICE SUTHERLAND delivered the opinion of the Court.

The purposes of the "Bituminous Coal Conservation Act of 1935," involved in these suits, as declared by the title, are to stabilize the bituminous coal mining industry and promote its interstate commerce; to provide for cooperative marketing of bituminous coal; to levy a tax on such coal and provide for a drawback under certain conditions; to declare the production, distribution, and use of such coal to be affected with a national public interest; to conserve the national resources of such coal; to provide for the general welfare, and for other purposes. C. 824, 49 Stat. 991. The constitutional validity of the act is challenged in each of the suits.

Nos. 636 and 651 are cross-writs of certiorari in a stockholder's suit, brought in the Supreme Court of the District of Columbia by Carter against the Carter Coal Company and some of its officers, Guy T. Helvering (Commissioner of Internal Revenue of the United

Page 298 U. S. 279

States), and certain other officers of the United States, to enjoin the coal company and its officers named from filing an acceptance of the code provided for in said act, from paying any tax imposed upon the coal company under the authority of the act, and from complying with its provisions or the provisions of the code. The bill sought to enjoin the Commissioner of Internal Revenue and the other federal officials named from proceeding under the act in particulars specified, the details of which it is unnecessary to state.

No. 649 is a suit brought in a federal district court in Kentucky by petitioners against respondent collector of internal revenue for the district of Kentucky, to enjoin him from collecting or attempting to collect the taxes sought to be imposed upon them by the act, on the ground of its unconstitutionality.

No. 650 is a stockholder's suit brought in the same court against the coal company and some of its officers, to secure a mandatory injunction against their refusal to accept and operate under the provisions of the Bituminous Coal Code prepared in pursuance of the act.

By the terms of the act, every producer of bituminous coal within the United States is brought within its provisions.

Section 1 is a detailed assertion of circumstances thought to justify he act. It declares that the mining and distribution of bituminous coal throughout the United States by the producer are affected with a national public interest, and that the service of such coal in relation to industrial activities, transportation facilities, health and comfort of the people, conservation by controlled production and economical mining and marketing, maintenance of just and rational relations between the public, owners, producers and employees, the right of the public to constant and adequate supplies of coal at reasonable prices, and the general welfare of the nation,

Page 298 U. S. 280

require that the bituminous coal industry should be regulated as the act provides.

Section 1, among other things, further declares that the production and distribution by producers of such coal bear upon and directly affect interstate commerce, and render regulation of production and distribution imperative for the protection of such commerce; that certain features connected with the production, distribution, and marketing have led to waste of the national coal resources, disorganization of interstate commerce in such coal, and burdening and obstructing interstate commerce therein; that practices prevailing in the production of such coal directly affect interstate commerce and require regulation for the protection of that commerce, and that the right of mine workers to organize and collectively bargain for wages, hours of labor, and conditions of employment should be guaranteed in order to

prevent constant wage cutting and disparate labor costs detrimental to fair interstate competition and in order to avoid obstructions to interstate commerce that recur in industrial disputes over labor relations at the mines. These declarations constitute not enactments of law, but legislative averments by way of inducement to the enactment which follows.

The substantive legislation begins with § 2, which establishes in the Department of the Interior a National Bituminous Coal Commission, to be appointed and constituted as the section then specifically provides. Upon this commission is conferred the power to hear evidence and find facts upon which its orders and actions may be predicated.

Section 3 provides:

"There is hereby imposed upon the sale or other disposal of all bituminous coal produced within the United States an excise tax of 15 percentum on the sale price at the mine, or, in the case of captive coal, the fair market

Page 298 U. S. 281

value of such coal at the mine, such tax, subject to the later provisions of this section, to be payable to the United States by the producers of such coal, and to be payable monthly for each calendar month, on or before the first business day of the second succeeding month, and under such regulations, and in such manner, as shall be prescribed by the Commissioner of Internal Revenue: Provided, That in the case of captive coal produced as aforesaid, the Commissioner of Internal Revenue shall fix a price therefor at the current market price for the comparable kind, quality, and size of coals in the locality where the same is produced: Provided further, That any such coal producer who has filed with the National Bituminous Coal Commission his acceptance of the code provided for in section 4 of this Act, and who acts in compliance with the provisions of such code, shall be entitled to a drawback in the form of a credit upon the amount of such tax payable hereunder, equivalent to 90 percentum of the amount of such tax, to be allowed and deducted therefrom at the time settlement therefor is required, in such manner as shall be prescribed by the Commissioner of Internal Revenue. Such right or benefit of drawback shall apply to all coal sold or disposed of from and after the day of the producer's filing with the Commission his acceptance of said code in such form of agreement as the Commission may prescribe. No producer shall by reason of his acceptance of the code provided for in section 4 or of the drawback of taxes provided in section 3 of this Act be held to be precluded or estopped from contesting the constitutionality of any provision of said code, or its validity as applicable to such producer."

Section 4 provides that the commission shall formulate the elaborate provisions contained therein into a working agreement to be known as the Bituminous Coal Code. These provisions require the organization of twenty-three

Page 298 U. S. 282

coal districts, each with a district board the membership of which is to be determined in a manner pointed out by the act. Minimum prices for coal are to be established by each of these boards, which is authorized to make such classification of coals and price variation as to mines and consuming market areas as it may deem proper.

"In order to sustain the stabilization of wages, working conditions, and maximum hours of labor, said prices shall be established so as to yield a return per net ton for each district in a minimum price area, as such districts are identified and such area is defined in the subjoined table designated 'Minimum-price area table,' equal as nearly as may be to the weighted average of the total costs, per net ton, determined as hereinafter provided, of the tonnage of such minimum price area. The computation of the total costs shall include the cost of labor, supplies, power, taxes, insurance, workmen's compensation, royalties, depreciation, and depletion (as determined by the Bureau of Internal Revenue in the computation of the Federal income tax) and all other direct expenses of production, coal operators' association dues, district board assessments for Board operating expenses only levied under the code, and reasonable costs of selling and the cost of administration."

The district board must determine and adjust the total cost of the ascertainable tonnage produced in the district so as to give effect to any changes in wage rates, hours of employment, or other factors substantially affecting costs, which may have been established since January 1st, 1934.

Without repeating the long and involved provisions with regard to the fixing of minimum prices, it is enough to say that the act confers the power to fix the minimum price of coal at each and every coal mine in the United States, with such price variations as the board may deem necessary and proper. There is also a provision authorizing the commission, when deemed necessary in the public

Page 298 U. S. 283

interest, to establish maximum prices in order to protect the consumer against unreasonably high prices.

All sales and contracts for the sale of coal are subject to the code prices provided for and in effect when such sales and contracts are made. Various unfair methods of competition are defined and forbidden.

The labor provisions of the code, found in Part III of the same section, require that, in order to effectuate the purposes of the act, the district boards and code members shall accept specified conditions contained in the code, among which are the following:

Employees to be given the right to organize and bargain collectively, through representatives of their own choosing, free from interference, restraint, or coercion of employers or their agents in respect of their concerted activities.

Such employees to have the right of peaceable assemblage for the discussion of the principles of collective bargaining, and to select their own check-weighman to inspect the weighing or measuring of coal.

A labor board is created, consisting of three members, to be appointed by the President and assigned to the Department of Labor. Upon this board is conferred authority to adjudicate disputes arising under the provisions just stated, and to determine whether or not an organization of employees had been promoted, or is controlled or dominated by, an employer in its organization, management, policy, or election of representatives. The board "may order a code member to meet the representatives of its employees for the purpose of collective bargaining."

Subdivision (g) of Part III provides:

"Whenever the maximum daily and weekly hours of labor are agreed upon in any contract or contracts negotiated between the producers of more than two-thirds the annual national tonnage production for the

Page 298 U. S. 284

preceding calendar year and the representatives of more than one-half of the mine workers employed, such maximum hours of labor shall be accepted by all the code members. The wage agreement or agreements negotiated by collective bargaining in any district or group of two or more districts, between representatives of producers of more than two-thirds of the annual tonnage production of such district or each of such districts in a contracting group during the preceding calendar year, and representatives of the majority of the mine workers therein, shall be filed with the Labor Board and shall be accepted as the minimum wages for the various classifications of labor by the code members operating in such district or group of districts."

The bill of complaint in Nos. 636 and 651 was filed in the Supreme Court of the District of Columbia on August 31, 1935, the day after the Coal Conservation Act came into effect. That court, among other things, found that the suit was brought in good faith; that, if Carter Coal Company should join the code, it would be compelled to cancel existing contracts and pay its proportionate share of administering the code; that the production of bituminous coal is a local activity carried on within state borders; that coal is the nation's greatest and primary source of energy, vital to the public welfare, of the utmost importance to the industrial and economic life of the nation and the health and comfort of its inhabitants, and that its distribution in interstate commerce should be regular, continuous, and free of interruptions, obstructions, burdens, and restraints.

Other findings are to the effect that such coal is generally sold f.o.b. mine, and the predominant portion of it shipped outside the state in which it is produced; that the distribution and marketing is predominantly interstate in character, and that the intrastate distribution

Page 298 U. S. 285

and sale are so connected that interstate regulation cannot be accomplished effectively unless transactions of intrastate distribution and sale be regulated.

The court further found the existence of a condition of unrestrained and destructive competition in the system of distribution and marketing such coal, and of destructive price-cutting, burdening and restraining interstate commerce and dislocating and diverting its normal flow.

The court concluded as a matter of law that the bringing of the suit was not premature; that the plaintiff was without legal remedy, and rightly invoked relief in equity; that the labor provisions of the act and code were unconstitutional for reasons stated, but the price-fixing provisions were valid and constitutional; that the labor provisions are separable; and, since the provisions with respect to price-fixing and unfair competition are valid, the taxing provisions of the act could stand. Therefore, except for granting a permanent injunction against collection of the "taxes" accrued during the suit (Ex parte Young, 209 U. S. 123, 209 U. S. 147-148), the court denied the relief sought, and dismissed the bill.

Appeals were taken to the United States Court of Appeals for the District of Columbia by the parties, but, pending hearing and submission in that court, petitions for writs of certiorari were presented asking us to review the decree of the Supreme Court of the District without awaiting such hearing and submission. Because of the importance of the question and the advantage of a speedy final determination thereof, the writs were granted.

The remaining two suits (Nos. 649 and 650), involving the same questions, were brought in the federal District Court for the Western District of Kentucky. That court held the act valid and constitutional in its entirety, and entered a decree accordingly. 12 F.Supp. 570. Appeals were taken to the Circuit Court of Appeals for the Sixth

Page 298 U. S. 286

Circuit; but, as in the Carter case and for the same reasons, this court granted writs of certiorari in advance of hearing and submission.

The questions involved will be considered under the following heads:

1. The right of stockholders to maintain suits of this character.

2. Whether the suits were prematurely brought.

3. Whether the exaction of 15 percentum on the sale price of coal at the mine is a tax or a penalty.

4. The purposes of the act as set forth in § 1, and the authority vested in Congress by the Constitution to effectuate them.

5. Whether the labor provisions of the act can be upheld as an exercise of the power to regulate interstate commerce.

6. Whether subdivision (g) of Part III of the Code, is an unlawful delegation of power.

7. The constitutionality of the price-fixing provisions, and the question of severability -- that is to say, whether, if either the group of labor provisions or the group of price-fixing provisions be found constitutionally invalid, the other can stand as separable.

First. In the Carter case (Nos. 636 and 651), the stockholder who brought the suit had formally demanded of the board of directors that the company should not join the code, should refuse to pay the tax fixed by the act, and should bring appropriate Judicial proceedings to prevent an unconstitutional and improper diversion of the assets of the company and to have determined the liability of the company under the act. The board considered the demand, determined that, while it believed the act to be unconstitutional and economically unsound, and that it would adversely affect the business of the company if accepted, nevertheless, it should accept the code provided for by the act because the penalty in the form

Page 298 U. S. 287

of a 15% tax on its gross sales would be seriously injurious, and might result in bankruptcy. This action of the board was approved by a majority of the shareholders at a special meeting called for the purpose of considering it.

In the Tway Company cases, the company itself brought suit to enjoin the enforcement of the act (No. 649), and a stockholder brought suit to compel the company to accept the code and operate under its provisions (No. 650).

Without repeating the long averments of the several bills, we are of opinion that the suits were properly brought and were maintainable in a court of equity. The right of stockholders to bring such suits under the circumstances disclosed is settled by the recent decision of this court in Ashwander v. Tennessee Valley Authority,297 U. S. 288 and requires no further discussion.

Second. That the suits were not prematurely brought also is clear. Section 2 of the act is mandatory in its requirement that the commission be appointed by the President. The provisions of § 4 that the code be formulated and promulgated are equally mandatory. The so-called tax of 15% is definitely imposed, and its exaction certain to ensue.

In Pennsylvania v. West Virginia, 262 U. S. 553, 262 U. S. 592-595, suits were brought by Pennsylvania and Ohio against West Virginia to enjoin the defendant state from enforcing an act of her legislature upon the ground that it would injuriously affect or cut off the supply of natural gas produced in her territory and carried by pipelines into the territory of the plaintiff states, and there sold and used. These suits were brought a few days after the West Virginia act became effective. No order had yet been made under it by the Public Service Commission, nor had it been tested in actual practice. But it appeared that the act was certain to operate as the complainant

Page 298 U. S. 288

states apprehended it would. This court held that the suit was not premature.

"One does not have to await the consummation of threatened injury to obtain preventive relief. If the injury is certainly impending, that is enough."

Pierce v. Society of Sisters, 268 U. S. 510, 268 U. S. 535-536, involved the constitutional validity of the Oregon Compulsory Education Act, which required every parent or other person having control of a child between the ages of eight and sixteen years to send him to the public school of the district where he resides. Suit was brought to enjoin the operation of the act by corporations owning and conducting private schools, on the ground that their business and property were threatened with destruction through the unconstitutional compulsion exercised by the act upon parents and guardians. The suits were held to be not premature, although the effective date of the act had not yet arrived. We said --

"The injury to appellees was present and very real, not a mere possibility in the remote future. If no relief had been possible prior to the effective date of the Act, the injury would have become irreparable. Prevention of impending injury by unlawful action is a well recognized function of courts of equity."

See also Terrace v. Thompson, 263 U. S. 197, 263 U. S. 215-216; Swift & Co. v. United States, 276 U. S. 311, 276 U. S. 326; Euclid v. Ambler Realty Co.,272 U. S. 365, 272 U. S. 386; City Bank Co. v. Schnader, 291 U. S. 24, 291 U. S. 34.

Third. The so-called excise tax of 15 percentum on the sale price of coal at the mine, or, in the case of captive coal the fair market value, with its drawback allowance of 13 1/2%, is clearly not a tax, but a penalty. The exaction applies to all

bituminous coal produced, whether it be sold, transported or consumed in interstate commerce, or transactions in respect of it be confined wholly

Page 298 U. S. 289

to the limits of the state. It also applies to "captive coal" -- that is to say, coal produced for the sole use of the producer.

It is very clear that the "excise tax" is not imposed for revenue, but exacted as a penalty to compel compliance with the regulatory provisions of the act. The whole purpose of the exaction is to coerce what is called an agreement -- which, of course, it is not, for it lacks the essential element of consent. One who does a thing in order to avoid a monetary penalty does not agree; he yields to compulsion precisely the same as though he did so to avoid a term in jail.

The exaction here is a penalty, and not a tax, within the test laid down by this court in numerous cases. Child Labor Tax Case, 259 U. S. 20, 259 U. S. 37-39;United States v. La Franca, 282 U. S. 568, 282 U. S. 572; United States v. Constantine, 296 U. S. 287, 296 U. S. 293 et seq.; United States v. Butler, 297 U. S. 1, 297 U. S. 70. While the lawmaker is entirely free to ignore the ordinary meanings of words and make definitions of his own, Karnuth v. United States, 279 U. S. 231, 279 U. S. 242; Tyler v. United States, 281 U. S. 497, 281 U. S. 502, that device may not be employed so as to change the nature of the acts or things to which the words are applied. But it is not necessary to pursue the matter further. That the "tax" is, in fact, a penalty is not seriously in dispute. The position of the Government, as we understand it, is that the validity of the exaction does not rest upon the taxing power, but upon the power of Congress to regulate interstate commerce, and that, if the act in respect of the labor and price-fixing provisions be not upheld, the "tax" must fall with them. With that position we agree, and confine our consideration accordingly.

Fourth. Certain recitals contained in the act plainly suggest that its makers were of opinion that its constitutionality could be sustained under some general federal

Page 298 U. S. 290

power thought to exist apart from the specific grants of the Constitution. The fallacy of that view will be apparent when we recall fundamental principles which, although hitherto often expressed in varying forms of words, will bear repetition whenever their accuracy seems to be challenged. The recitals to which we refer are contained in § 1 (which is simply a preamble to the act), and, among others, are to the effect that the distribution of bituminous coal is of national interest, affecting the health and comfort of the people and the general welfare of the nation; that this circumstance, together with the necessity of maintaining just and rational relations between the public, owners, producers, and employees, and the right of the public to constant and adequate supplies at reasonable prices, require regulation of the industry as the act provides. These affirmations -- and the further ones that the production and distribution of such coal "directly affect interstate commerce," because of which and of the waste of the national coal resources and other circumstances, the regulation is necessary for the protection of such commerce -- do not constitute an exertion of the will of Congress, which is legislation, but a recital of considerations which in the opinion of that body existed and justified the expression of its will in the present act. Nevertheless, this preamble may not be disregarded. On the contrary, it is important because it makes clear, except for the pure assumption that the conditions described "directly" affect interstate commerce, that the powers which Congress undertook to exercise are not specific, but of the most general character -- namely, to protect the general public interest and the health and comfort of the people, to conserve privately owned coal, maintain just relations between producers and employees and others, and promote the general welfare, by controlling nationwide production and distribution of coal. These, it may be conceded, are objects of great worth;

Page 298 U. S. 291

but are they ends the attainment of which has been committed by the Constitution to the federal government? This is a vital question, for nothing is more certain than that beneficent aims, however great or well directed, can never serve in lieu of constitutional power.

The ruling and firmly established principle is that the powers which the general government may exercise are only those specifically enumerated in the Constitution and such implied powers as are necessary and proper to carry into effect the enumerated powers. Whether the end sought to be attained by an act of Congress is legitimate is wholly a matter of

constitutional power, and not at all of legislative discretion. Legislative congressional discretion begins with the choice of means, and ends with the adoption of methods and details to carry the delegated powers into effect. The distinction between these two things -- power and discretion -- is not only very plain, but very important. For while the powers are rigidly limited to the enumerations of the Constitution, the means which may be employed to carry the powers into effect are not restricted, save that they must be appropriate, plainly adapted to the end, and not prohibited by, but consistent with, the letter and spirit of the Constitution. @ 17 U. S. 421. Thus, it may be said that, to a constitutional end, many ways are open, but to an end not within the terms of the Constitution, all ways are closed.

The proposition, often advanced and as often discredited, that the power of the federal government inherently extends to purposes affecting the nation as a whole with which the states severally cannot deal or cannot adequately deal, and the related notion that Congress, entirely apart from those powers delegated by the Constitution, may enact laws to promote the general welfare, have never been accepted, but always definitely rejected, by this court. Mr. Justice Story, as early as 1816,

Page 298 U. S. 292

laid down the cardinal rule, which has ever since been followed -- that the general government

"can claim no powers which are not granted to it by the Constitution, and the powers actually granted, must be such as are expressly given, or given by necessary implication."

@ 14 U. S. 326. In the Framers Convention, the proposal to confer a general power akin to that just discussed was included in Mr. Randolph's resolutions, the sixth of which, among other things, declared that the National Legislature ought to enjoy the legislative rights vested in Congress by the Confederation, and,

"moreover, to legislate in all cases to which the separate States are incompetent, or in which the harmony of the United States may be interrupted by the exercise of individual Legislation."

The convention, however, declined to confer upon Congress power in such general terms, instead of which it carefully limited the powers which it thought wise to entrust to Congress by specifying them, thereby denying all others not granted expressly or by necessary implication. It made no grant of authority to Congress to legislate substantively for the general welfare, United States v. Butler, supra, p. 297 U. S. 64, and no such authority exists, save as the general welfare may be promoted by the exercise of the powers which are granted. Compare Jacobson v. Massachusetts, 197 U. S. 11, 197 U. S. 22.

There are many subjects in respect of which the several states have not legislated in harmony with one another, and in which their varying laws and the failure of some of them to act at all have resulted in injurious confusion and embarrassment. See Addyston Pipe & Steel Co. v. United States, 175 U. S. 211, 175 U. S. 232-233. The state laws with respect to marriage and divorce present a case in point, and the great necessity of national legislation on that subject has been from time to time vigorously urged. Other pertinent examples are laws with respect to negotiable

Page 298 U. S. 293

instruments, desertion and nonsupport, certain phases of state taxation, and others which we do not pause to mention. In many of these fields of legislation, the necessity of bringing the applicable rules of law into general harmonious relation has been so great that a Commission on Uniform State Laws, composed of commissioners from every state in the Union, has for many years been industriously and successfully working to that end by preparing and securing the passage by the several states of uniform laws. If there be an easier and constitutional way to these desirable results through congressional action it thus far has escaped discovery.

Replying directly to the suggestion advanced by counsel in Kansas v. Colorado, 206 U. S. 46, 206 U. S. 89-90, to the effect that necessary powers national in their scope must be found vested in Congress, though not expressly granted or essentially implied, this court said:

"But the proposition that there are legislative powers affecting the Nation as a whole which belong to, although not expressed in the grant of powers, is in direct conflict with the doctrine that this is a government of enumerated powers. That this is such a government clearly appears from the Constitution, independently of the Amendments, for otherwise there would be an instrument granting certain specified things made operative to grant other and distinct things. This natural construction of the original body of the Constitution is made absolutely certain by the Tenth Amendment. This amendment, which was seemingly adopted with prescience of just such contention as the present, disclosed the widespread fear that the National Government might, under the pressure of a supposed general welfare, attempt to exercise powers which had not been granted. With equal determination, the framers intended that no such assumption should ever find justification in the organic act, and that if, in the future, further powers seemed necessary they should

Page 298 U. S. 294

be granted by the people in the manner they had provided for amending that act."

The general rule with regard to the respective powers of the national and the state governments under the Constitution is not in doubt. The states were before the Constitution, and, consequently, their legislative powers antedated the Constitution. Those who framed and those who adopted that instrument meant to carve from the general mass of.legislative powers then possessed by the states only such portions as it was thought wise to confer upon the federal government, and, in order that there should be no uncertainty in respect of what was taken and what was left, the national powers of legislation were not aggregated, but enumerated -- with the result that what was not embraced by the enumeration remained vested in the states without change or impairment. Thus, "when it was found necessary to establish a national government for national purposes," this court said in Munn v. Illinois, 94 U. S. 113, 94 U. S. 124,

"a part of the powers of the States and of the people of the States was granted to the United States and the people of the United States. This grant operated as a further limitation upon the powers of the States, so that now the governments of the States possess all the powers of the Parliament of England except such as have been delegated to the United States or reserved by the people."

While the states are not sovereign in the true sense of that term, but only quasi-sovereign, yet, in respect of all powers reserved to them, they are supreme -- "as independent of the general government as that government, within its sphere, is independent of the States." 78 U. S. 124. And since every addition to the national legislative power to some extent detracts from or invades the power of the states, it is of vital moment that, in order to preserve the fixed balance intended by the Constitution, the powers of the general government

Page 298 U. S. 295

be not so extended as to embrace any not within the express terms of the several grants or the implications necessarily to be drawn therefrom. It is no longer open to question that the general government, unlike the states, Hammer v. Dagenhart, 247 U. S. 251, 247 U. S. 275, possesses no inherent power in respect of the internal affairs of the states, and emphatically not with regard to legislation. The question in respect of the inherent power of that government as to the external affairs of the nation and in the field of international law is a wholly different matter, which it is not necessary now to consider. See, however, Jones v. United States, 137 U. S. 202, 137 U. S. 212; Nishimura Ekiu v. United States, 142 U. S. 651, 142 U. S. 659; Fong Yue Ting v. United States, 149 U. S. 698, 149 U. S. 705 et seq.; Burnet v. Brooks,@ 288 U. S. 378, 288 U. S. 396.

The determination of the Framers Convention and the ratifying conventions to preserve complete and unimpaired state self-government in all matters not committed to the general government is one of the plainest facts which emerge from the history of their deliberations. And adherence to that determination is incumbent equally upon the federal government and the states. State powers can neither be appropriated, on the one hand, nor abdicated, on the other. As this court said in @ 74 U. S. 725 --

"the preservation of the States, and the maintenance of their governments, are as much within the design and care of the Constitution as the preservation of the Union and the maintenance of the National Government. The Constitution, in all its provisions, looks to an indestructible Union, composed of indestructible States."

Every journey to a forbidden end begins with the first step, and the danger of such a step by the federal government in the direction of taking over the powers of the states is that the end of the journey may find the states so despoiled of their powers, or -- what may amount to the same thing -- so

Page 298 U. S. 296

relieved of the responsibilities which possession of the powers necessarily enjoins, as to reduce them to little more than geographical subdivisions of the national domain. It is safe to say that, if, when the Constitution was under consideration, it had been thought that any such danger lurked behind its plain words, it would never have been ratified.

And the Constitution itself is, in every real sense, a law -- the lawmakers being the people themselves, in whom, under our system, all political power and sovereignty primarily resides, and through whom such power and sovereignty primarily speaks. It is by that law, and not otherwise, that the legislative, executive, and judicial agencies which it created exercise such political authority as they have been permitted to possess. The Constitution speaks for itself in terms so plain that to misunderstand their import is not rationally possible. "We the people of the United States," it says, "do ordain and establish this Constitution . . ." Ordain and establish! These are definite words of enactment, and, without more, would stamp what follows with the dignity and character of law. The framers of the Constitution, however, were not content to let the matter rest here, but provided explicitly --

"This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; . . . shall be the supreme Law of the Land; . . ."

The supremacy of the Constitution as law is thus declared without qualification. That supremacy is absolute; the supremacy of a statute enacted by Congress is not absolute, but conditioned upon its being made in pursuance of the Constitution. And a judicial tribunal, clothed by that instrument with complete judicial power, and, therefore, by the very nature of the power, required to ascertain and apply the law to the facts in every case or proceeding properly brought for adjudication, must apply the supreme law and reject the inferior statute

Page 298 U. S. 297

whenever the two conflict. In the discharge of that duty, the opinion of the lawmakers that a statute passed by them is valid must be given great weight, Adkins v. Children's Hospital, 261 U. S. 525, 261 U. S. 544; but their opinion, or the court's opinion, that the statute will prove greatly or generally beneficial is wholly irrelevant to the inquiry. Schechter v. United States, 295 U. S. 495, 295 U. S. 549-550.

We have set forth, perhaps at unnecessary length, the foregoing principles, because it seemed necessary to do so in order to demonstrate that the general purposes which the act recites, and which, therefore, unless the recitals be disregarded, Congress undertook to achieve, are beyond the power of Congress except so far, and only so far, as they may be realized by an exercise of some specific power granted by the Constitution. Proceeding by a process of elimination which it is not necessary to follow in detail, we shall find no grant of power which authorizes Congress to legislate in respect of these general purposes unless it be found in the commerce clause -- and this we now consider.

Fifth. Since the validity of the act depends upon whether it is a regulation of interstate commerce, the nature and extent of the power conferred upon Congress by the commerce clause becomes the determinative question in this branch of the case. The commerce clause vests in Congress the power -- "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." The function to be exercised is that of regulation. The thing to be regulated is the commerce described. In exercising the authority conferred by this clause of the Constitution, Congress is powerless to regulate anything which is not commerce, as it is powerless to do anything about commerce which is not regulation. We first inquire, then -- What is commerce? The term, as this court many times has said, is

Page 298 U. S. 298

one of extensive import. No all-embracing definition has ever been formulated. The question is to be approached both affirmatively and negatively -- that is to say, from the points of view as to what it includes and what it excludes.

In @ 22 U. S. 189-190, Chief Justice Marshall said:

"Commerce, undoubtedly, is traffic, but it is something more: it is intercourse. It describes the commercial intercourse between nations, and parts of nations, in all its branches, and is regulated by prescribing rules for carrying on that intercourse. . . ."

As used in the Constitution, the word "commerce" is the equivalent of the phrase "intercourse for the purposes of trade," and includes transportation, purchase, sale, and exchange of commodities between the citizens of the different states. And the power to regulate commerce embraces the instruments by which commerce is carried on. Welton v. Missouri, 91 U. S. 275, 91 U. S. 280; Addyston Pipe & Steel Co. v. United States, 175 U. S. 211, 175 U. S. 241; Hopkins v. United States, 171 U. S. 578, 171 U. S. 597. In Adair v. United States, 208 U. S. 161, 208 U. S. 177, the phrase "Commerce among the several States" was defined as comprehending

"traffic, intercourse, trade, navigation, communication, the transit of persons and the transmission of messages by telegraph -- indeed, every species of commercial intercourse among the several States."

In @ 55 U. S. 573-574, this court, after saying that the phrase could never be applied to transactions wholly internal, significantly added:

"Nor can it be properly concluded, that, because the products of domestic enterprise in agriculture or manufactures or in the arts may ultimately become the subjects of foreign commerce, that the control of the means or the encouragements by which enterprise is fostered and protected is legitimately within the import of the phraseforeign commerce, or fairly implied

Page 298 U. S. 299

in any investiture of the power to regulate such commerce. A pretension as far-reaching as this would extend to contracts between citizen and citizen of the same State, would control the pursuits of the planter, the grazier, the manufacturer, the mechanic, the immense operations of the collieries and mines and furnaces of the country; for there is not one of these avocations the results of which may not become the subjects of foreign commerce, and be borne either by turnpikes, canals, or railroads from point to point within the several States towards an ultimate destination like the one above mentioned. . . ."

The distinction between manufacture and commerce was discussed in Kidd v. Pearson, 128 U. S. 1, 128 U. S. 20, 128 U. S. 21, 22, and it was said:

"No distinction is more popular to the common mind, or more clearly expressed in economic and political literature, than that between manufacture and commerce. Manufacture is transformation -- the fashioning of raw materials into a change of form for use. The functions of commerce are different. . . . If it be held that the term includes the regulation of all such manufactures as are intended to be the subject of commercial transactions in the future, it is impossible to deny that it would also include all productive industries that contemplate the same thing. The result would be that Congress would be invested, to the exclusion of the States, with the power to regulate not only manufactures, but also agriculture, horticulture, stock raising, domestic fisheries, mining -- in short, every branch of human industry. For is there one of them that does not contemplate, more or less clearly, an interstate or foreign market? Does not the wheat grower of the Northwest and the cotton planter of the South plant, cultivate, and harvest his crop with an eye on the prices at Liverpool, New York, and Chicago? The power being vested in Congress and

Page 298 U. S. 300

denied to the States, it would follow as an inevitable result that the duty would devolve on Congress to regulate all of these delicate, multiform and vital interests -- interests which, in their nature, are and must be local in all the details of their successful management."

And then, as though foreseeing the present controversy, the opinion proceeds:

"Any movement toward the establishment of rules of production in this vast country, with its many different climates and opportunities, could only be at the sacrifice of the peculiar advantages of a large part of the localities in it, if not of every one of them. On the other hand, any movement toward the local, detailed and incongruous legislation required by such interpretation would be about the widest possible departure from the declared object of the clause in question. Nor this alone. Even in the exercise of the power contended for, Congress would be confined to the regulation not of certain branches of industry, however numerous, but to those instances in each and every branch where the producer contemplated an interstate market. . . . A situation more paralyzing to the state governments, and more provocative of conflicts between the general government and the States, and less likely to have been what the framers of the Constitution intended it would be difficult to imagine."

Chief Justice Fuller, speaking for this court in United States v. E. C. Knight Co., 156 U. S. 1, 156 U. S. 12, 156 U. S. 13, said:

"Doubtless the power to control the manufacture of a given thing involves in a certain sense the control of its disposition, but this is a secondary, and not the primary, sense, and, although the exercise of that power may result in bringing the operation of commerce into play, it does not control it, and affects it only incidentally and indirectly. Commerce succeeds to manufacture, and is not a part of it. . . . "

Page 298 U. S. 301

"It is vital that the independence of the commercial power and of the police power, and the delimitation between them, however sometimes perplexing, should always be recognized and observed, for while the one furnishes the strongest bond of union, the other is essential to the preservation of the autonomy of the States, as required by our dual form of government, and acknowledged evils, however grave and urgent they may appear to be, had better be borne than the risk be run, in the effort to suppress them, of more serious consequences by resort to expedients of even doubtful constitutionality."

". . . The regulation of commerce applies to the subjects of commerce, and not to matters of internal police. Contracts to buy, sell, or exchange goods to be transported among the several States, the transportation and its instrumentalities, and articles bought, sold, or exchanged for the purposes of such transit among the States, or put in the way of transit, may be regulated, but this is because they form part of interstate trade or commerce. The fact that an article is manufactured for export to another State does not, of itself, make it an article of interstate commerce, and the intent of the manufacturer does not determine the time when the article or product passes from the control of the State and belongs to commerce. . . ."

That commodities produced or manufactured within a state are intended to be sold or transported outside the state does not render their production or manufacture subject to federal regulation under the commerce clause. As this court said in Coe v. Errol, 116 U. S. 517, 116 U. S. 526,

"Though intended for exportation, they may never be exported; the owner has a perfect right to change his mind, and until actually put in motion for some place out of the State or committed to the custody of a carrier for transportation to such place, why may they not be regarded as still remaining a part of the general mass of

Page 298 U. S. 302

property in the State?"

It is true that this was said in respect of a challenged power of the state to impose a tax, but the query is equally pertinent where the question, as here, is with regard to the power of regulation. The case was relied upon in Kidd v. Pearson, supra, p. 128 U. S. 26. "The application of the principles above announced," it was there said,

"to the case under consideration leads to a conclusion against the contention of the plaintiff in error. The police power of a State is as broad and plenary as its taxing power, and property within the State is subject to the operations of the former so long as it is within the regulating restrictions of the latter."

In Heisler v. Thomas Colliery Co., 260 U. S. 245, 260 U. S. 259-260, we held that the possibility, or even certainty, of exportation of a product or article from a state did not determine it to be in interstate commerce before the commencement of its movement from the state. To hold otherwise

"would nationalize all industries, it would nationalize and withdraw from state jurisdiction and deliver to federal commercial control the fruits of California and the South, the wheat of the West and its meats, the cotton of the South, the shoes of Massachusetts and the woolen industries of other States, at the very inception of their production or growth, that is, the fruits unpicked, the cotton and wheat ungathered, hides and flesh of cattle yet 'on the hoof,' wool yet unshorn, and coal yet unmined, because they are in varying percentages destined for and surely to be exported to States other than those of their production."

In Oliver Iron Co. v. Lord, 262 U. S. 172, 262 U. S. 178, we said on the authority of numerous cited cases:

"Mining is not interstate commerce, but, like manufacturing, is a local business subject to local regulation and taxation. . . . Its character in this regard is intrinsic, is not affected by the intended use or disposal of the product, is not controlled by contractual engagements, and persists even

Page 298 U. S. 303

though the business be conducted in close connection with interstate commerce."

The same rule applies to the production of oil.

"Such production is essentially a mining operation, and therefore is not a part of interstate commerce even though the product obtained is intended to be and, in fact, is immediately shipped in such commerce."

Champlin Rfg. Co. v. Corporation Commission, 286 U. S. 210, 286 U. S. 235. One who produces or manufactures a commodity, subsequently sold and shipped by him in interstate commerce, whether such sale and shipment were originally intended or not, has engaged in two distinct and separate activities. So far as he produces or manufactures a commodity, his business is purely local. So far as he sells and ships or contracts to sell and ship the commodity to customers in another state, he engages in interstate commerce. In respect of the former, he is subject only to regulation by the state; in respect of the latter, to regulation only by the federal government. Utah Power & L. Co. v. Pfost, 286 U. S. 165, 286 U. S. 182. Production is not commerce, but a step in preparation for commerce.Chassaniol v. Greenwood, 291 U. S. 584, 291 U. S. 587.

We have seen that the word "commerce" is the equivalent of the phrase "intercourse for the purposes of trade." Plainly, the incidents leading up to and culminating in the mining of coal do not constitute such intercourse. The employment of men, the fixing of their wages, hours of labor and working conditions, the bargaining in respect of these things -- whether carried on separately or collectively each and all constitute intercourse for the purposes of production, not of trade. The latter is a thing apart from the relation of employer and employee, which, in all producing occupations, is purely local in character. Extraction of coal from the mine is the aim and the completed result of local activities. Commerce in the coal mined is not brought into being by

Page 298 U. S. 304

force of these activities, but by negotiations, agreements, and circumstances entirely apart from production. Mining brings the subject matter of commerce into existence. Commerce disposes of it.

A consideration of the foregoing, and of many cases which might be added to those already cited, renders inescapable the conclusion that the effect of the labor provisions of the act, including those in respect of minimum wages, wage agreements, collective bargaining, and the Labor Board and its powers, primarily falls upon production, and not upon commerce, and confirms the further resulting conclusion that production is a purely local activity. It follows that none of these essential antecedents of production constitutes a transaction in, or forms any part of, interstate commerce. Schechter Corp. v. United States, supra, p. 295 U. S. 542 et seq. Everything which moves in interstate commerce has had a local origin.

Without local production somewhere, interstate commerce, as now carried on, would practically disappear. Nevertheless, the local character of mining, of manufacturing and of crop growing is a fact, and remains a fact, whatever may be done with the products.

Certain decisions of this court, superficially considered, seem to lend support to the defense of the act now under review. But, upon examination, they will be seen to be inapposite. Thus, Coronado Coal Co. v. United Mine Workers, 268 U. S. 295, 268 U. S. 310, and kindred cases, involved conspiracies to restrain interstate commerce in violation of the anti-trust laws. The acts of the persons involved were local in character, but the intent was to restrain interstate commerce, and the means employed were calculated to carry that intent into effect. Interstate commerce was the direct object of attack, and the restraint of such commerce was the necessary consequence of the acts and the immediate end in view. 274 U. S. 46. The applicable law was concerned not with the character of the acts or of the means employed, which might be in and of themselves purely local, but with the intent and direct operation of those acts and means upon interstate commerce. " The mere reduction in the supply of an article," this court said in the Coronado Co. case, supra,@ p. 268 U. S. 310,

"to be shipped in interstate commerce by the illegal or tortious prevention of its manufacture or production is ordinarily an indirect and remote obstruction to that commerce. But when the intent of those unlawfully preventing the manufacture or production is shown to be to restrain or control the supply entering and moving in interstate commerce, or the price of it in interstate markets, their action is a direct violation of the Anti-Trust Act."

Another group of cases, of which Swift & Co. v. United States, 196 U. S. 375, is an example, rest upon the circumstance that the acts in question constituted direct interferences with the "flow" of commerce among the states. In the Swift case, livestock was consigned and delivered to stockyards -- not as a place of final destination, but, as the court said in Stafford v. Wallace, 258 U. S. 495, 258 U. S. 516, "a throat through which the current flows." The sales which ensued merely changed the private interest in the subject of the current, without interfering with its continuity. Industrial Assn. v. United States, 268 U. S. 64, 268 U. S. 79. It was nowhere suggested in these cases that the interstate commerce power extended to the growth or production of the things which, after production, entered the flow. If the court had held that the raising of the cattle, which were involved in the Swift case, including the wages paid to and working conditions of the herders and others employed in the business, could be regulated by Congress, that decision and decisions holding similarly would be in

Page 298 U. S. 306

point, for it is that situation, and not the one with which the court actually dealt, which here concerns us.

The distinction suggested is illustrated by the decision in Arkadelphia Milling Co. v. St. Lois S.W. Ry. Co., 249 U. S. 134, 249 U. S. 150-152. That case dealt with orders of a state commission fixing railroad rates. One of the questions considered was whether certain shipments of rough material from the forest to mills in the same state for manufacture, followed by the forwarding of the finished product to points outside the state, was a continuous movement in interstate commerce. It appeared that, when the rough material reached the mills, it was manufactured into various articles which were stacked or placed in kilns to dry, the processes occupying several months. Markets for the manufactured articles were almost entirely in other states or in foreign countries. About 95% of the finished articles was made for outbound shipment. When the rough material was shipped to the mills, it was expected by the mills that this percentage of the finished articles would be so sold and shipped outside the state. And all of them knew and intended that this 95% of the finished product would be so sold and shipped. This court held that the state order did not interfere with interstate commerce, and that the Swift case was not in point, as it is not in point here.

The restricted field covered by the Swift and kindred cases is illustrated by the Schechter case, supra, p. 295 U. S. 543. There, the commodity in question, although shipped from another state, had come to rest in the state of its destination, and, as the court pointed out, was no longer in a current or flow of interstate commerce. The Swift doctrine was rejected as inapposite. In the Schechter case, the flow had ceased. Here it had not begun. The difference is not one of substance. The applicable principle is the same.

Page 298 U. S. 307

But § 1 (the preamble) of the act now under review declares that all production and distribution of bituminous coal "bear upon and directly affect its interstate commerce", and that regulation thereof is imperative for the protection of such commerce. The contention of the government is that the labor provisions of the act may be sustained in that view.

That the production of every commodity intended for interstate sale and transportation has some effect upon interstate commerce may be, if it has not already been, freely granted, and we are brought to the final and decisive inquiry, whether here that effect is direct, as the "preamble" recites, or indirect. The distinction is not formal, but substantial in the highest degree, as we pointed out in the Schechter case, supra, p. 295 U. S. 546, et seq. "If the commerce clause were construed," we there said,

"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. Indeed, on such a theory, even the development of the State's commercial facilities would be subject to federal control."

It was also pointed out, p. 295 U. S. 548, that

"the distinction between direct and indirect effects of intrastate transactions upon interstate commerce must be recognized as a fundamental one, essential to the maintenance of our constitutional system."

Whether the effect of a given activity or condition is direct or indirect is not always easy to determine. The word "direct" implies that the activity or condition invoked or blamed shall operate proximately -- not mediately, remotely, or collaterally -- to produce the effect. It connotes the absence of an efficient intervening agency

Page 298 U. S. 308

or condition. And the extent of the effect bears no logical relation to its character. The distinction between a direct and an indirect effect turns not upon the magnitude of either the cause or the effect, but entirely upon the manner in which the effect has been brought about. If the production by one man of a single ton of coal intended for interstate sale and shipment, and actually so sold and shipped, affects interstate commerce indirectly, the effect does not become direct by multiplying the tonnage, or increasing the number of men employed, or adding to the expense or complexities of the business, or by all combined. It is quite true that rules of law are sometimes qualified by considerations of degree, as the government argues. But the matter of degree has no bearing upon the question here, since that question is not what is the extent of the local activity or condition, or the extent of the effect produced upon interstate commerce?, but what is the relation between the activity or condition and the effect?

Much stress is put upon the evils which come from the struggle between employers and employees over the matter of wages, working conditions, the right of collective bargaining, etc., and the resulting strikes, curtailment and irregularity of production and effect on prices, and it is insisted that interstate commerce is greatly affected thereby. But, in addition to what has just been said, the conclusive answer is that the evils are all local evils over which the federal government has no legislative control. The relation of employer and employee is a local relation. At common law, it is one of the domestic relations. The wages are paid for the doing of local work. Working conditions are obviously local conditions. T he employees are not engaged in or about commerce, but exclusively in producing a commodity. And the controversies and evils which it is the object of the

Page 298 U. S. 309

act to regulate and minimize are local controversies and evils affecting local work undertaken to accomplish that local result. Such effect as they may have upon commerce, however extensive it may be, is secondary and indirect. An increase in the greatness of the effect adds to its importance. It does not alter its character.

The government's contentions in defense of the labor provisions are really disposed of adversely by our decision in the Schechter case, supra. The only perceptible difference between that case and this is that, in the Schechter case, the federal power was asserted with respect to commodities which had come to rest after their interstate transportation, while here

the case deals with commodities at rest before interstate commerce has begun. That difference is without significance. The federal regulatory power ceases when interstate commercial intercourse ends; and, correlatively, the power does not attach until interstate commercial intercourse begins. There is no basis in law or reason for applying different rules to the two situations. No such distinction can be found in anything said in the Schechter case. On the contrary, the situations were recognized as akin. In the opinion, at page 295 U. S. 546, after calling attention to the fact that, if the commerce clause could be construed to reach transactions having 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, we said: "Indeed, on such a theory, even the development of the State's commercial facilities would be subject to federal control." And again, after pointing out that hours and wages have no direct relation to interstate commerce and that, if the federal government had power to determine the wages and hours of employees in the internal commerce of a state because of their relation to cost and prices and their

Page 298 U. S. 310

indirect effect upon interstate commerce, we said, p. 295 U. S. 549:

"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."

A reading of the entire opinion makes clear what we now declare, that the want of power on the part of the federal government is the same whether the wages hours of service, and working conditions, and the bargaining about them, are related to production before interstate commerce has begun or to sale and distribution after it has ended.

Sixth. That the act, whatever it may be in form, in fact, is compulsory clearly appears. We have already discussed § 3, which imposes the excise tax as a penalty to compel "acceptance" of the code. Section 14 provides that the United States shall purchase no bituminous coal produced at any mine where the producer has not complied with the provisions of the code, and that each contract made by the United States shall contain a provision that the contractor will buy no bituminous coal to use on, or in the carrying out of, such contract unless the producer be a member of the code, as certified by the coal commission. In the light of these provisions, we come to a consideration of subdivision (g) of Part III of § 4, dealing with "Labor Relations."

That subdivision delegates the power to fix maximum hours of labor to a part of the producers and the miners -- namely, "the producers of more than two-thirds of the annual national tonnage production for the preceding calendar year" and "more than one-half of the mine workers employed", and to producers of more than two-thirds of the district annual tonnage during the preceding calendar year and a majority of the miners, there is delegated the power to fix minimum wages for the district

Page 298 U. S. 311

or group of districts. The effect, in respect of wages and hours, is to subject the dissentient minority, either of producers or miners or both, to the will of the stated majority, since, by refusing to submit, the minority at once incurs the hazard of enforcement of the drastic compulsory provisions of the act to which we have referred. To "accept," in these circumstances, is not to exercise a choice, but to surrender to force.

The power conferred upon the majority is, in effect, the power to regulate the affairs of an unwilling minority. This is legislative delegation in its most obnoxious form, for it is not even delegation to an official or an official body, presumptively disinterested, but to private persons whose interests may be and often are adverse to the interests of others in the same business. The record shows that the conditions of competition differ among the various localities. In some, coal dealers compete among themselves. In other localities, they also compete with the mechanical production of electrical energy and of natural gas. Some coal producers favor the Code; others oppose it, and the record clearly indicates that this diversity of view arises from their conflicting and even antagonistic interests. The difference between producing coal and regulating its production is, of course, fundamental. The former is a private activity; the latter is necessarily a governmental function, since, in the very nature of things, one person may not be entrusted with the power to regulate the business of another, and especially of a competitor. And a statute which attempts to confer such power

undertakes an intolerable and unconstitutional interference with personal liberty and private property. The delegation is so clearly arbitrary, and so clearly a denial of rights safeguarded by the due process clause of the Fifth Amendment, that it is unnecessary to do more than refer to decisions of this court which foreclose the question. Schechter Corp. v. United States,

Page 298 U. S. 312

295 U.S. at p. 295 U. S. 537; Eubank v. Richmond, 226 U. S. 137, 226 U. S. 143; Seattle Trust Co. v. Roberge, 278 U. S. 116, 278 U. S. 121-122.

Seventh. Finally, we are brought to the price-fixing provisions of the code. The necessity of considering the question of their constitutionality will depend upon whether they are separable from the labor provisions, so that they can stand independently. Section 15 of the act provides:

"If any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of the Act and the application of such provisions to other persons or circumstances shall not be affected thereby."

In the absence of such a provision, the presumption is that the legislature intends an act to be effective as an entirety -- that is to say, the rule is against the mutilation of a statute, and if any provision be unconstitutional, the presumption is that the remaining provisions fall with it. The effect of the statute is to reverse this presumption in favor of inseparability and create the opposite one of separability. Under the nonstatutory rule, the burden is upon the supporter of the legislation to show the separability of the provisions involved. Under the statutory rule, the burden is shifted to the assailant to show their inseparability. But, under either rule, the determination, in the end, is reached by applying the same test -- namely, what was the intent of the lawmakers?

Under the statutory rule, the presumption must be overcome by considerations which establish "the clear probability that the invalid part being eliminated, the legislature would not have been satisfied with what remains," Williams v. Standard Oil Co., 278 U. S. 235, 278 U. S. 241 et seq.; or, as stated in Utah Power & L. Co. v. Pfost, 286 U. S. 165, 286 U. S. 184-185, "the clear probability that the legislature would not have been satisfied with the statute unless

Page 298 U. S. 313

it had included the invalid part." Whether the provisions of a statute are so interwoven that, one being held invalid, the others must fall, presents a question of statutory construction and of legislative intent, to the determination of which the statutory provision becomes an aid. "But it is an aid merely; not an inexorable command."Dorchy v. Kansas, 264 U. S. 286, 264 U. S. 290. The presumption in favor of separability does not authorize the court to give the statute "an effect altogether different from that sought by the measure viewed as a whole." Railroad Retirement Board v. Alton R. Co., 295 U. S. 330, 295 U. S. 362.

The statutory aid to construction in no way alters the rule that, in order to hold one part of a statute unconstitutional and uphold another part as separable, they must not be mutually dependent upon one another. Perhaps a fair approach to a solution of the problem is to suppose that, while the bill was pending in Congress, a motion to strike out the labor provisions had prevailed, and to inquire whether, in that event, the statute should be so construed as to justify the conclusion that Congress, notwithstanding, probably would not have passed the price-fixing provisions of the code.

Section 3 of the act, which provides that no producer shall, by accepting the code or the drawback of taxes, be estopped from contesting the constitutionality of any provision of the code, is thought to aid the separability clause. But the effect of that provision is simply to permit the producer to challenge any provision of the code despite his acceptance of the code or the drawback. It seems not to have anything to do with the question of separability.

With the foregoing principles in mind, let us examine the act itself. The title of the act and the preamble demonstrate, as we have already seen, that Congress desired to accomplish certain general purposes therein recited. To that end, it created a commission, with mandatory

Page 298 U. S. 314

directions to formulate into a working agreement the provisions set forth in § 4 of the act. That being done, the result is a code. Producers accepting and operating under the code are to be known as code members, and § 4 specifically requires that, in order to carry out the policy of the act, "the code shall contain the following conditions, provisions, and obligations . . . ," which are then set forth. No power is vested in the commission, in formulating the code, to omit any of these conditions, provisions, or obligations. The mandate to include them embraces all of them. Following the requirement just quoted, and, significantly, in the same section(International Textbook Co. v. Pigg, 217 U. S. 91, 217 U. S. 112-113) under appropriate headings, the price-fixing and labor-regulating provisions are set out in great detail. These provisions, plainly meant to operate together and not separately, constitute the means designated to bring about the stabilization of bituminous coal production, and thereby to regulate or affect interstate commerce in such coal. The first clause of the title is: "To stabilize the bituminous coal mining industry and promote its interstate commerce."

Thus, the primary contemplation of the act is stabilization of the industry through the regulation of labor and the regulation of prices; for, since both were adopted, we must conclude that both were thought essential. The regulations of labor, on the one hand, and prices, on the other, furnish mutual aid and support, and their associated force -- not one or the other, but both combined -- was deemed by Congress to be necessary to achieve the end sought. The statutory mandate for a code upheld by two legs at once suggests the improbability that Congress would have assented to a code supported by only one.

This seems plain enough, for Congress must have been conscious of the fact that elimination of the labor provisions

Page 298 U. S. 315

from the act would seriously impair, if not destroy, the force and usefulness of the price provisions. The interdependence of wages and prices is manifest. Approximately two-thirds of the cost of producing a ton of coal is represented by wages. Fair prices necessarily depend upon the cost of production, and since wages constitute so large a proportion of the cost, prices cannot be fixed with any proper relation to cost without taking into consideration this major element. If one of them becomes uncertain, uncertainty with respect to the other necessarily ensues.

So much is recognized by the code itself. The introductory clause of Part III declares that the conditions respecting labor relations are "To effectuate the purposes of this Act." And subdivision (a) of Part II, quoted in the forepart of this opinion, reads in part:

"In order to sustain the stabilization of wages, working conditions, and maximum hours of labor, said prices shall be established so as to yield a return per net ton for each district in a minimum price area . . . equal as nearly as may be to the weighted average of the total costs, per net ton. . . ."

Thus, wages, hours of labor, and working conditions are to be so adjusted as to effectuate the purposes of the act, and prices are to be so regulated as to stabilize wages, working conditions, and hours of labor which have been or are to be fixed under the labor provisions. The two are so woven together as to render the probability plain enough that uniform prices, in the opinion of Congress, could not be fairly fixed or effectively regulated without also regulating these elements of labor which enter so largely into the cost of production.

These two sets of requirements are not like a collection of bricks, some of which may be taken away without disturbing the others, but rather are like the interwoven threads constituting the warp and woof of a fabric, one

Page 298 U. S. 316

set of which cannot be removed without fatal consequences to the whole. Paraphrasing the words of this court in Butts v. Merchants Transportation Co., 230 U. S. 126, 230 U. S. 133, we inquire: what authority has this court, by construction, to convert the manifest purpose of Congress to regulate production by the mutual operation and interaction of fixed wages and fixed prices into a purpose to regulate the subject by the operation of the latter alone? Are we at liberty to say from the fact that Congress has adopted an entire integrated system that it probably would have enacted a doubtfully effective

fraction of the system? The words of the concurring opinion in the Schechter case, 295 U.S. at pages 295 U. S. 554-555, are pertinent in reply.

"To take from this code the provisions as to wages and the hours of labor is to destroy it altogether. . . . Wages and the hours of labor are essential features of the plan, its very bone and sinew. There is no opportunity in such circumstances for the severance of the infected parts in the hope of saving the remainder."

The conclusion is unavoidable that the price-fixing provisions of the code are so related to and dependent upon the labor provisions as conditions, considerations or compensations as to make it clearly probable that, the latter being held bad, the former would not have been passed. The fall of the latter, therefore, carries down with it the former. International Textbook Co. v. Pigg, supra, p. 217 U. S. 113; Warren v. Charlestown, 2 Gray [Mass.] 84, 98-99.

The price-fixing provisions of the code are thus disposed of without coming to the question of their constitutionality; but neither this disposition of the matter nor anything we have said is to be taken as indicating that the court is of opinion that these provisions, if separately enacted, could be sustained.

If there be in the act provisions, other than those we have considered, that may stand independently, the

Page 298 U. S. 317

question of their validity is left for future determination when, if ever, that question shall be presented for consideration.

The decrees in Nos. 636, 649, and 650 must be reversed and the causes remanded for further consideration in conformity with this opinion. The decree in No. 651 will be affirmed.

It is so ordered.

Separate opinion of MR. CHIEF JUSTICE HUGHES.

I agree that the stockholders were entitled to bring their suits; that, in view of the question whether any part of the Act could be sustained, the suits were not premature; that the so-called tax is not a real tax, but a penalty; that the constitutional power of the Federal Government to impose this penalty must rest upon the commerce clause, as the Government concedes; that production -- in this case, mining -- which precedes commerce is not itself commerce, and that the power to regulate commerce among the several States is not a power to regulate industry within the State.

The power to regulate interstate commerce embraces the power to protect that commerce from injury, whatever may be the source of the dangers which threaten it, and to adopt any appropriate means to that end. Second Employers' Liability Cases, 223 U. S. 1, 223 U. S. 51. Congress thus has adequate authority to maintain the orderly conduct of interstate commerce and to provide for the peaceful settlement of disputes which threaten it. Texas & N.O. R. Co. v. Railway Clerks, 281 U. S. 548, 281 U. S. 570. But Congress may not use this protective authority as a pretext for the exertion of power to regulate activities and relations within the States which affect interstate commerce only indirectly. Otherwise, in view of the multitude of indirect effect, Congress, in its discretion,

Page 298 U. S. 318

could assume control of virtually all the activities of the people, to the subversion of the fundamental principle of the Constitution. If the people desire to give Congress the power to regulate industries within the State, and the relations of employers and employees in those industries, they are at liberty to declare their will in the appropriate manner, but it is not for the Court to amend the Constitution by judicial decision.

I also agree that subdivision (g) of Part III of the prescribed Code is invalid upon three counts: (1) It attempts a broad delegation of legislative power to fix hours and wages without standards or limitation. The Government invokes the analogy of legislation which becomes effective on the happening of a specified event, and says that, in this case, the event is the agreement of a certain proportion of producers and employees, whereupon the other producers and

employees become subject to legal obligations accordingly. I think that the argument is unsound, and is pressed to the point where the principle would be entirely destroyed. It would remove all restrictions upon the delegation of legislative power, as the making of laws could thus be referred to any designated officials or private persons whose orders or agreements would be treated as "events," with the result that they would be invested with the force of law having penal sanctions. (2) The provision permits a group of producers and employees, according to their own views of expediency, to make rules as to hours and wages for other producers and employees who were not parties to the agreement. Such a provision, apart from the mere question of the delegation of legislative power, is not in accord with the requirement of due process of law which under the Fifth Amendment dominates the regulations which Congress may impose. (3) The provision goes beyond any proper measure of protection of interstate

Page 298 U. S. 319

commerce, and attempts a broad regulation of industry within the State.

But that is not the whole case. The Act also provides for the regulation of the prices of bituminous coal sold in interstate commerce, and prohibits unfair methods of competition in interstate commerce. Undoubtedly, transactions in carrying on interstate commerce are subject to the federal power to regulate that commerce, and the control of charges and the protection of fair competition in that commerce are familiar illustrations of the exercise of the power, as the Interstate Commerce Act, the Packers and Stockyards Act, and the Anti-Trust Acts abundantly show. The Court has repeatedly stated that the power to regulate interstate commerce among the several States is supreme and plenary. Minnesota Rate Cases, 230 U. S. 352, 230 U. S. 398. It is

"complete in itself, and may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution."

22 U. S. 196. We are not at liberty to deny to the Congress, with respect to interstate commerce, a power commensurate with that enjoyed by the States in the regulation of their internal commerce. See Nebbia v. New York,@ 291 U. S. 502.

Whether the policy of fixing prices of commodities sold in interstate commerce is a sound policy is not for our consideration. The question of that policy, and of its particular applications, is for Congress. The exercise of the power of regulation is subject to the constitutional restriction of the due process clause, and if, in fixing rates, prices or conditions of competition, that requirement is transgressed, the judicial power may be invoked to the end that the constitutional limitation may be maintained. Interstate Commerce Comm'n v. Union Pacific R. Co., 222 U. S. 541, 222 U. S. 547; St. Joseph Stock Yards Co. v. United States, ante, p. 298 U. S. 38.

Page 298 U. S. 320

In the legislation before us, Congress has set up elaborate machinery for the fixing of prices of bituminous coal sold in interstate commerce. That provision is attackedin limine. Prices have not yet been fixed. If fixed, they may not be contested. If contested, the Act provides for review of the administrative ruling. If, in fixing prices, due process is violated by arbitrary, capricious or confiscatory action, judicial remedy is available. If an attempt is made to fix prices for sales in intrastate commerce, that attempt will also be subject to attack by appropriate action. In that relation, it should be noted that, in the Carter cases, the court below found that substantially all the coal mined by the Carter Coal Company is sold f.o.b. mines, and is transported into States other than those in which it is produced for the purpose of filling orders obtained from purchasers in such States. Such transactions are in interstate commerce. Savage v. Jones, 225 U. S. 501, 225 U. S. 520. The court below also found that "the interstate distribution and sale and the intrastate distribution and sale" of the coal are so "intimately and inextricably connected" that

"the regulation of interstate transactions of distribution and sale cannot be accomplished effectively without discrimination against interstate commerce unless transactions of intrastate distribution and sale be regulated."

Substantially the same situation is disclosed in the Kentucky cases. In that relation, the Government invokes the analogy of transportation rates. Shreveport Case,234 U. S. 342; Wisconsin Railroad Comm'n v. Chicago, B. & Q. R. Co., 257 U. S. 563. The question will be the subject of consideration when it arises in any particular application of the Act.

Upon what ground, then, can it be said that this plan for the regulation of transactions in interstate commerce in coal is beyond the constitutional power of Congress? The Court reaches that conclusion in the view that the

Page 298 U. S. 321

invalidity of the labor provisions requires us to condemn the Act in its entirety. I am unable to concur in that opinion. I think that the express provisions of the Act preclude such a finding of inseparability.

This is admittedly a question of statutory construction, and hence we must search for the intent of Congress. And, in seeking that intent, we should not fail to give full weight to what Congress itself has said upon the very point. The Act provides (§ 15):

"If any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of the Act and the application of such provisions to other persons or circumstances shall not be affected thereby.'"

That is a flat declaration against treating the provisions of the Act as inseparable. It is a declaration which Congress was competent to make. It is a declaration which reverses the presumption of indivisibility and creates an opposite presumption. Utah Power & Light Co. v. Pfost, 286 U. S. 165, 286 U. S. 184.

The above-quoted provision does not stand alone. Congress was at pains to make a declaration of similar import with respect to the provisions of the Code (§ 3):

"No producer shall by reason of his acceptance of the code provided for in section 4 or of the drawback of taxes provided in section 3 of this Act be held to be precluded or estopped from contesting the constitutionality of any provision of said code, or its validity as applicable to such producer."

This provision evidently contemplates, when read with the one first quoted, that a stipulation of the Code may be found to be unconstitutional, and yet that its invalidity shall not be regarded as affecting the obligations attaching to the remainder.

I do not think that the question of separability should be determined by trying to imagine what Congress would

Page 298 U. S. 322

have done if certain provisions found to be invalid were excised. That, if taken broadly, would lead us into a realm of pure speculation. Who can tell, amid the host of divisive influences playing upon the legislative body, what its reaction would have been to a particular excision required by a finding of invalidity? The question does not call for speculation of that sort, but rather for an inquiry whether the provisions are inseparable by virtue of inherent character. That is, when Congress states that the provisions of the Act are not inseparable and that the invalidity of any provision shall not affect others, we should not hold that the provisions are inseparable unless their nature, by reason of an inextricable tie, demands that conclusion.

All that is said in the preamble of the Act, in the directions to the Commission which the Act creates, and in the stipulations of the Code, is subject to the explicit direction of Congress that the provisions of the statute shall not be treated as forming an indivisible unit. The fact that the various requirements furnish to each other mutual aid and support does not establish indivisibility. The purpose of Congress, plainly expressed, was that, if a part of that aid were lost, the whole should not be lost. Congress desired that the Act and Code should be operative so far as they met the constitutional test. Thus, we are brought, as I have said, to the question whether, despite this purpose of Congress, we must treat the marketing provisions and the labor provisions as inextricably tied together because of their nature. I find no such tie. The labor provisions are themselves separated and placed in a separate part (Part III) of the Code. It seems quite clear that the validity of the entire Act cannot depend upon the provisions as to hours and wages in paragraph (g) of Part III. For what was contemplated by that paragraph is manifestly independent of

Page 298 U. S. 323

the other machinery of the Act, as it cannot become effective unless the specified proportion of producers and employees reach an agreement as to particular wages and hours. And the provision for collective bargaining in paragraphs (a) and (b) of Part III is apparently made separable from the Code itself by § 9 of the Act, providing, in substance, that the employees of all producers shall have the right of collective bargaining even when producers do not accept or maintain the Code.

The marketing provisions (Part II) of the Code naturally form a separate category. The interdependence of wages and prices is no clearer in the coal business than in transportation. But the broad regulation of rates in order to stabilize transportation conditions has not carried with it the necessity of fixing wages. Again, the requirement, in paragraph (a) of Part II, that district boards shall establish prices so as to yield a prescribed "return per net ton" for each district in a minimum price area in order "to sustain the stabilization of wages, working conditions and maximum hours of labor" does not link the marketing provisions to the labor provisions by an unbreakable bond. Congress evidently desired stabilization through both the provisions relating to marketing and those relating to labor, but the setting up of the two sorts of requirements did not make the one dependent upon the validity of the other. It is apparent that they are not so interwoven that they cannot have separate operation and effect. The marketing provisions in relation to interstate commerce can be carried out as provided in Part II without regard to the labor provisions contained in Part III. That fact, in the light of the congressional declaration of separability, should be considered of controlling importance.

In this view, the Act, and the Code for which it provides, may be sustained in relation to the provisions for

Page 298 U. S. 324

marketing in interstate commerce, and the decisions of the courts below, so far as they accomplish that result, should be affirmed.

MR. JUSTICE CARDOZO (dissenting in Nos. 636, 649 and 650, and in No. 651 concurring in the result).

My conclusions, compendiously stated, are these:

(a) Part II of the statute sets up a valid system of price-fixing as applied to transactions in interstate commerce and to those in intrastate commerce where interstate commerce is directly or intimately affected. The prevailing opinion holds nothing to the contrary.

(b) Part II, with its system of price-fixing, is separable from Part III, which contains the provisions as to labor considered and condemned in the opinion of the court.

(c) Part II being valid, the complainants are under a duty to come in under the code, and are subject to a penalty if they persist in a refusal.

(d) The suits are premature insofar as they seek a judicial declaration as to the validity or invalidity of the regulations in respect of labor embodied in Part III. No opinion is expressed, either directly or by implication, as to those aspects of the case. It will be time enough to consider them when there is the threat, or even the possibility, of imminent enforcement. If that time shall arrive, protection will be given by clear provisions of the statute (§ 3) against any adverse inference flowing from delay or acquiescence.

(e) The suits are not premature to the extent that they are intended to avert a present wrong, though the wrong upon analysis will be found to be unreal.

The complainants are asking for a decree to restrain the enforcement of the statute in all or any of its provisions on the ground that it is a void enactment, and void in all its parts. If some of its parts are valid and are separable from others that are or may be void, and if the parts upheld and separated are sufficient to sustain a

Page 298 U. S. 325

regulatory penalty, the injunction may not issue, and hence the suits must fail. There is no need when that conclusion has been reached to stir a step beyond. Of the provisions not considered, some may never take effect, at least in the absence of future happenings which are still uncertain and contingent. Some may operate in one way as to one group and in another way as to others, according to particular conditions as yet unknown and unknowable. A decision in advance as to the operation and validity of separable provisions in varying contingencies is premature, and hence unwise.

"The court will not 'anticipate a question of constitutional law in advance of the necessity of deciding it.' Steamship Co. v. Emigration Commissioners, 113 U. S. 33, 113 U. S. 39; Abrams v. Van Schaick, 293 U. S. 188; Wilshire Oil Co. v. United States, 295 U. S. 100. 'It is not the habit of the Court to decide questions of a constitutional nature unless absolutely necessary to a decision of the case.' Burton v. United States, 196 U. S. 283, 196 U. S. 295."

Per Brandeis, J., in Ashwander v. Tennessee Valley Authority, 297 U. S. 288, 297 U. S. 346. The moment we perceive that there are valid and separable portions, broad enough to lay the basis for a regulatory penalty, inquiry should halt. The complainants must conform to whatever is upheld, and, as to parts excluded from the decision, especially if the parts are not presently effective, must make their protest in the future when the occasion or the need arises.

First: I am satisfied that the Act is within the power of the central government insofar as it provides for minimum and maximum prices upon sales of bituminous coal in the transactions of interstate commerce and in those of intrastate commerce where interstate commerce is directly or intimately affected. Whether it is valid also in other provisions that have been considered and condemned in the opinion of the court I do not find it necessary to determine at this time. Silence must not be taken as importing acquiescence. Much would have

Page 298 U. S. 326

to be written if the subject, even as thus restricted, were to be explored through all its implications, historical and economic as well as strictly legal. The fact that the prevailing opinion leaves the price provisions open for consideration in the future makes it appropriate to forego a fullness of elaboration that might otherwise be necessary. As a system of price-fixing, the Act is challenged upon three grounds: (1) because the governance of prices is not within the commerce clause; (2) because it is a denial of due process forbidden by the Fifth Amendment, and (3) because the standards for administrative action are indefinite, with the result that there has been an unlawful delegation of legislative power.

(1) With reference to the first objection, the obvious and sufficient answer is, so far as the Act is directed to interstate transactions, that sales made in such conditions constitute interstate commerce, and do not merely "affect" it. Dahnke-Walker Milling Co. v. Bondurant, 257 U. S. 282, 257 U. S. 290; Flanagan v. Federal Coal Co., 267 U. S. 222, 267 U. S. 225; Lemke v. Farmers Crain Co., 258 U. S. 50, 258 U. S. 60; Public Utilities Comm'n v. Attleboro Steam & Electric Co., 273 U. S. 83, 273 U. S. 90; Federal Trade Comm'n v. Pacific States Paper Trade Assn., 273 U. S. 52, 273 U. S. 64. To regulate the price for such transactions is to regulate commerce itself, and not alone its antecedent conditions or its ultimate consequences. The very act of sale is limited and governed. Prices in interstate transactions may not be regulated by the states. Baldwin v. Seelig, 294 U. S. 511. They must therefore be subject to the power of the nation unless they are to be withdrawn altogether from governmental supervision. Cf. Head Money Cases, 112 U. S. 580, 112 U. S. 593; Story, Commentaries on the Constitution, § 1082. If such a vacuum were permitted, many a public evil incidental to interstate transactions would be left without a remedy. This does not mean, of course, that prices may be fixed for arbitrary reasons or in an arbitrary way. The commerce power of the nation is

Page 298 U. S. 327

subject to the requirement of due process like the police power of the states. Hamilton v. Kentucky Distilleries Co., 251 U. S. 146, 251 U. S. 156; cf. Brooks v. United States, 267 U. S. 432, 267 U. S. 436, 267 U. S. 437; Nebbia v. New York, 291 U. S. 502, 291 U. S. 524. Heed must be given to similar considerations of social benefit or detriment in marking the division between reason and oppression. The evidence is overwhelming that Congress did not ignore those considerations in the adoption of this Act. What is to be said in that regard may conveniently be postponed to the part of the opinion dealing with the Fifth Amendment.

Regulation of prices being an exercise of the commerce power in respect of interstate transactions, the question remains whether it comes within that power as applied to intrastate sales where interstate prices are directly or intimately affected.

Mining and agriculture and manufacture are not interstate commerce considered by themselves, yet their relation to that commerce may be such that, for the protection of the one, there is need to regulate the other. Schechter Poultry Corp. v. United States, 295 U. S. 495, 295 U. S. 544, 295 U. S. 545, 295 U. S. 546. Sometimes it is said that the relation must be "direct" to bring that power into play. In many circumstances, such a description will be sufficiently precise to meet the needs of the occasion. But a great principle of constitutional law is not susceptible of comprehensive statement in an adjective. The underlying thought is merely this -- that "the law is not indifferent to considerations of degree." Schechter Poultry Corp. v. United States, supra, concurring opinion, p. 295 U. S. 554. It cannot be indifferent to them without an expansion of the commerce clause that would absorb or imperil the reserved powers of the states. At times, as in the case cited, the waves of causation will have radiated so far that their undulatory motion, if discernible at all, will be too faint or obscure, too broken by cross-currents, to be heeded by the law. In such circumstances,

Page 298 U. S. 328

the holding is not directed at prices or wages considered in the abstract, but at prices or wages in particular conditions. The relation may be tenuous, or the opposite, according to the facts. Always, the setting of the facts is to be viewed if one would know the closeness of the tie. Perhaps, if one group of adjectives is to be chosen in preference to another, "intimate" and "remote" will be found to be as good as any. At all events, "direct" and "indirect," even if accepted as sufficient, must not be read too narrowly. Cf. Stone, J., in Di Santo v. Pennsylvania., 273 U. S. 34, 273 U. S. 44. A survey of the cases shows that the words have been interpreted with suppleness of adaptation and flexibility of meaning. The power is as broad as the need that evokes it.

One of the most common and typical instances of a relation characterized as direct has been that between interstate and intrastate rates for carriers by rail where the local rates are so low as to divert business unreasonably from interstate competitors. In such circumstances, Congress has the power to protect the business of its carriers against disintegrating encroachments. Shreveport Case, 234 U. S. 342, 234 U. S. 351, 352; Wisconsin Railroad Comm'n v. Chicago, B. & Q. R. Co.,257 U. S. 563, 257 U. S. 588; United States v. Louisiana, 290 U. S. 70, 290 U. S. 75; Florida v. United States, 292 U. S. 1. To be sure, the relation even then may be characterized as indirect if one is nice or over-literal in the choice of words. Strictly speaking, the intrastate rates have a primary effect upon the intrastate traffic, and not upon any other, though the repercussions of the competitive system may lead to secondary consequences affecting interstate traffic also. Atlantic Coast Line R. Co. v. Florida, 295 U. S. 301, 295 U. S. 306. What the cases really mean is that the causal relation in such circumstances is so close and intimate and obvious as to permit it to be called direct without subjecting the word to an unfair or excessive strain. There is a like immediacy

Page 298 U. S. 329

here. Within rulings the most orthodox, the prices for intrastate sales of coal have so inescapable a relation to those for interstate sales that a system of regulation for transactions of the one class is necessary to give adequate protection to the system of regulation adopted for the other. The argument is strongly pressed by intervening counsel that this may not be true in all communities or in exceptional conditions. If so, the operators unlawfully affected may show that the Act, to that extent, is invalid as to them. Such partial invalidity is plainly an insufficient basis for a declaration that the Act is invalid as a whole. Dahnke-Walker Co. v. Bondurant, supra, p. 257 U. S. 289; DuPont v. Commissioner, 289 U. S. 685, 289 U. S. 688.

What has been said in this regard is said with added certitude when complainants' business is considered in the light of the statistics exhibited in the several records. In No. 636, the Carter case, the complainant has admitted that "substantially all" (over 97 1/2%) of the sales of the Carter Company are made in interstate commerce. In No. 649 the percentages of intrastate sales are, for one of the complaining companies, twenty-five percent, for another, one percent, and for most of the others, two percent or four. The Carter Company has its mines in West Virginia; the mines of the other companies are located in Kentucky. In each of those states, moreover, coal from other regions is purchased in large quantities, and is thus brought into competition with the coal locally produced. Plainly, it is impossible to say, either from the statute itself or from any figures laid before us, that interstate sales will not be prejudicially affected in West Virginia and Kentucky if intrastate prices are maintained on a lower level. If it be assumed for present purposes that there are other states or regions where the effect may be different, the complainants are not the champions of any rights except their own. 204 U. S. 160, 161; Premier-Pabst Sales Co. v. Grosscup, ante,@ p. 298 U. S. 226.

(2) The commerce clause being accepted as a sufficient source of power, the next inquiry must be whether the power has been exercised consistently with the Fifth Amendment. In the pursuit of that inquiry, Nebbia v. New York, 291 U. S. 502, lays down the applicable principle. There, a statute of New York prescribing a minimum price for milk was upheld against the objection that price-fixing was forbidden by the Fourteenth Amendment. [Footnote 1] We found it a sufficient reason to uphold the challenged system that

"the conditions or practices in an industry make unrestricted competition an inadequate safeguard of the consumer's interest, produce waste harmful to the public, threaten ultimately to cut off the supply of a commodity needed by the public, or portend the destruction of the industry itself."

291 U.S. at p. 291 U. S. 538.

All this may be said, and with equal, if not greater force, of the conditions and practices in the bituminous coal industry, not only at the enactment of this statute in August, 1935, but for many years before. Overproduction was at a point where free competition had been degraded into anarchy. Prices had been cut so low that profit had become impossible for all except the lucky

Page 298 U. S. 331

handful. Wages came down along with prices and with profits. There were strikes, at times nationwide in extent, at other times spreading over broad areas and many mines, with the accompaniment of violence and bloodshed and misery and bitter feeling. The sordid tale is unfolded in many a document and treatise. During the twenty-three years between 1913 and 1935, there were nineteen investigations or hearings by Congress or by specially created commissions with reference to conditions in the coal mines. [Footnote 2] The hope of betterment was faint unless the industry could be subjected to the compulsion of a code. In the weeks immediately preceding the passage of this Act, the country was threatened once more with a strike of ominous proportions. The plight of the industry was not merely a menace to owners and to mine workers; it was and had long been a menace to the public, deeply concerned in a steady and uniform supply of a fuel so vital to the national economy.

Congress was not condemned to inaction in the face of price wars and wage wars so pregnant with disaster. Commerce had been choked and burdened; its normal flow had been diverted from one state to another; there had been bankruptcy and waste and ruin alike for capital and for labor. The liberty protected by the Fifth Amendment does not include the right to persist in this anarchic riot.

"When industry is grievously hurt, when producing concerns fail, when unemployment mounts and communities dependent upon profitable production are prostrated, the wells of commerce go dry."

Appalachian Coals, Inc. v. United States, 288 U. S. 344, 288 U. S. 372. The free competition so often figured as a social good imports order and moderation and a decent regard for the welfare of the group. Cf. 297 U. S. Inc. v.

Page 298 U. S. 332

United States, 297 U. S. 553. There is testimony in these records, testimony even by the assailants of the statute, that only through a system of regulated prices can the industry be stabilized and set upon the road of orderly and peaceful progress. [Footnote 3] If further facts are looked for, they are narrated in the findings, as well as in congressional reports and a mass of public records. [Footnote 4] After making every allowance for difference of opinion as to the most efficient cure, the student of the subject is confronted with the indisputable truth that there were ills to be corrected, and ills that had a direct relation to the maintenance of commerce among the states without friction or diversion. An evil existing, and also the power to correct it, the lawmakers were at liberty to use their own discretion in the selection of the means. [Footnote 5]

(3) Finally, and in answer to the third objection to the statute in its price-fixing provisions, there has been no excessive delegation of legislative power. The prices

Page 298 U. S. 333

to be fixed by the District Boards and the Commission must conform to the following standards: they must be just and equitable; they must take account of the weighted average cost of production for each minimum price area; they must not be unduly prejudicial or preferential as between districts or as between producers within a district, and they must reflect as nearly as possible the relative market value of the various kinds, qualities and sizes of coal, at points of delivery in each common consuming market area; to the end of affording the producers in the several districts substantially the same opportunity to dispose of their coals on a competitive basis as has heretofore existed. The minimum for any district shall yield a return, per net ton, not less than the weighted average of the total costs per net ton of the tonnage of the minimum price area; the maximum for any mine, if a maximum is fixed, shall yield a return not less than cost plus a reasonable profit. Reasonable prices can as easily be ascertained for coal as for the carriage of passengers or property under the Interstate Commerce Act, or for the services of brokers in the stockyards (Tagg Bros. & Moorhead v. United States, 280 U. S. 420), or for the use of dwellings under the Emergency Rent Laws (Block v. Hirsh, 256 U. S. 135, 256 U. S. 157; Marcus Brown Co. v. Feldman, 256 U. S. 170; Levy Leasing Co. v. Siegel, 258 U. S. 242), adopted at a time of excessive scarcity, when the laws of supply and demand no longer gave a measure for the ascertainment of the reasonable. The standards established by this Act are quite as definite as others that have had the approval of this court. New York Central Securities Corp. v. United States, 287 U. S. 12, 287 U. S. 24; Federal Radio Comm'n v. Nelson Bros. Bond & Mortgage Co., 289 U. S. 266, 289 U. S. 286; Tagg Bros. & Moorhead v. United States, supra; Mabler v. Eby, 264 U. S. 32. Certainly a bench of judges, not experts in the coal business, cannot

Page 298 U. S. 334

say with assurance that members of a commission will be unable, when advised and informed by others experienced in the industry, to make the standards workable, or to overcome, through the development of an administrative technique, many obstacles and difficulties that might be baffling or confusing to inexperience or ignorance.

The price provisions of the Act are contained in a chapter known as Part II. The final subdivisions of that part enumerate certain forms of conduct which are denounced as "unfair methods of competition." For the most part, the prohibitions are ancillary to the fixing of a minimum price. The power to fix a price carries with it the subsidiary power to forbid and prevent evasion. Cf. United States v. Ferger, 250 U. S. 199. The few prohibitions that may be viewed as separate are directed to situations that may never be realized in practice. None of the complainants threatens or expresses the desire to do these forbidden acts. As to those phases of the statute, the suits are premature.

Second: the next inquiry must be whether Part I of the statute, which creates the administrative agencies, and Part II, which has to do in the main with the price-fixing machinery as well as preliminary sections levying a tax or penalty, are separable from Part III, which deals with labor relations in the industry, with the result that what is earlier would stand if what is later were to fall.

The statute prescribes the rule by which construction shall be governed.

"If any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of the Act and the application of such provisions to other persons or circumstances shall not be affected thereby."

§ 15. The rule is not read as an inexorable mandate. Dorchy v. Kansas, 264 U. S. 286, 264 U. S. 290; 286 U. S. 184; Railroad Retirement Board v. Alton R. Co.,@ 295 U. S. 330, 295 U. S. 362. It creates a "presumption of divisibility," which is not applied mechanically or in a manner to frustrate the intention of the lawmakers. Even so, the burden is on the litigant who would escape its operation. Here, the probabilities of intention are far from overcoming the force of the presumption. They fortify and confirm it. A confirmatory token is the formal division of the statute into "Parts" separately numbered. Part III which deals with labor, is physically separate from everything that goes before it. But, more convincing than the evidences of form and structure, the division into chapters and sections and paragraphs, each with its proper subject matter, are the evidences of plan and function. Part II, which deals with prices, is to take effect at once, or as soon as the administrative agencies have finished their administrative work. Part III, in some of its most significant provisions, the section or subdivision in respect of wages and the hours of labor, may never take effect at all. This is clear beyond the need for argument from the mere reading of the statute. The maximum hours of labor may be fixed by agreement between the producers of more than two thirds of the annual national tonnage production for the

preceding calendar year and the representatives of more than one half the mine workers. Wages may be fixed by agreement or agreements negotiated by collective bargaining in any district or group of two or more districts between representatives of producers of more than two thirds of the annual tonnage production of such districts or each of such districts in a contracting group during the preceding calendar year, and representatives of the majority of the mine workers therein. It is possible that none of these agreements as to hours and wages will ever be made. If made, they may not be completed for months, or even years. In the meantime, however, the provisions

Page 298 U. S. 336

of Part II will be continuously operative, and will determine prices in the industry. Plainly, then, there was no intention on the part of the framers of the statute that prices should not be fixed if the provisions for wages or hours of labor were found to be invalid.

Undoubtedly the rules as to labor relations are important provisions of the statute. Undoubtedly the lawmakers were anxious that provisions so important should have the force of law. But they announced with all the directness possible for words that they would keep what they could have if they could not have the whole. Stabilizing prices would go a long way toward stabilizing labor relations by giving the producers capacity to pay a living wage. [Footnote 6] To hold otherwise is to ignore the whole history of mining. All in vain have official committees

Page 298 U. S. 337

inquired and reported in thousands of printed pages if this lesson has been lost. In the face of that history, the court is now holding that Congress would have been unwilling to give the force of law to the provisions of Part II, which were to take effect at once, if it could not have Part III, which, in the absence of agreement between the employers and the miners, would never take effect at all. Indeed, the prevailing opinion goes so far, it seems, as to insist that if the least provision of the statute in any of the three chapters is to be set aside as void, the whole statute must go down for the reason that everything, from end to end, or everything, at all events, beginning with § 4, is part of the Bituminous Coal Code, to be swallowed at a single draught, without power in the commission, or even in the court, to abate a jot or tittle. One can only wonder what is left of the "presumption of divisibility" which the lawmakers were at pains to establish later on. Codes under the National Recovery Act are not a genuine analogy. The Recovery Act made it mandatory (§ 7a) that every code should contain provisions as to labor, including wages and hours, and left everything else to the discretion of the codifiers. Wages and hours in such circumstances were properly described as "essential features of the plan, its very bone and sinew" (Schechter Poultry Corp. v. United States, supra, concurring opinion, p. 295 U. S. 555), which, taken from the body of a code, would cause it to collapse. Here, on the face of the statute, the price provisions of one Part and the labor provisions of the other (the two to be administered by separate agencies) are made of equal rank.

What is true of the sections and subdivisions that deal with wages and the hours of labor is true also of the other provisions of the same chapter of the Act. Employees are to have the right to organize and bargain collectively through representatives of their own choosing,

Page 298 U. S. 338

and shall be free from interference, restraint or coercion of employers, or their agents, in the designation of such representatives, or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and no employee and no one seeking employment shall be required as a condition of employment to join any company union. No threat has been made by anyone to do violence to the enjoyment of these immunities and privileges. No attempt to violate them may be made by the complainants, or indeed by anyone else in the term of four years during which the Act is to remain in force. By another subdivision, employees are to have the right of peaceable assemblage for the discussion of the principles of collective bargaining, shall be entitled to select their own checkweighman to inspect the weighing or measuring of coal, and shall not be required, as a condition of employment, to live in company houses or to trade at the store of the employer. None of these privileges or immunities has been threatened with impairment. No attempt to impair them may ever be made by anyone.

Analysis of the statute thus leads to the conclusion that the provisions of Part III, so far as summarized, are separable from Parts I and II, and that any declaration in respect of their validity or invalidity under the commerce clause of the

Constitution or under any other section will anticipate a controversy that may never become real. This being so, the proper course is to withhold an expression of opinion until expression becomes necessary. A different situation would be here if a portion of the statute, and a portion sufficient to uphold the regulatory penalty, did not appear to be valid. If the whole statute were a nullity, the complainants would be at liberty to stay the hand of the tax gatherer threatening to collect the penalty, for collection in such circumstances would be a trespass, an illegal and forbidden act. 259 U. S. 62; Terrace v. Thompson, 263 U. S. 197, 263 U. S. 215; Pierce v. Society of Sisters,@ 268 U. S. 510, 268 U. S. 536. It would be no answer to say that the complainants might avert the penalty by declaring themselves code members ( § 3) and fighting the statute afterwards. In the circumstances supposed, there would be no power in the national government to put that constraint upon them. The Act by hypothesis, being void in all its parts as a regulatory measure, the complainants might stand their ground, refuse to sign anything, and resist the onslaught of the collector as the aggression of a trespasser. But the case, as it comes to us, assumes a different posture, a posture inconsistent with the commission of a trespass, either present or prospective. The hypothesis of complete invalidity has been shown to be unreal. The price provisions being valid, the complainants were under a duty to come in under the code whether the provisions as to labor are valid or invalid, and their failure to come in has exposed them to a penalty lawfully imposed. They are thus in no position to restrain the acts of the collector, or to procure a judgment defeating the operation of the statute, whatever may be the fate hereafter of particular provisions not presently enforceable. The right to an injunction failing, the suits must be dismissed. Nothing more is needful -- no pronouncement more elaborate -- for a disposition of the controversy.

A last assault upon the statute is still to be repulsed. The complainants take the ground that the Act may not coerce them through the imposition of a penalty into a seeming recognition or acceptance of the code, if any of the code provisions are invalid, however separable from others. I cannot yield assent to a position so extreme. It is one thing to impose a penalty for refusing to come in under a code that is void altogether. It is a very different thing if a penalty is imposed for

Page 298 U. S. 340

refusing to come in under a code invalid at the utmost in separable provisions, not immediated operative, the right to contest them being explicitly reserved. The penalty in those circumstances is adopted as a lawful sanction to compel submission to a statute having the quality of law. A sanction of that type is the one in controversy here. So far as the provisions for collective bargaining and freedom from coercion are concerned, the same duties are imposed upon employers by § 9 of the statute whether they come in under the code or not. So far as code members are subject to regulation as to wages and hours of labor, the force of the complainants' argument is destroyed when reference is made to those provisions of the statute in which the effect of recognition and acceptance is explained and limited. By § 3 of the Act,

"No producer shall by reason of his acceptance of the code provided for in section 4 or of the drawback of taxes provided for in section 3 of this Act be held to be precluded or estopped from contesting the constitutionality of any provision of said code, or its validity as applicable to said producer."

These provisions are reinforced and made more definite by §§ 5(c) and 6(b), which, so far as presently material, are quoted in the margin. [Footnote 7] For the subscriber to the code who is

Page 298 U. S. 341

doubtful as to the validity of some of its requirements, there is thus complete protection. If this might otherwise be uncertain, it would be made clear by our decision inEx parte Young, 209 U. S. 123, which was applied in the court below at the instance and for the benefit of one of these complainants to give relief against penalties accruing during suit. Helvering v. Carter, No. 651. Finally, the adequacy of the remedial devices is made even more apparent when one remembers that the attack upon the statute in its labor regulations assumes the existence of a controversy that may never become actual. The failure to agree upon a wage scale or upon maximum hours of daily or weekly labor may make the statutory scheme abortive in the very phases and aspects that the court has chosen to condemn. What the code will provide as to wages and hours of labor, or whether it will provide anything, is still in the domain of prophecy. The opinion of the court begins at the wrong end. To adopt a homely form of words, the complainants have been crying before they are really hurt.

My vote is for affirmance.

I am authorized to state that MR. JUSTICE BRANDEIS and MR. JUSTICE STONE join in this opinion.

[Footnote 1]

Hamilton v. Kentucky Distilleries Co., 251 U. S. 146, 251 U. S. 156:

"The war power of the United States, like its other powers and like the police power of the States, is subject to applicable constitutional limitations ( 71 U. S. 121-127; Monongahela Navigation Co. v. United States, 148 U. S. 312, 148 U. S. 336; United States v. Joint Traffic Assn., 171 U. S. 505, 171 U. S. 571; McCray v. United States, 195 U. S. 27, 195 U. S. 61; United States v. Cress, 243 U. S. 316, 243 U. S. 326); but the Fifth Amendment imposes in this respect no greater limitation upon the national power than does the Fourteenth Amendment upon state power. In re Kemmler, 136 U. S. 436, 136 U. S. 448; Carroll v. Greenwich Ins. Co.,@ 199 U. S. 401, 199 U. S. 410."

Cf. Brooks v. United States, 267 U. S. 432, 267 U. S. 436, 267 U. S. 437; Nebbia v. New York, 291 U. S. 502, 291 U. S. 524.

[Footnote 2]

The dates and titles are given in the brief for the Government in No. 636, at pp. 118.

[Footnote 3]

See also the Report of the Fifteenth Annual Meeting of the National Coal Association, October 26-27, 1934, and the statement of the resolutions adopted at the Sixteenth Annual Meeting as reported at hearings preliminary to the passage of this Act. Hearings before a Subcommittee of the Committee on Ways and Means, House of Representatives, 74th Congress, 1st Session, on H.R. 8479, pp. 20, 152.

[Footnote 4]

There is significance in the many bills proposed to the Congress after painstaking reports during successive national administrations with a view to the regulation of the coal industry by Congressional action. S. 2557, October 4, 1921, 67th Cong., 1st Sess.; S. 3147, February 13, 1922, 67th Cong., 2nd Sess.; H.R. 9222, February 11, 1926, 69th Cong., 1st Sess.; H.R. 11898, May 4, 1926 (S. 4177), 69th Cong., 1st Sess.; S. 2935, January 7, 1932 (H.R. 7536), 72nd Cong., 1st Sess.; also, same session, H.R. 12916 and 9924.

[Footnote 5]

"Price control, like any other form of discrimination, is unconstitutional only if arbitrary, discriminatory or demonstrably irrelevant to the policy the legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty."

Nebbia v. New York, supra, at p. 291 U. S. 538.

[Footnote 6]

At a hearing before a Subcommittee of the Committee on Ways and Means, House of Representatives, 74th Congress, First Session, on H.R. 8479, counsel for the United Mine Workers of America, who had cooperated in the drafting of the Act, said (p. 35):

"We have, as can be well understood, a provision of this code dealing with labor relations at the mines. We think that is justified; we think it is impossible to conceive of any regulation of this industry that does not provide for regulation of labor relations at the mines. I realize that, while it may be contested, yet I feel that it is going to be sustained."

"Also, there is a provision in this act that if this act, or any part of it, is declared to be invalid as affecting any person or persons, the rest of it will be valid, and if the other provisions of this act still stand and the labor provisions are struck down, we still want the act, because it stabilizes the industry and enables us to negotiate with them on a basis which will at least be different from what we have been confronted with since April, and that is a disinclination to even negotiate a labor wage scale because they claim they are losing money."

"If the labor provisions go down, we still want the industry stabilized, so that our union may negotiate with them on the basis of a living American wage standard."

[Footnote 7]

§ 5(c).

"Any producer whose membership in the code and whose right to a drawback on the taxes as provided under this Act has been canceled shall have the right to have his membership restored upon payment by him of all taxes in full for the time during which it shall be found by the Commission that his violation of the code or of any regulation thereunder, the observance of which is required by its terms, shall have continued. In making its findings under this subsection the Commission shall state specifically (1) the period of time during which such violation continued, and (2) the amount of taxes required to be paid to bring about reinstatement as a code member."

§ 6(b).

"Any person aggrieved by an order issued by the Commission or Labor Board in a proceeding to which such person is a party may obtain a review of such order in the Circuit Court of Appeals of the United States, within any circuit wherein such person resides or has his principal place of business, or in the United States Court of Appeals for the District of Columbia, by filing in such court, within sixty days after the entry of such order, a written petition praying that the order of the Commission or Labor Board be modified or set aside in whole or in part. . . . The judgment and decree of the court, affirming, modifying, and enforcing or setting aside, in whole or in part, any such order of the Commission or Labor Board, as the case may be, shall be final, subject to review by the Supreme Court of the United States upon certiorari or certification as provided in sections 239 and 240 of the Judicial Code, as amended (U.S.C. title 28, §§ 346 and 347.)"

WEST COAST HOTEL CO. V. PARRISH , 300 U.S. 379 (1937)

300 U.S. 379

WEST COAST HOTEL CO. v.

PARRISH et ux. No. 293.

Argued Dec. 16, 17, 1936. Decided March 29, 1937.

Appeal from the Supreme Court of the State of Washington. [ West Coast Hotel Co. v. Parrish 300 U.S. 379 (1937) ] [300 U.S. 379 , 380]

Messrs. E. L. Skeel and John W. Roberts, both of Seattle, Wash., for appellant.

Messrs. W. A. Toner, of Olympia, Wash., and

[300 U.S. 379 , 381] Sam M. Driver, of Wenatchee, Wash., for appellees.

[300 U.S. 379 , 386]

Mr. Chief Justice HUGHES delivered the opinion of the Court.

This case presents the question of the constitutional validity of the minimum wage law of the state of Washington.

The act, entitled 'Minimum Wages for Women,' authorizes the fixing of minimum wages for women and minors. Laws 1913 (Washington) c. 174, p. 602, Remington's Rev.Stat.(1932) 7623 et seq. It provides:

'Section 1. The welfare of the State of Washington demands that women and minors be protected from conditions of labor which have a pernicious effect on their health and norals. The State of Washington, therefore, exercising herein its police and sovereign power declares that inadequate wages and unsanitary conditions of labor exert such pernicious effect. 'Sec. 2. It shall be unlawful to employ women or minors in any industry or occupation within the State of Washington under conditions of labor detrimental to their health or morals; and it shall be unlawful to employ [300 U.S. 379 , 387] women workers in any industry within the State of Washington at wages which are not adequate for their maintenance. 'Sec. 3. There is hereby created a commission to be known as the 'Industrial Welfare Commission' for the State of Washington, to establish such standards of wages and conditions of labor for women and minors employed within the State of Washington, as shall be held hereunder to be reasonable and not detrimental to health and morals, and which shall be sufficient for the decent maintenance of women.'

Further provisions required the commission to ascertain the wages and conditions of labor of women and minors within the state. Public hearings were to be held. If after investigation the commission found that in any occupation, trade, or industry the wages paid to women were 'inadequate to supply them necessary cost of living and to maintain the workers in health,' the commission was empowered to call a conference of representatives of employers and employees together with disinterested persons representing the public. The conference was to recommend to the commission, on its request, an estimate of a minimum wage adequate for the purpose above stated, and on the approval of such a recommendation it became the duty of the commission to issue an obligatory order fixing minimum wages. Any such order might be reopened and the question reconsidered with the aid of the former conference or a new one. Special licenses were authorized for the employment of women who were 'physically defective or crippled by age or otherwise,' and also for apprentices, at less than the prescribed minimum wage.

By a later act the Industrial Welfare Commission was abolished and its duties were assigned to the Industrial Welfare Committee consisting of the Director of Labor and Industries, the Supervisor of Industrial Insurance, [300 U.S. 379 , 388] the Supervisor of Industrial Relations, theIndustrial Statistician, and the Supervisor of Women in Industry. Laws 1921 (Washington) c. 7, p. 12, Remington's Rev.Stat.(1932) 10840, 10893.

The appellant conducts a hotel. The appellee Elsie Parrish was employed as a chambermaid and (with her husband) brought this suit to recover the difference between the wages paid her and the minimum wage fixed pursuant to the state law. The minimum wage was $14.50 per week of 48 hours. The appellant challenged the act as repugnant to the due process clause of the Fourteenth Amendment of the Constitution of the United States. The Supreme Court of the state, reversing the trial court, sustained the statute and directed judgment for the plaintiffs. Parrish v. West Coast Hotel Co., 185 Wash. 581, 55 P.(2d) 1083. The case is here on appeal.

The appellant relies upon the decision of this Court in Adkins v. Children's Hospital, 261 U.S. 525, 24 A.L.R. 1238, which held invalid the District of Columbia Minimum Wage Act (40 Stat. 960) which was attacked under the due process clause of the Fifth Amendment. On the argument at bar, counsel for the appellees attempted to distinguish the Adkins Case upon the ground that the appellee was employed in a hotel and that the business of an innkeeper was affected with a public interest. That effort at distinction is obviously futile, as it appears that in one of the cases ruled by the Adkins opinion the employee was a woman employed as an elevator operator in a hotel. Adkins v. Lyons, 261 U.S. 525 , at page 542, 395, 24 A.L.R. 1238.

The recent case of Morehead v. New York ex rel. Tipaldo, 298 U.S. 587, 103 A.L.R. 1445, came here on certiorari to the New York court which had held the New York minimum wage act for women to be invalid. A minority of this Court thought that the New York statute was distinguishable in a material feature from that involved in the Adkins Case and that for that and other reasons the New [300 U.S. 379 , 389] York statute should be sustained. But the Court of Appeals of New York had said that it found no material difference between the two statutes and this Court held that the 'meaning of the statute' as fixed by the decision of the state court 'must be accepted here as if the meaning had been specifically expressed in the enactment.' 298 U.S. 587 , at page 609, 56 S. Ct. 918, 922, 103 A.L.R. 1445. That view led to the affirmance by this Court of the judgment in the Morehead Case, as the Court considered that the only question before it was whether the Adkins Case was distinguishable and that reconsideration of that decision had not been sought. Upon that point the Court said: 'The petition for the writ sought review upon the ground that this case (Morehead) is distinguishable from that one (Adkins). No application has been made for reconsideration of the constitutional question there decided. The validity of the principles upon which that decision rests is not challenged. This court confines itself to the ground upon which the writ was asked or granted . * * * Here the review granted was no broader than sought by the petitioner. * * * He is not entitled and does not ask to be heard upon the question whether the Adkins Case should be overruled. He maintains that it may be distinguished on the ground that the statutes are vitally dissimilar.' 298 U.S. 587 , at pp. 604, 605, 920, 103 A.L.R. 1445.

We think that the question which was not deemed to be open in the Morehead Case is open and is necessarily presented here. The Supreme Court of Washington has upheld the minimum wage statute of that state. It has decided that the statute is a reasonable exercise of the police power of the state. In reaching that conclusion, the state court has invoked principles long established by this Court in the application of the Fourteenth Amendment. The state court has refused to regard the decision in the Adkins Case as determinative and has pointed to our decisions both before and since that case as justifying its position. We are of the opinion that this ruling of [300 U.S. 379 , 390] the state court demands on our part a re-examination of the Adkins Case. The importance of the question, in which many states having similar laws are concerned, the close division by which the decision in the Adkins Case was reached, and the economic conditions which have supervened, and in the light of which the reasonableness of the exercise of the protective power of the state must be considered, make it not only appropriate, but we think imperative, that in deciding the present case the subject should receive fresh consideration.

The history of the litigation of this question may be briefly stated. The minimum wage statute of Washington was enacted over twenty-three years ago. Prior to the decision in the instant case, it had twice been held valid by the Supreme Court of the state. Larsen v. Rice, 100 Wash. 642, 171 P. 1037; Spokane Hotel Co. v. Younger, 113 Wash. 359, 194 P. 595. The Washington statute is essentially the same as that enacted in Oregon in the same year. Laws 1913 (Oregon) c. 62, p. 92. The validity of the latter act was sustained by the Supreme Court of Oregon in Stettler v. O'Hara, 69 Or. 519, 139 P. 743, L.R.A.1917C, 944, Ann.Cas.1916A, 217, and Simpson v. O'Hara, 70 Or. 261, 141 P. 158. These cases, after reargument, were affirmed here by an equally divided court, in 1917. 243 U.S. 629 . The law of Oregon thus continued in effect. The District of Columbia Minimum Wage Law (40 Stat. 960) was enacted in 1918. The statute was sustained by the Supreme Court of the District in the Adkins Case. Upon appeal the Court of Appeals of the District first affirmed that ruling, but on rehearing reversed it and the case came before this Court in 1923. The judgment of the Court of Appeals holding the act invalid was affirmed, but with Chief Justice Taft, Mr. Justice Holmes, and Mr. Justice Sanford dissenting, and Mr. Justice Brandeis taking no part. The dissenting opinions took the ground that the decision was at variance with the [300 U.S. 379 , 391] principles which this Court had frequently announced and applied. In 1925 and 1927, the similar ninimum wage statutes of Arizona and Arkansas were held invalid upon the authority of the Adkins Case. The Justices who had dissented in that case bowed to the ruling and Mr. Justice Brandeis dissented. Murphy v. Sardell, 269 U.S. 530 ; Donham v. West-Nelson Co., 273 U.S. 657 . The question did not come before us again until the last term in the Morehead Case, as already noted. In that case, briefs supporting the New York statute were submitted by the states of Ohio, Connecticut, Illinois, Massachusetts, New Hampshire, New Jersey, and Rhode Island. 298 U.S. page 604, note, 103 A.L.R. 1445. Throughout this entire period the Washington statute now under consideration has been in force.

The principle which must control our decision is not in doubt. The constitutional provision invoked is the due process clause of the Fourteenth Amendment governing the states, as the due process clause invoked in theAdkins Case governed Congress. In each case the violation alleged by those attacking minimum wage regulation for women is deprivation of freedom of contract. What is this freedom? The Constitution does not speak of freedom of contract. It speaks of liberty and prohibits the deprivation of liberty without due process of law. In prohibiting that deprivation, the Constitution does not recognize an absolute and uncontrollable liberty. Liberty in each of its phases has its history and

connotation. But the liberty safeguarded is liberty in a social organization which requires the protection of law against the evils which menace the health, safety, morals, and welfare of the people. Liberty under the Constitution is thus necessarily subject to the restraints of due process, and regulation which is reasonable in relation to its subject and is adopted in the interests of the community is due process. [300 U.S. 379 , 392] This essential limitation of liberty in general governs freedom of contract in particular. More than twenty-five years ago we set forth the applicable principle in these words, after referring to the cases where the liberty guaranteed by the Fourteenth Amendment had been broadly described. 1

'But it was recognized in the cases cited, as in many others, that freedom of contract is a qualified, and not an absolute, right. There is no absolute freedom to do as one wills or to contract as one chooses. The guaranty of liberty does not withdraw from legislative supervision that wide department of activity which consists of the making of contracts, or deny to government the power to provide restrictive safeguards. Liberty implies the absence of arbitrary restraint, not immunity from reasonable regulations and prohibitions imposed in the interests of the community.' Chicago, Burlington & Quincy R. Co. v. McGuire, 219 U.S. 549, 565 , 262.

This power under the Constitution to restrict freedom of contract has had many illustrations. 2 That it may be exercised in the public interest with respect to contracts[300 U.S. 379 , 393] between employer and employee is undeniable. Thus statutes have been sustained limiting employment in underground mines and smelters to eight hours a day (Holden v. Hardy, 169 U.S. 366 ); in requiring redemption in cash of store orders or other evidences of indebtedness issued in the payment of wages (Knoxville Iron Co. v. Harbison, 183 U.S. 13 ); in forbidding the payment of seamen's wages in advance (Patterson v. The Bark Eudora, 190 U.S. 169 ); in making it unlawful to contract to pay miners employed at quantity rates upon the basis of screened coal instead of the weight of the coal as originally produced in the mine (McLean v. Arkansas, 211 U.S. 539 ); in prohibiting contracts limiting liability for injuries to employees (Chicago, Burlington & Quincy R. Co. v. McGuire, supra); in limiting hours of work of employees in manufacturing establishments (Bunting v. Oregon, 243 U.S. 426 , Ann.Cas.1918A, 1043); and in maintaining workmen's compensation laws (New York Central R. Co. v. White, 243 U.S. 188 , L.R.A.1917D, 1, Ann.Cas.1917D, 629; Mountain Timber Co. v. Washington, 243 U.S. 219 , Ann.Cas.1917D, 642). In dealing with the relation of employer and employed, the Legislature has necessarily a wide field of discretion in order that there may be suitable protection of health and safety, and that peace and good order may be promoted through regulations designed to insure wholesome conditions of work and freedom from oppression. Chicago, Burlington & Quincy R. Co. v. McGuire, supra, 219 U.S. 549 , at page 570.

The point that has been strongly stressed that adult employees should be deemed competent to make their own contracts was decisively met nearly forty years ago in Holden v. Hardy, supra, where we pointed out the inequality in the footing of the parties. We said (Id., 169 U.S. 366, 397 , 390):

'The legislature has also recognized the fact, which the experience of legislators in many states has corroborated, that the proprietors of these establishments and their operatives do not stand upon an equality, and that [300 U.S. 379 , 394] their interests are, to a certain extent, conflicting. The former naturally desire to obtain as much labor as possible from their employe s, while the latter are often induced by the fear of discharge to conform to regulations which their judgment, fairly exercised, would pronounce to be detrimental to their health or strength. In other words, the proprietors lay down the rules, and the laborers are practically constrained to obey them. In such cases self-interest is often an unsafe guide, and the legislature may properly interpose its authority.'

And we added that the fact 'that both parties are of full age, and competent to contract, does not necessarily deprive the state of the power to interfere, where the parties do not stand upon an equality, or where the public heath demands that one party to the contract shall be protected against himself.' 'The state still retains an interest in his welfare, however reckless he may be. The whole is no greater than the sum of all the parts, and when the individual health, safety, and welfare are sacrificed or neglected, the state must suffer.'

It is manifest that this established principle is peculiarly applicable in relation to the employment of women in whose protection the state has a special interest. That phase of the subject received elaborate consideration in Muller v. Oregon (1908) 208 U.S. 412, 326 , 13 Ann.Cas. 957, where the constitutional authority of the state to limit the working hours of women was sustained. We emphasized the consideration that 'woman's physical structure and the performance of maternal functions place her at a disadvantage in the struggle for subsistence' and that her physical well being 'becomes an object of public interest and care in order to preserve the strength and vigor of the race.' We emphasized the need of

protecting women against oppression despite her possession of contractual rights. We said that 'though limitations upon personal and contractual rights may be removed by legislation, there is that in her [300 U.S. 379 , 395] disposition and habits of life which will operate against a full assertion of those rights. She will still be where some legislation to protect her seems necessary to secure a real equality of right.' Hence she was 'properly placed in a class by herself, and legislation designed for her protection may be sustained, even when like legislation is not necessary for men, and could not be sustained.' We concluded that the limitations which the statute there in question 'places upon her contractual powers, upon her right to agree with her employer, as to the time she shall labor' were 'not imposed solely for her benefit, but also largely for the benefit of all.' Again, in Quong Wing v. Kirkendall, 223 U.S. 59, 63 , in referring to a differentiation with respect to the employment of women, we said that the Fourteenth Amendment did not interfere with state power by creating a 'fictitious equality.' We referred to recognized classifications on the basis of sex with regard to hours of work and in other matters, and we observed that the particular points at which that difference shall be enforced by legislation were largely in the power of the state. In later rulings this Court sustained the regulation of hours of work of women employees in Riley v. Massachusetts, 232 U.S. 671 (factories), Miller v. Wilson, 236 U.S. 373 , L.R.A.1915F, 829 (hotels), and Bosley v. McLaughlin, 236 U.S. 385 (hospitals).

This array of precedents and the principles they applied were thought by the dissenting Justices in the Adkins Case to demand that the minimum wage statute be sustained. The validity of the distinction made by the Court between a minimum wage and a maximum of hours in limiting liberty of contract was especially challenged.261 U.S. 525 , at page 564, 403, 24 A.L.R. 1238. That challenge persists and is without any satisfactory answer. As Chief Justice Taft observed: 'In absolute freedom of contract the one term is as important as the other, for both enter equally into the consideration given and received, a restriction as to [300 U.S. 379 , 396] the one is not any greater in essence than the other, and is of the same kind. One is the multiplier and the other the multiplicand.' And Mr. Justice Holmes, while recognizing that 'the distinctions of the law are distinctions of degree,' could 'perceive no difference in the kind or degree of interference with liberty, the only matter with which we have any concern, between the one case and the other. The bargain is equally affected whichever half you regulate.' Id., 261 U.S. 525 , at p. 569, 43 S. Ct. 394, 405, 24 A.L.R. 1238.

One of the points which was pressed by the Court in supporting its ruling in the Adkins Case was that the standard set up by the District of Columbia Act did not take appropriate account of the value of the services rendered. In the Morehead Case, the minority thought that the New York statute had met that point in its definition of a 'fair wage' and that it accordingly presented a distinguishable feature which the Court could recognize within the limits which the Morehead petition for certiorari was deemed to present. The Court, however, did not take that view and the New York Act was held to be essentially the same as that for the District of Columbia. The statute now before us is like the latter, but we are unable to conclude that in its minimum wage requirement the state has passed beyond the boundary of its broad protective power.

The minimum wage to be paid under the Washington statute is fixed after full consideration by representatives of employers, employees, and the public. It may be assumed that the minimum wage is fixed in consideration of the services that are performed in the particular occupations under normal conditions. Provision is made for special licenses at less wages in the case of women who are incapable of full service. The statement of Mr. Justice Holmes in the Adkins Case is pertinent: 'This statute does not compel anybody to pay anything. It simply forbids employment at rates below those fixed as [300 U.S. 379 , 397] the minimum requirement of health and right living. It is safe to assume that women will not be employed at even the lowest wages allowed unless they earn them, or unless the employer's business can sustain the burden. In short the law in its character and operation is like hundreds of so- called police laws that have been up-held.' 261 U.S. 525 , at page 570, 406, 24 A.L.R. 1238. And Chief Justice Taft forcibly pointed out the consideration which is basic in a statute of this character: 'Legislatures which adopt a requirement of maximum hours or minimum wages may be presumed to believe that when sweating employers are prevented from paying unduly low wages by positive law they will continue their business, abating that part of their profits, which were wrung from the necessities of their employees, and will concede the better terms required by the law, and that while in individual cases, hardship may result, the restriction will enure to the benefit of the general class of employees in whose interest the law is passed, and so to that of the community at large.' Id., 261 U.S. 525 , at page 563, 403, 24 A.L.R. 1238.

We think that the views thus expressed are sound and that the decision in the Adkins Case was a departure from the true application of the principles governing the regulation by the state of the relation of employer and employed. Those principles have been reenforced by our subsequent decisions. Thus in Radice v. New York,264 U.S. 292 , we sustained the New York statute which restricted the employment of women in restaurants at night. In O'Gorman & Young v. Hartford Fire Insurance Company, 282 U.S. 251, 72 A.L.R. 1163, which upheld an act regulating the commissions of

insurance agents, we pointed to the presumption of the constitutionality of a statute dealing with a subject within the scope of the police power and to the absence of any factual foundation of record for deciding that the limits of power had been transcended. In Nebbia v. New York, 291 U.S. 502, 89 A.L.R. 1469, dealing [300 U.S. 379 , 398] with the New York statute providing for minimum prices for milk, the general subject of the regulation of the use of private property and of the making of private contracts received an exhaustive examination, and we again declared that if such laws 'have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of dur process are satisfied'; that 'with the wisdom of the policy adopted, with the adequacy or practicability of the law enacted to forward it, the courts are both incompetent and unauthorized to deal'; that 'times without number we have said that the Legislature is primarily the judge of the necessity of such an enactment, that every possible presumption is in favor of its validity, and that though the court may hold views inconsistent with the wisdom of the law, it may not be annulled unless palpably in excess of legislative power.' Id., 291 U.S. 502 , at pages 537, 538, 516, 89 A.L.R. 1469.

With full recognition of the earnestness and vigor which characterize the prevailing opinion in the Adkins Case, we find it impossible to reconcile that ruling with these well-considered declarations. What can be closer to the public interest than the health of women and their protection from unscrupulous and overreaching employers? And if the protection of women is a legitimate end of the exercise of state power, how can it be said that the requirement of the payment of a minimum wage fairly fixed in order to meet the very necessities of existence is not an admissible means to that end? The Legislature of the state was clearly entitled to consider the situation of women in employment, the fact that they are in the class receiving the least pay, that their bargaining power is relatively weak, and that they are the ready victims of those who would take advantage of their necessitous circumstances. The Legislature was entitled to adopt measures to reduce the evils of the 'sweating sys- [300 U.S. 379 , 399] tem,' the exploiting of workers at wages so low as to be insufficient to meet the bare cost of living, thus making their very helplessness the occastion of a most injurious competition. The Legislature had the right to consider that its minimum wage requirements would be an important aid in carrying out its policy of protection. The adoption of similar requirements by many states evidences a deepseated conviction both as to the presence of the evil and as to the means adapted to check it. Legislative response to that conviction cannot be regarded as arbitrary or capricious and that is all we have to decide. Even if the wisdom of the policy be regarded as debatable and its effects uncertain, still the Legislature is entitled to its judgment.

There is an additional and compelling consideration which recent economic experience has brought into a strong light. The exploitation of a class of workers who are in an unequal position with respect to bargaining power and are thus relatively defenseless against the denial of a living wage is not only detrimental to their health and well being, but casts a direct burden for their support upon the community. What these workers lose in wages the taxpayers are called upon to pay. The bare cost of living must be met. We may take judicial notice of the unparalleled demands for relief which arose during the recent period of depression and still continue to an alarming extent despite the degree of economic recovery which has been achieved. It is unnecessary to cite official statistics to establish what is of common knowledge through the length and breadth of the land. While in the instant case no factual brief has been presented, there is no reason to doubt that the state of Washington has encountered the same social problem that is present elsewhere. The community is not bound to provide what is in effect a subsidy for unconscionable employers. The [300 U.S. 379 , 400] community may direct its law-making power to correct the abuse which springs from their selfish disregard of the public interest. The argument that the legislation in question constitutes an arbitrary discrimination, because it does not extend to men, is unavailing. This Court has frequently held that the legislative authority, acting within its proper field, is not bound to extend its regulation to all cases which it might possibly reach. The Legislature 'is free to recognize degrees of harm and it may confine its restrictions to those classes of cases where the need is deemed to be clearest.' If 'the law presumably hits the evil where it is most felt, it is not to be overthrown because there are other instances to which it might have been applied.' There is no 'doctrinaire requirement' that the legislation should be couched in all embracing terms. Carroll v. Greenwich Insurance Co., 199 U.S. 401, 411 ; Patsone v. Pennsylvania, 232 U.S. 138, 144 ; Keokee Coke Co. v. Taylor, 234 U.S. 224, 227 ; Sproles v. binford, 286 U.S. 374, 396 , 588; Semler v. Oregon Board, 294 U.S. 608, 610 , 611, 571. This familiar principle has repeatedly been applied to legislation which singles out women, and particular classes of women, in the exercise of the state's protective power. Miller v. Wilson, supra, 236 U.S. 373 , at page 384, L.R.A.1915F, 829; Bosley v. McLaughlin, supra, 236 U.S. 385 , at pages 394, 395; Radice v. New York, supra, 264 U.S. 292 , at pages 295-298, 326, 327. Their relative need in the presence of the evil, no less than the existence of the evil itself, is a matter for the legislative judgment.

Our conclusion is that the case of Adkins v. Children's Hospital, supra, should be, and it is, overruled. The judgment of the Supreme Court of the state of Washington is affirmed.

Affirmed.

Mr. Justice SUTHERLAND.

Mr. Justice VAN DEVANTER, Mr. Jjstice McREYNOLDS, Mr. Justice BUTLER, and I think the judgment of the court below should be reversed. [300 U.S. 379 , 401] The principles and authorities relied upon to sustain the judgment were considered in Adkins v. Children's Hospital, 261 U.S. 525, 24 A.L.R. 1238, and Morehead v. New York ex rel. Tipaldo, 298 U.S. 587, 103 A.L.R. 1445, and their lack of application to cases like the one in hand was pointed out. A sufficient answer to all that is now said will be found in the opinions of the court in those cases. Nevertheless, in the circumstances, it seems well to restate our reasons and conclusions.

Under our form of government, where the written Constitution, by its own terms, is the supreme law, some agency, of necessity, must have the power to say the final word as to the validity of a statute assailed as unconstitutional. The Constitution makes it clear that the power has been intrusted to this court when the question arises in a controversy within its jurisdiction; and so long as the power remains there, its exercise cannot be avoided without betrayal of the trust.

It has been pointed out many times, as in the Adkins Case, that this judicial duty is one of gravity and delicacy; and that rational doubts must be resolved in favor of the constitutionality of the statute. But whose doubts, and by whom resolved? Undoubtedly it is the duty of a member of the court, in the process of reaching a right conclusion, to give due weight to the opposing views of his associates; but in the end, the question which he must answer is not whether such views seem sound to those who entertain them, but whether they convince him that the statute is constitutional or engender in his mind a rational doubt upon that issue. The oath which he takes as a judge is not a composite oath, but an individual one. And in passing upon the validity of a statute, he discharges a duty imposed upon him, which cannot be consummated justly by an automatic acceptance of the views of others which have neither convinced, nor created a reasonable doubt in, his mind. If upon a question so [300 U.S. 379 , 402] important he thus surrender his deliberate judgment, he stands forsworn. He cannot subordinate his convictions to that extent and keep faith with his oath or retain his judicial and moral independence.

The suggestion that the only check upon the exercise of the judicial power, when properly invoked, to declare a constitutional right superior to an unconstitutional statute is the judge's own faculty of self- restraint, is both ill considered and mischievous. Self-restraint belongs in the domain of will and not of judgment. The check upon the judge is that imposed by his oath of office, by the Constitution, and by his own conscientious and informed convictions; and since he has the duty to make up his own mind and adjudge accordingly, it is hard to see how there could be any other restraint. This Court acts as a unit. It cannot act in any other way; and the majority (whether a bare majority or a majority of all but one of its members), therefore, establishes the controlling rule as the decision of the court, binding, so long as it remains unchanged, equally upon those who disagree and upon those who subscribe to it. Otherwise, orderly administration of justice would cease. But it is the right of those in the minority to disagree, and sometimes, in matters of grave importance, their imperative duty to voice their disagreement at such length as the occasion demands-always, of course, in terms which, however forceful, do not offend the proprieties or impugn the good faith of those who think otherwise.

It is urged that the question involved should now receive fresh consideration, among other reasons, because of 'the economic conditions which have supervened'; but the meaning of the Constitution does not change with the ebb and flow of economic events. We frequently are told in more general words that the Constitution must be construed in the light of the present. If by that it is meant that the Constitution is made up of [300 U.S. 379 , 403] living words that apply to every new condition which they include, the statement is quite true. But to say, if that be intended, that the words of the Constitution mean today what they did not mean when written-that is, that they do not apply to a situation now to which they would have applied then-is to rob that instrument of the essential element which continues it in force as the people have made it until they, and not their official agents, have made it otherwise.

The words of Judge Campbell in People ex rel. Twitchell v. Blodgett, 13 Mich. 127, 139, 140, apply with peculiar force. 'But it may easily happen,' he said, 'that specific provisions may, in unforeseen emergencies, turn out to have been inexpedient. This does not make these provisions any less binding. Constitutions can not be changed by events alone. They remain binding as the acts of the people in their sovereign capacity, as the framers of Government, until they are

amended or abrogated by the action prescribed by the authority which created them. It is not competent for any department of the Government to change a constitution, or declare it changed, simply because it appears ill adapted to a new state of things . * * *

'Restrictions have, it is true, been found more likely than grants to be unsuited to unforeseen circumstances. * * * But, where evils arise from the application of such regulations, their force cannot be denied or evaded; and the remedy consists in repeal or amendment, and not in false construction.' The principle is reflected in many decisions of this Court. See South Carolina v. United States, 199 U.S. 437, 448 , 449, 4 Ann.Cas. 737; Lake County v. Rollins, 130 U.S. 662, 670 ; Knowlton v. Moore, 178 U.S. 41, 95 ; Rhode Island v. Massachusetts, 12 Pet. 657, 723; Craig v. Missouri, 4 Pet. 410, 431, 432; Ex parte Bain,121 U.S. 1, 12 ; Maxwell v. Dow, 176 U.S. 581, 602 ; Jarrolt v. Moberly, 103 U.S. 580, 586 . [300 U.S. 379 , 404] The judicial function is that of interpretation; it does not include the power of amendment under the guise of interpretation. To miss the point of difference between the two is to miss all that the phrase 'supreme law of the land' stands for and to convert what was intended as inescapable and enduring mandates into mere moral reflections.

If the Constitution, intelligently and reasonably construed in the light of these principles, stands in the way of desirable legislation, the blame must rest upon that instrument, and not upon the court for enforcing it according to its terms. The remedy in that situation-and the only true remedy-is to amend the Constitution. Judge Cooley, in the first volume of his Constitutional Limitations (8th Ed.) p. 124, very clearly pointed out that much of the benefit expected from written Constitutions would be lost if their provisions were to be bent to circumstances or modified by public opinion. He pointed out that the common law, unlike a Constitution, was subject to modification by public sentiment and action which the courts might recognize; but that 'a court or legislature which should allow a change in public sentiment to influence it in giving to a written constitution a construction not warranted by the intention of its founders, would be justly chargeable with reckless disregard of official oath and public duty; and if its course could become a precedent, these instruments would be of little avail. * * * What a court is to do, therefore, is to declare the law as written, leaving it to the people themselves to make such changes as new circumstances may require. The meaning of the constitution is fixed when it is adopted, and it is not different at any subsequent time when a court has occasion to pass upon it.'

The Adkins Case dealt with an Act of Congress which had passed the scrutiny both of the legislative and executive branches of the government. We recognized that[300 U.S. 379 , 405] thereby these departments had affirmed the validity of the statute, and properly declared that their determination must be given great weight, but we then concluded, after thorough consideration, that their view could not be sustained. We think it not inappropriate now to add a word on that subject before coming to the question immediately under review.

The people by their Constitution created three separate, distinct, independent, and coequal departments of government. The governmental structure rests, and was intended to rest, not upon any one or upon any two, but upon all three of these fundamental pillars. It seems unnecessary to repeat, what so often has been said, that the powers of these departments are different and are to be exercised independently. The differences clearly and definitely appear in the Constitution. Each of the departments is an agent of its creator; and one department is not and cannot be the agent of another. Each is answerable to its creator for what it does, and not to another agent. The view, therefore, of the Executive and of Congress that an act is constitutional is persuasive in a high degree; but it is not controlling.

Coming, then, to a consideration of the Washington statute, it first is to be observed that it is in every substantial respect identical with the statute involved in the Adkins Case. Such vices as existed in the latter are present in the former. And if the Adkins Case was properly decided, as we who join in this opinion think it was, it necessarily follows that the Washington statute is invalid.

In support of minimum-wage legislation, it has been urged, on the one hand, that great benefits will result in favor of underpaid labor, and, on the other hand, that the danger of such legislation is that the minimum will tend to become the maximum and thus bring down the [300 U.S. 379 , 406] earnings of the more efficient toward the level of the less-efficient employees. But with these speculations we have nothing to do. We are concerned only with the question of constitutionality.

That the clause of the Fourteenth Amendment which forbids a state to deprive any person of life, liberty, or property without due process of law includes freedom of contract is so well settled as to be no longer open to question. Nor

reasonably can it be disputed that contracts of employment of labor are included in the rule. Adair v. United States, 208 U.S. 161, 174 , 175, 280, 13 Ann.Cas. 764; Coppage v. Kansas, 236 U.S. 1, 10 , 14, L.R.A. 1915C, 960. In the first of these cases, Mr. Justice Harlan, speaking for the Court, said, 'The right of a person to sell his labor upon such terms as he deems proper is, in its essence, the same as the right of the purchaser of labor to prescribe the conditions upon which he will accept such labor from the person offering to sell it. * * * In all such particulars the employer and the employee have equality of right, and any legislation that disturbs that equality is an arbitrary interference with the liberty of contract which no government can legally justify in a free land.'

In the Adkins Case we referred to this language, and said that while there was no such thing as absolute freedom of contract, but that it was subject to a great variety of restraints, nevertheless, freedom of contract was the general rule and restraint the exception; and that the power to abridge that freedom could only be justified by the existence of exceptional circumstances. This statement of the rule has been many times affirmed; and we do not understand that it is questioned by the present decision.

We further pointed out four distinct classes of cases in which this court from time to time had upheld statutory interferences with the liberty of contract. They were, in brief, (1) statutes fixing rates and charges to be [300 U.S. 379 , 407] exacted by businesses impressed with a public interest; (2) statutes relating to contracts for the performance of public work; (3) statutes prescribing the character, methods, and time for payment of wages; and (4) statutes fixing hours of labor. It is the last class that has been most relied upon as affording support for minimum-wage legislation; and much of the opinion in the Adkins Case, 261 U.S. 525, 547 -553, 397- 399, 24 A.L.R. 1238, is devoted to pointing out the essential distinction between fixing hours of labor and fixing wages. What is there said need not be repeated. It is enough for present purposes to say that statutes of the former class deal with an incident of the employment, having no necessary effect upon wages. The parties are left free to contract about wages, and thereby equalize such additional burdens as may be imposed upon the employer as a result of the restrictions as to hours by an adjustment in respect of the amount of wages. This court, wherever the question is adverted to, has been careful to disclaim any purpose to uphold such legislation as fixing wages, and has recognized an essential difference between the two. E.g., Bunting v. Oregon, 243 U.S. 426 , Ann.Cas.1918A, 1043; Wilson v. New, 243 U.S. 332, 345 , 346, 353, 354, L.R.A.1917E, 938, Ann.Cas.1918A, 1024; and see Freund, Police Power, 318.

We then pointed out that minimumwage legislation such as that here involved does not deal with any business charged with a public interest, or with public work, or with a temporary emergency, or with the character, methods, or periods of wage payments, or with hours of labor, or with the protection of persons under legal disability, or with the prevention of fraud. It is, simply and exclusively, a law fixing wages for adult women who are legally as capable of contracting for themselves as men, and cannot be sustained unless upon principles apart from those involved in cases already decided by the court.

Two cases were involved in the Adkins decision. In one of them it appeared that a woman twenty-one years of age, [300 U.S. 379 , 408] who brought the suit, was employed as an elevator operator at a fixed salary. Her services were satisfactory, and she was anxious to retain her position, and her employer, while willing to retain her, was obliged to dispense with her services on account of the penalties prescribed by the act. The wages received by her were the best she was able to obtain for any work she was capable of performing; and the enforcement of the order deprived her, as she alleged, not only of that employment, but left her unable to secure any position at which she could make a living with as good physical and moral surroundings and as good wages as she was receiving and was willing to take. The Washington statute, of course, admits of the same situation and result, and, for aught that appears to the contrary the situation in the present case may have been the same as that just described. Certainly, to the extent that the statute applies to such cases, it cannot be justified as a reasonable restraint upon the freedom of contract. On the contrary, it is essentially arbitrary.

Neither the statute involved in the Adkins Case nor the Washington statute, so far as it is involved here, has the slightest relation to the capacity or earning power of the employee, to the number of hours which constitute the day's work, the character of the place where the work is to be done, or the circumstances or surroundings of the employment. The sole basis upon which the question of validity rests is the assumption that the employee is entitled to receive a sum of money sufficient to provide a living for her, keep her in health and preserve her morals. And, as we pointed out at some length in that case ( 261 U.S. 525 , at pages 555-557, 400, 401, 24 A.L.R. 1238), the question thus presented for the determination of the board can not be solved by any general formula prescribed by a statutory bureau, since it is not a composite but an individual question to be answered for each individual, considered by herself. [300 U.S. 379 , 409] What we said further in that case (261 U.S. 525 , at pages 557-559, 401, 24 A.L.R. 1238), is equally applicable here:

'The law takes account of the necessities of only one party to the contract. It ignores the necessities of the employer by compelling him to pay not less than a certain sum, not only whether the employee is capable of earning it, but irrespective of the ability of his business to sustain the burden, generously leaving him, of course, the privilege of abandoning his business as an alternative for going on at a loss. Within the limits of the minimum sum, he is precluded, under penalty of fine and imprisonment, from adjusting compensation to the differing merits of his employees. It compels him to pay at least the sum fixed in any event, because the employee needs it, but requires no service of equivalent value from the employee. It therefore undertakes to solve but one-half of the problem. The other half is the establishment of a corresponding standard of efficiency, and this forms no part of the policy of the legislation, although in practice the former half without the latter must lead to ultimate failure, in accordance with the inexorable law that no one can continue indefinitely to take out more than he puts in without ultimately exhausting the supply. The law is not confined to the great and powerful employers but embraces those whose bargaining power may be as weak as that of the employee. It takes no account of periods of stress and business depression, of crippling losses, which may leave the employer himself without adequate means of livelihood. To the extent that the sum fixed exceeds the fair value of the services rendered, it amounts to a compulsory exaction from the employer for the support of a partially indigent person, for whose condition there rests upon him no peculiar responsibility, and therefore, in effect, arbitrarily shifts to his shoulders a burden which, if it belongs to anybody, belongs to society as a whole. 'The feature of this statute, which perhaps more than any other, puts upon it the stamp of invalidity, is that it [300 U.S. 379 , 410] exacts from the employer an arbitrary payment for a purpose and upon a basis having no causal connection with his business, or the contract or the work the employee engages to do. The declared basis, as already pointed out, is not the value of the service rendered, but the extraneous circumstance that the employee needs to get a prescribed sum of money to insure her subsistence, health, and morals. The ethical right of every worker, man or woman, to a living wage may be conceded. One of the declared and important purposes of trade organizations is to secure it. And with that principle and with every legitimate effort to realize it in fact, no one can quarrel; but the fallacy of the proposed method of attaining it is that it assumes that every employer is bound at all events to furnish it. The moral requirement implicit in every contract of employment, viz. that the amount to be paid and the service to be rendered shall bear to each other some relation of just equivalence, is completely ignored. The necessities of the employee are alone considered, and these arise outside of the employment, are the same when there is no employment, and as great in one occupation as in another. Certainly the employer, by paying a fair equivalent for the service rendered, though not sufficient to support the employee, has neither caused nor contributed to her poverty. On the contrary, to the extent of what he pays, he has relieved it. In principle, there can be no difference between the case of selling labor and the case of selling goods. If one goes to the butcher, the baker, or grocer to buy food, he is morally entitled to obtain the worth of his money; but he is not entitled to more. It what he gets is worth what he pays, he is not justified in demanding more, simply because he needs more; and the shopkeeper, having dealt fairly and honestly in that transaction, is not concerned in any peculiar sense with the question of his customer's necessities. Should a statute undertake to vest in a commission [300 U.S. 379 , 411] power to determine the quantity of food necessary for individual support, and require the shopkeeper, if he sell to the individual at all, to furnish that quantity at not more than a fixed maximum, it would undoubtedly fall before the constitutional test. The fallacy of any argument in support of the validity of such a statute would be quickly exposed. The argument in support of that now being considered is equally fallacious, though the weakness of it may not be so plain. A statute requiring an employer to pay in money, to pay at prescribed and regular intervals, to pay the value of the services rendered, even to pay with fair relation to the extent of the benefit obtained from the service, would be understandable. But a statute which prescribes payment without regard to any of these things, and solely with relation to circumstances apart from the contract of employment, the business affected by it, and the work done under it, is so clearly the product of a naked, arbitrary exercise of power that it cannot be allowed to stand under the Constitution of the United States.'

Whether this would be equally or at all true in respect of the statutes of some of the states we are not called upon to say. They are not now before us; and it is enough that it applies in every particular to the Washington statute now under consideration.

The Washington statute, like the one for the District of Columbia, fixes minimum wages for adult women. Adult men and their employers are left free to bargain as they please; and it is a significant and an important fact that all state statutes to which our attention has been called are of like character. The common-law rules restricting the power of women to make contracts have, under our system, long since practically disappeared. Women today stand upon a legal and political equality with men. There is no longer any reason why they should be put in different classes in respect of

their legal [300 U.S. 379 , 412] right to make contracts; nor should they be denied, in effect, the right to compete with men for work paying lower wages which men may be willing to accept. And it is an arbitrary exercise of the legislative power to do so. In the Tipaldo Case, 298 U.S. 587, 615 , 925, 103 A.L.R. 1445, it appeared that the New York Legislature had passed two minimum-wage measures-one dealing with women alone, the other with both men and women. The act which included men was vetoed by the Governor. The other, applying to women alone, was approved. The 'factual background' in respect of both measures was substantially the same. In pointing out the arbitrary discrimination which resulted ( 298 U.S. 587 , at pages 615-617, 925, 103 A.L.R. 1445), we said:

'These legislative declarations, in form of findings or recitals of fact, serve well to illustrate why any measure that deprives employers and adult women of freedom to agree upon wages, leaving employers and men employees free so to do, is necessarily arbitrary. Much, if not all that in them is said in justification of the regulations that the act imposes in respect of women's wages apply with equal force in support of the same regulation of men's wages. While men are left free to fix their wages by agreement with employers, it would be fanciful to suppose that the regulation of women's wages would be useful to prevent or lessen the evils listed in the first section of the act. Men in need of work are as likely as women to accept the low wages offered by unscrupulous employers. Men in greater number than women support themselves and dependents and because of need will work for whatever wages they can get and that without regard to the value of the service and even though the pay is less than minima prescribed in accordance with this act. It is plain that, under circumstances such as those portrayed in the 'factual background,' prescribing of minimum wages for women alone would unreasonably restrain them [300 U.S. 379 , 413] in competition with men and tend arbitrarily to deprive them of employment and a fair chance to find work.'

An appeal to the principle that the Legislature is free to recognize degrees of harm and confine its restrictions accordingly, is but to beg the question, which is-Since the contractual rights of men and women are the same, does the legislation here involved, by restricting only the rights of women to make contracts as to wages, create an arbitrary discrimination? We think it does. Difference of sex affords no reasonable ground for making a restriction applicable to the wage contracts of all working women from which like contracts of all working men are left free. Certainly a suggestion that the bargaining ability of the average woman is not equal to that of the average man would lack substance. The ability to make a fair bargain, as every one knows, does not depend upon sex.

If, in the light of the facts, the state legislation, without reason or for reasons of mere expediency, excluded men from the provisions of the legislation, the power was exercised arbitrarily. On the other hand, if such legislation in respect of men was properly omitted on the ground that it would be unconstitutional, the same conclusion of unconstitutionality is inescapable in respect of similar legislative restraint in the case of women. Adkins Case, 261 U.S. 525, 553 , 399, 24 A.L.R. 1238.

Finally, it may be said that a statute absolutely fixing wages in the various industries at definite sums and forbidding employers and employees from contracting for any other than those designated would probably not be thought to be constitutional. It is hard to see why the power to fix minimum wages does not connote a like power in respect of maximum wages. And yet, if both powers be exercised in such a way that the minimum and the maximum so nearly approach each other as to [300 U.S. 379 , 414] become substantially the same, the right to make any contract in respect of wages will have been completely abrogated.

A more complete discussion may be found in the Adkins and Tipaldo Cases cited supra.

Footnotes

[ Footnote 1 ] Allgeyer v. Louisiana, 165 U.S. 578 ; Lochner v. New York, 198 U.S. 45, 3 Ann.Cas. 1133; Adair v. United States, 208 U.S. 161, 13 Ann.Cas. 764.

[ Footnote 2 ] Munn v. Illinois, 94 U.S. 113 ; Railroad Commission Cases, 116 U.S. 307, 388 , 1191; Willcox v. Consolidated Gas Co., 212 U.S. 19, 48L.R.A.(N. S.) 1134, 15 Ann.Cas. 1034; Atkin v. Kansas, 191 U.S. 207 ; Mugler v. Kansas, 123 U.S. 623 ; Crowley v. Christensen, 137 U.S. 86 ; Gundling v. Chicago, 177 U.S. 183 ; Booth v. Illinois, 184 U.S. 425 ; Schmidinger v. Chicago, 226 U.S. 578 ; Armour & Co. v. North Dakota, 240 U.S. 510 , Ann.Cas.1916D, 548; National Union Fire Insurance Co. v. Wanberg, 260 U.S. 71 ; Radice v. New York, 264 U.S. 292 ; Yeiser v. Dysart, 267

U.S. 540 ; Liberty Warehouse Company v. Burley Tobacco Growers' Association, 276 U.S. 71, 97 , 297; Highland v. Russell Car Co., 279 U.S. 253, 261 , 316; O'Gorman & Young v. Hartford Insurance Co., 282 U.S. 251, 72 A.L.R. 1163; Hardware Insurance Co. v. Glidden Co., 284 U.S. 151, 157 , 70; Packer Corporation v. Utah, 285 U.S. 105, 111 , 275, 79 A.L.R. 546; Stephenson v. Binford, 287 U.S. 251, 274 , 188, 87 A.L.R. 721; Hartford Accident Co. v. Nelson Co., 291 U.S. 352, 360 , 395; Petersen Baking Co. v. Bryan, 290 U.S. 570, 90 A.L.R. 1285; Nebbia v. New York, 291 U.S. 502, 527 �529, 511, 512, 89 A.L.R. 1469.

N.L.R.B. v. JONES & LAUGHLIN STEEL CORP., 301 U.S. 1 (1937)

301 U.S. 1

NATIONAL LABOR RELATIONS BOARD v.

JONES & LAUGHLIN STEEL CORPORATION. No. 419.

Argued Feb. 10, 11, 1937. Decided April 12, 1937.

[301 U.S. 1, 5] Messrs. Homer S. Cummings, Atty. Gen., and Stanley F. Reed, Sol. Gen., and J. Warren Madden, both of Washington, D.C., for petitioner.

Mr. Earl F. Reed, of Pittsburgh, Pa., for respondent.

[301 U.S. 1, 22]

Mr. Chief Justice HUGHES delivered the opinion of the Court.

In a proceeding under the National Labor Relations Act of 19351 the National Labor Relations Board found that the respondent, Jones & Laughlin Steel Corporation, had violated the act by engaging in unfair labor practices affecting commerce. The proceeding was instituted by the Beaver Valley Lodge No. 200, affiliated with the Amalgamated Association of Iron, Steel and Tin Workers of America, a labor organization. The unfair labor practices charged were that the corporation was discriminating against members of the union with regard to hire and tenure of employment, and was coercing and intimidating its enployees in order to interfere with their self-organization. The discriminatory and coercive action alleged was the discharge of certain employees.

The National Labor Relations Board, sustaining the charge, ordered the corporation to cease and desist from such discrimination and coercion, to offer reinstatement to ten of the employees named, to make good their losses in pay, and to post for thirty days notices that the corporation would not discharge or discriminate against members, or those desiring to become members, of the labor union. As the corporation failed to comply, the Board petitioned the Circuit Court of Appeals to enforce the order. The court denied the petition holding that the order lay beyond the range of federal power. 83 F.(2d) 998. We granted certiorari. 299 U.S. 534 , 57 S. Ct. 119, 81 L.Ed. --.

The scheme of the National Labor Relations Act-which is too long to be quoted in full-may be briefly stated. The first section (29 U.S.C.A. 151) sets forth findings with respect to the injury to commerce resulting from the denial by employers of the right of employees to organize and from the refusal of employers to accept the procedure of col- [301 U.S. 1, 23] lective bargaining. There follows a declaration that it is the policy of the United States to eliminate these causes of obstruction to the free flow of commerce. 2 The act [301 U.S. 1, 24] then defines the terms it uses, including the terms 'commerce' and 'affecting commerce.' Section 2 (29 U.S.C.A. 152). It creates the National Labor Relations Board and prescribes its organization. Sections 3- 6 (29 U.S.C.A. 153-156). It sets forth the right of employees to self- organization and to bargain collectively through representatives of their own choosing. Section 7 (29 U.S.C.A. 157). It defines 'unfair labor practices.' Section 8 (29 U.S.C.A. 158). It lays down rules as to the representation of employees for

the purpose of collective bargaining. Section 9 (29 U.S.C.A. 159). The Board is empowered to prevent the described unfair labor practices affecting commerce and the act prescribes the procedure to that end. The Board is authorized to petition designated courts to secure the enforcement of its order. The findings of the Board as to the facts, if supported by evidence, are to be conclusive. If either party on application to the court shows that additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the hearings before the Board, the court may order the additional evidence to be taken. Any person aggrieved by a final order of the Board may obtain a review in the designated courts with the same procedure as in the case of an application by the Board for the enforcement of its order. Section 10 (29 U.S.C.A. 160). The Board has broad powers of investigation. Section 11 (29 U.S.C.A. 161). Interference with members of the Board or its agents in the performance of their duties is punishable by fine and imprisonment. Section 12 (29 U.S.C. A. 162). Nothing in the act is to be construed to interfere with the right to strike. Section 13 (29 U.S.C.A. 163). There is a separability clause to the effect that, if any provision of the act or its application to any person or circumstances shall be held invalid, the remainder of the act or its application to other persons or circumstances shall not be affected. Section 15 (29 U.S.C.A. 165). The particular provisions which are involved in the instant case will be considered more in detail in the course of the discussion.

The procedure in the instant case followed the statute. The labor union filed with the Board its verified charge. [301 U.S. 1, 25] The Board thereupon issued its complaint against the respondent, alleging that its action in discharging the employees in question constituted unfair labor practices affecting commerce within the meaning of section 8, subdivisions (1) and (3), and section 2, subdivisions (6) and (7), of the act. Respondent, appearing specially for the purpose of objecting to the jurisdiction of the Board, filed its answer. Respondent admitted the discharges, but alleged that they were made because of inefficiency or violation of rules or for other good reasons and were not ascribable to union membership or activities. As an affirmative defense respondent challenged the constitutional validity of the statute and its applicability in the instant case. Notice of hearing was given and respondent appeared by counsel. The Board first took up the issue of jurisdiction and evidence was presented by both the Board and the respondent. Respondent then moved to dismiss the complaint for lack of jurisdiction and, on denial of that motion, respondent in accordance with its special appearance withdrew from further participation in the hearing. The Board received evidence upon the merits and at its close made its findings and order.

Contesting the ruling of the Board, the respondent argues (1) that the act is in reality a regulation of labor relations and not of interstate commerce; (2) that the act can have no application to the respondent's relations with its production employees because they are not subject to regulation by the federal government; and (3) that the provisions of the act violate section 2 of article 3 and the Fifth and Seventh Amendments of the Constitution of the United States.

The facts as to the nature and scope of the business of the Jones & Laughlin Steel Corporation have been found by the Labor Board, and, so far as they are essential to the determination of this controversy, they are not in dispute. The Labor Board has found: The corporation is [301 U.S. 1, 26] organized under the laws of Pennsylvania and has its principal office at Pittsburgh. It is engaged in the business of manufacturing iron and steel in plants situated in Pittsburgh and nearby Aliquippa, Pa. It manufactures and distributes a widely diversified line of steel and pig iron, being the fourth largest producer of steel in the United States. With its subsidiaries-nineteen in number-it is a completely integrated enterprise, owning and operating ore, coal and limestone properties, lake and river transportation facilities and terminal railroads located at its manufacturing plants. It owns or controls mines in Michigan and Minnesota. It operates four ore steamships on the Great Lakes, used in the transportation of ore to its factories. It owns coal mines in Pennsylvania. It operates towboats and steam barges used in carrying coal to its factories. It owns limestone properties in various places in Pennsylvania and West Virginia. It owns the Monongahela connecting railroad which connects the plants of the Pittsburgh works and forms an interconnection with the Pennsylvania, New York Central and Baltimore & Ohio Railroad systems. It owns the Aliquippa & Southern Railroad Company, which connects the Aliquippa works with the Pittsburgh & Lake Erie, part of the New York Central system. Much of its product is shipped to its warehouses in Chicago, Detroit, Cincinnati and Memphis,-to the last two places by means of its own barges and transportation equipment. In Long Island City, New York, and in New Orleans it operates structural steel fabricating shops in connection with the warehousing of semifinished materials sent from its works. Through one of its wholly-owned subsidiaries it owns, leases, and operates stores, warehouses, and yards for the distribution of equipment and supplies for drilling and operating oil and gas wells and for pipe lines, refineries and pumping stations. It has sales offices in [301 U.S. 1, 27] twenty cities in the United States and a wholly-owned subsidiary which is devoted exclusively to distributing its product in Canada. Approximately 75 per cent. of its product is shipped out of Pennsylvania.

Summarizing these operations, the Labor Board concluded that the works in Pittsburgh and Aliquippa 'might be likened to the heart of a self- contained, highly integrated body. They draw in the raw materials from Michigan, Minnesota, West Virginia, Pennsylvania in part through arteries and by means controlled by the respondent; they transform the materials and then pump them out to all parts of the nation through the vast mechanism which the respondent has elaborated.'

To carry on the activities of the entire steel industry, 33,000 men mine ore, 44,000 men mine coal, 4,000 men quarry limestone, 16,000 men manufacture coke, 343,000 men manufacture steel, and 83,000 men transport its product. Respondent has about 10,000 employees in its Aliquippa plant, which is located in a community of about 30,000 persons.

Respondent points to evidence that the Aliquippa plant, in which the discharged, men were employed, contains complete facilities for the production of finished and semifinished iron and steel products from raw materials; that its works consist primarily of a by-product coke plant for the production of coke; blast furnaces for the production of pig iron; open hearth furnaces and Bessemer converters for the production of steel; blooming mills for the reduction of steel ingots into smaller shapes; and a number of finishing mills such as structural mills, rod mills, wire mills, and the like. In addition, there are other buildings, structures and equipment, storage yards, docks and an intraplant storage system. Respondent's operations at these works are carried on in two distinct stages, the first being the conversion of raw materials into pig [301 U.S. 1, 28] iron and the second being the manufacture of semifinished and finished iron and steel products; and in both cases the operations result in substantially changing the character, utility and value of the materials wrought upon, which is apparent from the nature and extent of the processes to which they are subjected and which respondent fully describes. Respondent also directs attention to the fact that the iron ore which is procured from mines in Minnesota and Michigan and transported to respondent's plant is stored in stock piles for future use, the amount of ore in storage varying with the season but usually being enough to maintain operations from nine to ten months; that the coal which is procured from the mines of a subsidiary located in Pennsylvania and taken to the plant at Aliquippa is there, like ore, stored for future use, approximately two to three months' supply of coal being always on hand; and that the limestone which is obtained in Pennsylvania and West Virginia is also stored in amounts usually adequate to run the blast furnaces for a few weeks. Various details of operation, transportation, and distribution are also mentioned which for the present purpose it is not necessary to detail.

Practically all the factual evidence in the case, except that which dealt with the nature of respondent's business, concerned its relations with the employees in the Aliquippa plant whose discharge was the subject of the complaint. These employees were active leaders in the labor union. Several were officers and others were leaders of particular groups. Two of the employees were motor inspectors; one was a tractor driver; three were crane operators; one was a washer in the coke plant; and three were laborers. Three other employees were mentioned in the complaint but it was withdrawn as to one of them and no evidence was heard on the action taken with respect to the other two. [301 U.S. 1, 29] While respondent criticizes the evidence and the attitude of the Board, which is described as being hostile toward employers and particularly toward those who insisted upon their constitutional rights, respondent did not take advantage of its opportunity to present evidence to refute that which was offered to show discrimination and coercion. In this situation, the record presents no ground for setting aside the order of the Board so far as the facts pertaining to the circumstances and purpose of the discharge of the employees are concerned. Upon that point it is sufficient to say that the evidence supports the findings of the Board that respondent discharged these men 'because of their union activity and for the purpose of discouraging membership in the union.' We turn to the questions of law which respondent urges in contesting the validity and application of the act.

First. The Scope of the Act.-The act is challenged in its entirety as an attempt to regulate all industry, thus invading the reserved powers of the States over their local concerns. It is asserted that the references in the act to interstate and foreign commerce are colorable at best; that the act is not a true regulation of such commerce or of matters which directly affect it, but on the contrary has the fundamental object of placing under the compulsory supervision of the federal government all industrial labor relations within the nation. The argument seeks support in the broad words of the preamble (section 13) and in the sweep of the provisions of the act, and it is further insisted that its legislative history shows an essential universal purpose in the light of which its scope cannot be limited by either construction or by the application of the separability clause.

If this conception of terms, intent and consequent inseparability were sound, the act would necessarily fall [301 U.S. 1, 30] by reason of the limitation upon the federal power which inheres in the constitutional grant, as well as because of the explicit reservation of the Tenth Amendment. Schechter Corporation v. United States, 295 U.S. 495, 549 , 550 S., 554, 55 S.Ct. 837, 851, 853, 97 A.L.R. 947. 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. That distinction between what is national and what is local in the activities of commerce is vital to the maintenance of our federal system. Id.

But we are not at liberty to deny effect to specific provisions, which Congress has constitutional power to enact, by superimposing upon them inferences from general legislative declarations of an ambiguous character, even if found in the same statute. The cardinal principle of statutory construction is to save and not to destroy. We have repeatedly held that as between two possible interpretations of a statute, by one of which it would be unconstitutional and by the other valid, our plain duty is to adopt that which will save the act. Even to avoid a serious doubt the rule is the same. Federal Trade Commission v. American Tobacco Co., 264 U.S. 298, 307 , 44 S.Ct. 336, 337, 32 A.L.R. 786; Panama R.R. Co. v. Johnson, 264 U.S. 375, 390 , 44 S.Ct. 391, 395; Missouri Pacific R.R. Co., v. Boone, 270 U.S. 466, 472 , 46 S.Ct. 341, 343; Blodgett v. Holden, 275 U.S. 142 , 148, 276 U.S. 594 , 48 S.Ct. 105, 107; Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 346, 48 S.Ct. 194, 198.

We think it clear that the National Labor Relations Act may be construed so as to operate within the sphere of constitutional authority. The jurisdiction conferred upon the Board, and invoked in this instance, is found in section 10(a), 29 U.S.C.A. 160(a), which provides:

'Sec. 10(a). The Board is empowered, as hereinafter provided, to prevent any person from engaging in any unfair labor practice (listed in section 8 (section 158)) affecting commerce.' [301 U.S. 1, 31] The critical words of this provision, prescribing the limits of the Board's authority in dealing with the labor practices, are 'affecting commerce.' The act specifically defines the 'commerce' to which it refers ( section 2(6), 29 U.S.C.A. 152(6): 'The term 'commerce' means trade, traffic, commerce, transportation, or communication among the several States, or between the District of Columbia or any Territory of the United States and any State or other Territory, or between any foreign country and any State, Territory, or the District of Columbia, or within the District of Columbia or any Territory, or between points in the same State but through any other State or any Territory or the District of Columbia or any foreign country.'

There can be no question that the commerce thus contemplated by the act (aside from that within a Territory or the District of Columbia) is interstate and foreign commerce in the constitutional sense. The act also defines the term 'affecting commerce' section 2(7), 29 U.S.C.A. 152(7):

'The term 'affecting commerce' means in commerce, or burdening or obstructing commerce or the free flow of commerce, or having led or tending to lead to a labor dispute burdening or obstructing commerce or the free flow of commerce.'

This definition is one of exclusion as well as inclusion. The grant of authority to the Board does not purport to extend to the relationship between all industrial employees and employers. Its terms do not impose collective bargaining upon all industry regardless of effects upon interstate or foreign commerce. It purports to reach only what may be deemed to burden or obstruct that commerce and, thus qualified, it must be construed as contemplating the exercise of control within constitutional bounds. It is a familiar principle that acts which directly burden or obstruct interstate or foreign commerce, or its free flow, are within the reach of the congressional power. Acts having that effect are not [301 U.S. 1, 32] rendered immune because they grow out of labor disputes. See Texas & N.O.R. Co. v. Railway & S.S. Clerks, 281 U.S. 548, 570 , 50 S.Ct. 427, 433, 434; Schechter Corporation v. United States, supra, 295 U.S. 495 , at pages 544, 545, 55 S.Ct. 837, 849, 97 A.L.R. 947; Virginian Railway Co. v. System Federation No. 40, 300 U.S. 515 , 57 S.Ct. 592, decided March 29, 1937. It is the effect upon commerce, not the source of the injury, which is the criterion. Second Employers' Liability Cases (Mondou v. New York, N.H. & H.R. Co.), 223 U.S. 1, 51 , 32 S.Ct. 169, 38 L.R.A.(N.S.) 44. Whether or not particular action does affect commerce in such a close and intimate fashion as to be subject to federal control, and hence to lie within the authority conferred upon the Board, is left by the statute to be determined as individual cases arise. We are thus to inquire whether in the instant case the constitutional boundary has been passed.

Second. The Unfair Labor Practices in Question.-The unfair labor practices found by the Board are those defined in section 8, subdivisions ( 1) and (3). These provide:

'Sec. 8. It shall be an unfair labor practice for an employer-

'(1) To interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7 (section 157 of this title). ... '(3) By discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization.' 4 [301 U.S. 1, 33] Section 8, subdivision (1), refers to section 7, which is as follows: 'Section 7. Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection.'

Thus, in its present application, the statute goes no further than to safeguard the right of employees to self-organization and to select representatives of their own choosing for collective bargaining or other mutual protection without restraint or coercion by their employer.

That is a fundamental right. Employees have as clear a right to organize and select their representatives for lawful purposes as the respondent has to organize its business and select its own officers and agents. Discrimination and coercion to prevent the free exercise of the right of employees to self-organization and representation is a proper subject for condemnation by competent legislative authority. Long ago we stated the reason for labor organizations. We said that they were organized out of the necessities of the situation; that a single employee was helpless in dealing with an employer; that he was dependent ordinarily on his daily wage for the maintenance of himself and family; that, if the employer refused to pay him the wages that he thought fair, he was nevertheless unable to leave the employ and resist arbitrary and unfair treatment; that union was essential to give laborers opportunity to deal on an equality with their employer. American Steel Foundries v. Tri-City Central Trades Council, 257 U.S. 184, 209 , 42 S.Ct. 72, 78, 27 A.L.R. 360. We reiterated these views when we had under consideration the Railway Labor Act of 1926, 44 Stat. 577. Fully recognizing the legality of collective action on the part of employees in [301 U.S. 1, 34] order to safeguard their proper interests, we said that Congress was not required to ignore this right but could safeguard it. Congress could seek to make appropriate collective action of employees an instrument of peace rather than of strife. We said that such collective action would be a mockery if representation were made futile by interference with freedom of choice. Hence the prohibition by Congress of interference with the selection of representatives for the purpose of negotiation and conference between employers and employees, 'instead of being an invasion of the constitutional right of either, was based on the recognition of the rights of both.' Texas & N.O.R. Co. v. Railway & S.S. Clerks, supra. We have reasserted the same principle in sustaining the application of the Railway Labor Act as amended in 1934 (45 U.S.C.A. 151 et seq.). Virginian Railway Co. v. System Federation, No. 40, supra.

Third. The application of the Act to Employees Engaged in Production.- The Principle Involved.-Respondent says that, whatever may be said of employees engaged in interstate commerce, the industrial relations and activities in the manufacturing department of respondent's enterprise are not subject to federal regulation. The argument rests upon the proposition that manufacturing in itself is not commerce. Kidd v. Pearson, 128 U.S. 1, 20 , 21 S., 9 S.Ct. 6; United Mine Workers v. Coronado Co., 259 U.S. 344, 407 , 408 S., 42 S.Ct. 570, 581, 582, 27 A.L.R. 762; Oliver Iron Co. v. Lord, 262 U.S. 172, 178 , 43 S.Ct. 526, 529; United Leather Workers' International Union v. Herkert & Meisel Trunk Co., 265 U.S. 457, 465 , 44 S.Ct. 623, 625, 33 A.L.R. 566; Industrial Association v. United States, 268 U.S. 64, 82 , 45 S.Ct. 403, 407; Coronado Coal Co. v. United Mine Workers, 268 U.S. 295, 310 , 45 S.Ct. 551, 556; Schechter Corporation v. United States, supra, 295 U.S. 495 , at page 547, 55 S.Ct. 837, 850, 97 A.L.R. 947; Carter v. Carter Coal Co., 298 U.S. 238, 304 , 317 S., 327, 56 S.Ct. 855, 869, 875, 880

The government distinguishes these cases. The various parts of respondent's enterprise are described as interdependent and as thus involving 'a great movement of[301 U.S. 1, 35] iron ore, coal and limestone along well-defined paths to the steel mills, thence through them, and thence in the form of steel products into the consuming centers of the country-a definite and well-understood course of business.' It is urged that these activities constitute a 'stream' or 'flow' of commerce, of which the Aliquippa manufacturing plant is the focal point, and that industrial strife at that point would cripple the entire movement. Reference is made to our decision sustaining the Packers and Stockyards Act. 5 Stafford v. Wallace, 258 U.S. 495 , 42 S.Ct. 397, 23 A.L.R. 229. The Court found that the stockyards were but a 'throat' through which the current of commerce flowed and the transactions which there occurred could not be separated from that movement. Hence the sales at the stockyards were not regarded as merely local transactions, for, while they created 'a local change of title,' they did not 'stop the flow,' but merely changed the private interests in the subject of the current. Distinguishing the cases which upheld the power of the state to impose a nondiscriminatory tax upon property which the owner intended to transport to another state, but which was not in actual transit and was held within the state

subject to the disposition of the owner, the Court remarked: 'The question, it should be observed, is not with respect to the extent of the power of Congress to regulate interstate commerce, but whether a particular exercise of state power in view of its nature and operation must be deemed to be in conflict with this paramount authority.' Id., 258 U.S. 495 , at page 526, 42 S.Ct. 397, 405, 23 A.L.R. 229. See Minnesota v. Blasius, 290 U.S. 1, 8 , 54 S.Ct. 34, 36. Applying the doctrine of Stafford v. Wallace, supra, the Court sustained the Grain Futures Act of 19226 with respect to transactions on the Chicago Board of Trade, although these transactions were 'not in and of themselves interstate commerce.' Congress had found [301 U.S. 1, 36] that they had become 'a constantly recurring burden and obstruction to that commerce.' Board of Trade of City of Chicago v. Olsen, 262 U.S. 1, 32 , 43 S.Ct. 470, 476. Compare Hill v. Wallace, 259 U.S. 44, 69 , 42 S.Ct. 453, 458. See, also, Tagg Bros. & Moorhead v. United States,280 U.S. 420 , 50 S.Ct. 220.

Respondent contends that the instant case presents material distinctions. Respondent says that the Aliquippa plant is extensive in size and represents a large investment in buildings, machinery and equipment. The raw materials which are brought to the plant are delayed for long periods and, after being subjected to manufacturing processes 'are changed substantially as to character, utility and value.' The finished products which emerge 'are to a large extent manufactured without reference to pre-existing orders and contracts and are entirely different from the raw materials which enter at the other end.' Hence respondent argues that, 'If importation and exportation in interstate commerce do not singly transfer purely local activities into the field of congressional regulation, it should follow that their combination would not alter the local situation.' Arkadelphia Milling Co. v. St. Louis, Southwestern R. Co ., 249 U.S. 134, 151 , 39 S.Ct. 237; Oliver Iron Co. v. Lord, supra.

We do not find it necessary to determine whether these features of defendant's business dispose of the asserted analogy to the 'stream of commerce' cases. The instances in which that metaphor has been used are but particular, and not exclusive, illustrations of the protective power which the government invokes in support of the present act. The congressional authority to protect interstate commerce from burdens and obstructions is not limited to transactions which can be deemed to be an essential part of a 'flow' of interstate or foreign commerce. Burdens and obstructions may be due to injurious action springing from other sources. The fundamental principle is that the power to regulate commerce is [301 U.S. 1, 37] the power to enact 'all appropriate legislation' for its 'protection or advancement' (The Daniel Ball, 10 Wall. 557, 564); to adopt measures 'to promote its growth and insure its safety' (County of Mobile v. Kimball, 102 U.S. 691, 696 , 697 S.); 'to foster, protect, control, and restrain.' (Second Employers' Liability Cases, supra, 223 U.S. 1 , at page 47, 32 S.Ct. 169, 174, 38 L.R.A.(N.S.) 44). See Texas & N.O.R. Co. v. Railway & S.S. Clerks, supra. That power is plenary and may be exerted to protect interstate commerce 'no matter what the source of the dangers which threaten it.' Second Employers' Liability Cases, 223 U.S. 1 , at page 51, 32 S.Ct. 169, 176, 38 L.R.A.( N.S.) 44; Schechter Corporation v. United States, supra. Although activities may be intrastate in character when separately considered, if they have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions, Congress cannot be denied the power to exercise that control. Schechter Corporation v. United States, supra. Undoubtedly the scope of this power must be considered in the light of our dual system of government and may not be extended so as to embrace effects upon interstate commerce so indirect and remote that to embrace them, in view of our complex society, would effectually obliterate the distinction between what is national and what is local and create a completely centralized government. Id. The question is necessarily one of degree. As the Court said in Board of Trade of City of Chicago v. Olsen, supra, 262 U.S. 1 , at page 37, 43 S.Ct. 470, 477, repeating what had been said in Stafford v. Wallace, supra: 'Whatever amounts to more or less constant practice, and threatens to obstruct or unduly to burden the freedom of interstate commerce is within the regulatory power of Congress under the commerce clause, and it is primarily for Congress to consider and decide the fact of the danger and to meet it.'

That intrastate activities, by reason of close and intimate relation to interstate commerce, may fall within federal control is demonstrated in the case of carriers who[301 U.S. 1, 38] are engaged in both interstate and intrastate transportation. There federal control has been found essential to secure the freedom of interstate traffic from interference or unjust discrimination and to promote the efficiency of the interstate service. The Shreveport Case ( Houston, E. & W.T.R. Co. v. United States),234 U.S. 342 , 351. 352, 34 S. Ct. 833; Railroad Commission of Wisconsin v. Chicago, B. & Q.R. Co., 257 U.S. 563, 588 , 42 S.Ct. 232, 237, 22 A.L.R. 1086. It is manifest that intrastate rates deal primarily with a local activity. But in rate making they bear such a close relation to interstate rates that effective control of the one must embrace some control over the other. Id. Under the Transportation Act, 1920,7 Congress went so far as to authorize the Interstate Commerce Commission to establish a state-wide level of intrastate rates in order to prevent an unjust discrimination against interstate commerce. Railroad Commission of Wisconsin v. Chicago, B. & Q.R.R. Co., supra; Florida v. United States, 282 U.S. 194, 210 , 211 S., 51 S.Ct. 119, 123. Other illustrations are found in the broad

requirements of the Safety Appliance Act (45 U.S.C.A. 1-10) and the Hours of Service Act (45 U.S.C.A. 61-64). Southern Railway Co. v. United States, 222 U.S. 20 , 32 S.Ct. 2; Baltimore & Ohio R.R. Co. v. Interstate Commerce Commission, 221 U.S. 612 , 31 S.Ct. 621. It is said that this exercise of federal power has relation to the maintenance of adequate instrumentalities of interstate commerce. But the agency is not superior to the commerce which uses it. The protective power extends to the former because it exists as to the latter.

The close and intimate effect which brings the subject within the reach of federal power may be due to activities in relation to productive industry although the industry when separately viewed is local. This has been abundantly illustrated in the application of the Federal Anti-Trust Act (15 U.S.C.A. 1-7, 15 note). In the Standard Oil and American Tobacco Cases (Standard Oil Co. v. United States), 221 U.S. 1 , 31 S.Ct. 502, 34 L.R.A.(N.S.) 834, Ann.Cas.1912D, 734; (United States v. American Tobacco Co.) 221 U.S. 106 , 31 S.Ct. 632), that statute was applied to combinations of employers engaged in productive industry. [301 U.S. 1, 39] Counsel for the offending corporations strongly urged that the Sherman Act had no application because the acts complained of were not acts of interstate or foreign commerce, nor direct and immediate in their effect on interstate or foreign commerce, but primarily affected manufacturing and not commerce. 221 U.S. 1 , at page 5, 31 S.Ct. 502, 34 L. R.A.(N.S.) 834, Ann.Cas.1912D, 734; 221 U.S. 106 , at page 125, 31 S.Ct. 632. Counsel relied upon the decision in United States v. E. C. Knight Co., 156 U.S. 1 , 15 S.Ct. 249. The Court stated their contention as follows: 'That the act, even if the averments of the bill be true, cannot be constitutionally applied, because to do so would extend the power of Congress to subject dehors the reach of its authority to regulate commerce, by enabling that body to deal with mere questions of production of commodities within the states.' And the Court summarily dismissed the contention in these words: 'But all the structure upon which this argument proceeds is based upon the decision in United States v. E.C. Knight Co., 156 U.S. 1 , 15 S.Ct. 249. The view, however, which the argument takes of that case, and the arguments based upon that view have been so repeatedly pressed upon this court in connection with the interpretation and enforcement of the Anti-trust Act, and have been so necessarily and expressly decided to be unsound as to cause the contentions to be plainly foreclosed and to require no express notice' ( citing cases). 221 U.S. 1 , at pages 68, 69, 31 S.Ct. 502, 519, 34 L.R.A.(N.S.) 834, Ann.Cas.1912D, 734.

Upon the same principle, the Anti-Trust Act has been applied to the conduct of employees engaged in production. Loewe v. Lawlor, 208 U.S. 274 , 28 S.Ct. 301, 13 Ann.Cas. 815; Coronado Coal Co. v. United Mine Workers, supra; Bedford Cut Stone Co. v. Stone Cutters' Association, 274 U.S. 37 , 47 S.Ct. 522, 54 A.L.R. 791. See, also, Local 167, International Brotherhood of Teamsters v. United States, 291 U.S. 293, 297 , 54 S.Ct. 396, 398; Schechter Corporation v. United States, supra. The decisions dealing with the question of that application illustrate both the principle and its limitation. Thus, in the first Coronado Case, the Court held that mining was not interstate commerce, that the power of Congress did not extend to its regulation as such, [301 U.S. 1, 40] and that it had not been shown that the activities there involved-a local strike-brought them within the provisions of the Anti-Trust Act, notwithstanding the broad terms of that statute. A similar conclusion was reached in United Leather Workers' International Union v. Herkert & Meisel Trunk Co., supra, Industrial Association v. United States, supra, and Levering & Garrigues v. Morrin, 289 U.S. 103, 107 , 53 S.Ct. 549, 550. But in the first Coronado Case the Court also said that 'if Congress deems certain recurring practices though not really part of interstate commerce, likely to obstruct, restrain or burden it, it has the power to subject them to national supervision and restraint.' 259 U.S. 344 , at page 408, 42 S.Ct. 570, 582, 27 A.L.R. 762. And in the second Coronado Case the Court ruled that, while the mere reduction in the supply of an article to be shipped in interstate commerce by the illegal or tortious prevention of its manufacture or production is ordinarily an indirect and remote obstruction to that commerce, nevertheless when the 'intent of those unlawfully preventing the manufacture or production is shown to be to restrain or control the supply entering and moving in interstate commerce, or the price of it in interstate markets, their action is a direct violation of the Anti-Trust Act.' 268 U.S. 295 , at page 310, 45 S.Ct. 551, 556. And the existence of that intent may be a necessary inference from proof of the direct and substantial effect produced by the employees' conduct. Industrial Association v. United States, 268 U.S. 64 , at page 81, 45 S.Ct. 403, 407. What was absent from the evidence in the first Coronado Case appeared in the second and the act was accordingly applied to the mining employees.

It is thus apparent that the fact that the employees here concerned were engaged in production is not determinative. The question remains as to the effect upon interstate commerce of the labor practice involved. In the Schechter Case, supra, we found that the effect there was so remote as to be beyond the federal power. To find 'immediacy or directness' there was to find it 'almost [301 U.S. 1, 41] everywhere,' a result inconsistent with the maintenance of our federal system. In the Carter Case, supra, the Court was of the opinion that the provisions of the statute relating to production were invalid upon several grounds,-that there was improper delegation of legislative power, and that the requirements not only went

beyond any sustainable measure of protection of interstate commerce but were also inconsistent with due process. These cases are not controlling here.

Fourth. Effects of the Unfair Labor Practice in Respondent's Enterprise.-Giving full weight to respondent's contention with respect to a break in the complete continuity of the 'stream of commerce' by reason of respondent's manufacturing operations, the fact remains that the stoppage of those operations by industrial strife would have a most serious effect upon interstate commerce. In view of respondent's far-flung activities, it is idle to say that the effect would be indirect or remote. It is obvious that it would be immediate and might be catastrophic. We are asked to shut our eyes to the plainest facts of our national life and to deal with the question of direct and indirect effects in an intellectual vacuum. Because there may be but indirect and remote effects upon interstate commerce in connection with a host of local enterprises throughout the country, it does not follow that other industrial activities do not have such a close and intimate relation to interstate commerce as to make the presence of industrial strife a matter of the most urgent national concern. When industries organize themselves on a national scale, making their relation to interstate commerce the dominant factor in their activities, how can it be maintained that their industrial labor relations constitute a forbidden field into which Congress may not enter when it is necessary to protect interstate commerce from the paralyzing consequences of industrial war? We have often said that interstate commerce itself is a practical [301 U.S. 1, 42] conception. It is equally true that interferences with that commerce must be appraised by a judgment that does not ignore actual experience.

Experience has abundantly demonstrated that the recognition of the right of employees to self-organization and to have representatives of their own choosing for the purpose of collective bargaining is often an essential condition of industrial peace. Refusal to confer and negotiate has been one of the most prolific causes of strife. This is such an outstanding fact in the history of labor disturbances that it is a proper subject of judicial notice and requires no citation of instances. The opinion in the case of Virginia Railway Co. v. System Federation No. 40, supra, points out that, in the case of carriers, experience has shown that before the amendment, of 1934, of the Railway Labor Act, 'when there was no dispute as to the organizations authorized to represent the employees, and when there was willingness of the employer to meet such representative for a discussion of their grievances, amicable adjustment of differences had generally followed and strikes had been avoided.' That, on the other hand, 'a prolific source of dispute had been the maintenance by the railroads of company unions and the denial by railway management of the authority of representatives chosen by their employees.' The opinion in that case also points to the large measure of success of the labor policy embodied in the Railway Labor Act. But, with respect to the appropriateness of the recognition of self-organization and representation in the promotion of peace, the question is not essentially different in the case of employees in industries of such a character that interstate commerce is put in jeopardy from the case of employees of transportation companies. And of what avail is it to protect the facility of transportation, if interstate commerce is throttled with respect to the commodities to be transported! [301 U.S. 1, 43] These questions have frequently engaged the attention of Congress and have been the subject of many inquiries. 8 The steel industry is one of the great basic industries of the United States, with ramifying activities affecting interstate commerce at every point. The Government aptly refers to the steel strike of 1919-1920 with its far-reaching consequences. 9 The fact that there appears to have been no major disturbance in that industry in the more recent period did not dispose of the possibilities of future and like dangers to interstate commerce which Congress was entitled to foresee and to exercise its protective power to forestall. It is not necessary again to detail the facts as to respondent's enterprise. Instead of being beyond the pale, we think that it presents in a most striking way the close and intimate relation which a manufacturing industry may have to interstate commerce and we have no doubt that Congress had constitutional authority to safeguard the right of respondent's employees to self- organization and freedom in the choice of representatives for collective bargaining.

Fifth. The Means Which the Act Employs.-Questions under the Due Process Clause and Other Constitutional Restrictions.-Respondent asserts its right to conduct its business in an orderly manner without being subjected to arbitrary restraints. What we have said points to the fallacy in the argument. Employees have their correlative [301 U.S. 1, 44] right to organize for the purpose of securing the redress of grievances and to promote agreements with employers relating to rates of pay and conditions of work. Texas & N.O.R. Co. v. Railway S.S. Clerks, supra; Virginian Railway Co. v. System Federation No. 40. Restraint for the purpose of preventing an unjust interference with that right cannot be considered arbitrary or capricious. The provision of section 9(a)10 that representatives, for the purpose of collective bargaining, of the majority of the employees in an appropriate unit shall be the exclusive representatives of all the employees in that unit, imposes upon the respondent only the duty of conferring and negotiating with the authorized representatives of its employees for the purpose of settling a labor dispute. This provision has its analogue in section 2, Ninth, of the Railway Labor Act, as amended (45 U.S.C.A. 152, subd. 9), which was under consideration in Virginian Railway Co. v. System Federation No. 40, supra. The decree which we affirmed in that case required the railway

company to treat with the representative chosen by the employees and also to refrain from entering into collective labor agreements with any one other than their true representative as ascertained in accordance with the provisions of the act. We said that the obligation to treat with the true representative was exclusive and hence imposed the negative duty to treat with no other. We also pointed out that, as conceded by the government,11 the injunc- [301 U.S. 1, 45] tion against the company's entering into any contract concerning rules, rates of pay and working conditions except with a chosen representative was 'designed only to prevent collective bargaining with any one purporting to represent employees' other than the representative they had selected. It was taken 'to prohibit the negotiation of labor contracts, generally applicable to employees' in the described unit with any other representative than the one so chosen, 'but not as precluding such individual contracts' as the company might 'elect to make directly with individual employees.' We think this construction also applies to section 9(a) of the National Labor Relations Act (29 U.S.C.A. 159(a).

The act does not compel agreements between employers and employees. It does not compel any agreement whatever. It does not prevent the employer 'from refusing to make a collective contract and hiring individuals on whatever terms' the employer 'may by unilateral action determine.' 12 The act expressly provides in section 9(a) that any individual employee or a group of employees shall have the right at any time to present grievances to their employer. The theory of the act is that free opportunity for negotiation with accredited representatives of employees is likely to promote industrial peace and may bring about the adjustments and agreements which the act in itself does not attempt to compel. As we said in Texas & N.O.R. Co. v. Railway & S.S. Clerks, supra, and repeated in Virginian Railway Co. v. System Federation No. 40, the cases of Adair v. United States, 208 U.S. 161 , 28 S.Ct. 277, 13 Ann.Cas. 764, and Coppage v. Kansas, 236 U.S. 1 , 35 S.Ct. 240, L.R.A.1915C, 960, are inapplicable to legislation of this character. The act does not interfere with the normal exercise of the right of the employer to select its employees or to discharge them. The employer may not, under cover of that right, intimidate or coerce its employees with respect to their [301 U.S. 1, 46] self-organization and representation, and, on the other hand, the Board is not entitled to make its authority a pretext for interference with the right of discharge when that right is exercised for other reasons than such intimidation and coercion. The true purpose is the subject of investigation with full opportunity to show the facts. It would seem that when employers freely recognize the right of their employees to their own organizations and their unrestricted right of representation there will be much less occasion for controversy in respect to the free and appropriate exercise of the right of selection and discharge.

The act has been criticized as one-sided in its application; that it subjects the employer to supervision and restraint and leaves untouched the abuses for which employees may be responsible; that it fails to provide a more comprehensive plan,-with better assurances of fairness to both sides and with increased chances of success in bringing about, if not compelling, equitable solutions of industrial disputes affecting interstate commerce. But we are dealing with the power of Congress, not with a particular policy or with the extent to which policy should go. We have frequently said that the legislative authority, exerted within its proper field, need not embrace all the evils within its reach. The Constitution does not forbid 'cautious advance, step by step,' in dealing with the evils which are exhibited in activities within the range of legislative power. Carroll v. Greenwich Insurance Co., 199 U.S. 401, 411 , 26 S.Ct. 66; Keokee Coke Co. v. Taylor, 234 U.S. 224, 227 , 34 S.Ct. 856; Miller v. Wilson, 236 U.S. 373, 384 , 35 S.Ct. 342, L.R.A.1915F, 829; Sproles v. Binford, 286 U.S. 374, 396 , 52 S.Ct. 581, 588. The question in such cases is whether the Legislature, in what it does prescribe, has gone beyond constitutional limits.

The procedural provisions of the act are assailed. But these provisions, as we construe them, do not offend against the constitutional requirements governing the [301 U.S. 1, 47] creation and action of administrative bodies. See Interstate Commerce Commission v. Louisville & Nashville R. Co., 227 U.S. 88, 91 , 33 S.Ct. 185. The act establishes standards to which the Board must conform. There must be complaint, notice and hearing. The Board must receive evidence and make findings. The findings as to the facts are to be conclusive, but only if supported by evidence. The order of the Board is subject to review by the designated court, and only when sustained by the court may the order be enforced. Upon that review all questions of the jurisdiction of the Board and the regularity of its proceedings, all questions of constitutional right or statutory authority are open to examination by the court. We construe the procedural provisions as affording adequate opportunity to secure judicial protection against arbitrary action in accordance with the well-settled rules applicable to administrative agencies set up by Congress to aid in the enforcement of valid legislation. It is not necessary to repeat these rules which have frequently been declared. None of them appears to have been transgressed in the instant case. Respondent was notified and heard. It had opportunity to meet the charge of unfair labor practices upon the merits, and by withdrawing from the hearing it declined to avail itself of that opportunity. The facts found by the Board support its order and the evidence supports the findings. Respondent has no just ground for complaint on this score.

The order of the Board required the reinstatement of the employees who were found to have been discharged because of their 'union activity' and for the purpose of 'discouraging membership in the union.' That requirement was authorized by the act. Section 10(c), 29 U.S.C.A. 160(c). In Texas & N.O.R. Co. v. Railway & S.S. Clerks, supra, a similar order for restoration to service was made by the court in contempt proceedings for the violation of an injunction issued by the court to restrain an interference with [301 U.S. 1, 48] the right of employees as guaranteed by the Railway Labor Act of 1926. The requirement of restoration to service of employees discharged in violation of the provisions of that act was thus a sanction imposed in the enforcement of a judicial decree. We do not doubt that Congress could impose a like sanction for the enforcement of its valid regulation. The fact that in the one case it was a judicial sanction, and in the other a legislative one, is not an essential difference in determining its propriety.

Respondent complaints that the Board not only ordered reinstatement but directed the payment of wages for the time lost by the discharge, less amounts earned by the employee during that period. This part of the order was also authorized by the act. Section 10(c). It is argued that the requirement is equivalent to a money judgment and hence contravenes the Seventh Amendment with respect to trial by jury. The Seventh Amendment provides that 'In suits at common law, where the value in controversy shall exceed twenty dollars; the right of trial by jury shall be preserved.' The amendment thus preserves the right which existed under the common law when the amendment was adopted. Shields v. Thomas, 18 How. 253, 262; In re Wood, 210 U.S. 246, 258 , 28 S.Ct. 621; Dimick v. Schiedt, 293 U.S. 474, 476 , 55 S.Ct. 296, 95 A.L.R. 1150; Baltimore & Carolina Line v. Redman, 295 U.S. 654, 657 , 55 S.Ct. 890, 891. Thus it has no application to cases where recovery of money damages is an incident to equitable relief even though damages might have been recovered in an action at law. Clark v. Wooster, 119 U.S. 322, 325 , 7 S.Ct. 217; Pease v. Rathbun-Jones Engineering Co., 243 U.S. 273, 279 , 37 S.Ct. 283, Ann.Cas.1918C, 1147. It does not apply where the proceeding is not in the nature of a suit at common law. Guthrie National Bank v. Guthrie, 173 U.S. 528, 537 , 19 S.Ct. 513.

The instant case is not a suit at common law or in the nature of such a suit. The proceeding is one unknown to the common law. It is a statutory proceeding. Reinstatement of the employee and payment for time lost are [301 U.S. 1, 49] requirements imposed for violation of the statute and are remedies appropriate to its enforcement. The contention under the Seventh Amendment is without merit.

Our conclusion is that the order of the Board was within its competency and that the act is valid as here applied. The judgment of the Circuit Court of Appeals is reversed and the cause is remanded for further proceedings in conformity with this opinion. It is so ordered.

Reversed and remanded.

Footnotes

[ Footnote 1 ] Act of July 5, 1935, 49 Stat. 449, 29 U.S.C. 151 et seq. (29 U.S. C.A. 151 et seq.).

[ Footnote 2 ] This section is as follows:

'Section 1. The denial by employers of the right of employees to organize and the refusal by employers to accept the procedure of collective bargaining lead to strikes and other forms of industrial strife or unrest, which have the intent or the necessary effect of burdening or obstructing commerce by (a) impairing the efficiency, safety, or operation of the instrumentalities of commerce; (b) occurring in the current of commerce; (c) materially affecting, restraining, or controlling the flow of raw materials or manufactured or processed goods from or into the channels of commerce, or the prices of such materials or goods in commerce; or (d) causing diminution of employment and wages in such volume as substantially to impair or disrupt the market for goods flowing from or into the channels of commerce. 'The inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract, and employers who are organized in the corporate or other forms of ownership association substantially burdens and affects the flow of commerce, and tends to aggravate recurrent business depressions, by depressing wage rates and the purchasing power of wage earners in industry and by preventing the stabilization of competitive wage rates and working conditions within and between industries. 'Experience has proved that protection by law of the right of employees to organize and bargain collectively safeguards commerce from injury, impairment, or interruption, and promotes the flow of commerce by

removing certain recognized sources of industrial strife and unrest, by encouraging practices fundamental to the friendly adjustment of industrial disputes arising out of differences as to wages, hours, or other working conditions, and by restoring equality of bargaining power between employers and employees. 'It is hereby declared to be the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and eliminate these obstructions when they have occurred by encouraging the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection.' 29 U.S. C.A. 151.

[ Footnote 3 ] See note 2.

[ Footnote 4 ] What is quoted above is followed by this proviso-not here involved-' Provided, That nothing in this Act (chapter), or in the National Industrial Recovery Act (U.S.C., Supp. VII, title 15, Secs. 701-712), as amended from time to time (sections 701 to 712 of Title 15), or in any code or agreement approved or prescribed thereunder, or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organization (not established, maintained, or assisted by any action defined in this Act (chapter) as an unfair labor practice) to require as a condition of employment membership therein, if such labor organization is the representative of the employees as provided in section 9(a) (section 159(a) of this title), in the appropriate collective bargaining unit covered by such agreement when made.'

[ Footnote 5 ] 42 Stat. 159 (7 U.S.C.A. 181 et seq.).

[ Footnote 6 ] 42 Stat. 998 (7 U.S.C.A. 1-17).

[ Footnote 7 ] Sections 416, 422, 41 Stat. 484, 488 (49 U.S.C.A. 13, 15a); Interstate Commerce Act, 13(4), 49 U.S.C.A. 13(4).

[ Footnote 8 ] See, for example, Final Report of the Industrial Commission (1902), vol. 19, p. 844; Report of the Anthracite Coal Strike Commission (1902), Sen.Doc. No. 6, 58th Cong., Spec.Sess.; Final Report of Commission on Industrial Relations (1916), Sen.Doc. No. 415, 64th Cong., 1st Sess., vol. 1; National War Labor Board, Principles and Rules of Procedure (1919), p. 4; Bureau of Labor Statistics, Bulletin No. 287 (1921), pp. 52-64; History of the Shipbuilding Labor Adjustment Board, U.S. Bureau of Labor Statistics, Bulletin No. 283.

[ Footnote 9 ] See Investigating Strike in Steel Industries, Sen.Rep. No. 289, 66th Cong., 1st Sess.

[ Footnote 10 ] The provision is as follows: 'Sec. 9(a). Representatives designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appropriate for such purposes, shall be the exclusive representatives of all the employees in such unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, orother conditions of employment: Provided, That any individual employee or a group of employees shall have the right at any time to present grievances to their employer.' 29 U.S.C.A. 159(a).

[ Footnote 11 ] See Virginian Railway Co. v. System Federation No. 40, 300 U.S. 515 , 57 S.Ct. 592, 600, note 6, decided March 29, 1937.

[ Footnote 12 ] See note 11.

CHAS. C. STEWARD MACH. CO. v. DAVIS, 301 U.S. 548 (1937)

301 U.S. 548

CHAS. C. STEWARD MACH. CO. v.

DAVIS. No. 837.

Argued April 8-9, 1937. Decided May 24, 1937.

[301 U.S. 548, 551] Messrs. William Logan Martin, of Birmingham, Ala., Neil P. Sterne, of Anniston, Ala., and Walter Bouldin, of Birmingham, Ala., for petitioner.

Homer S. Cummings, Atty. Gen.,

[301 U.S. 548, 553] Charles E. Wyzanski, Jr., Sp. Asst. Atty. Gen., and Robert H. Jackson, Asst. Atty. Gen., for respondent.

[301 U.S. 548, 573]

Mr. Justice CARDOZO delivered the opinion of the Court.

The validity of the tax imposed by the Social Security Act (42 U.S.C. A. 301-1305) on employers of eight or more is here to be determined.

Petitioner, an Alabama corporation, paid a tax in accordance with the statute, filed a claim for refund with the Commissioner of Internal Revenue, and sued to recover the payment ($46.14), asserting a conflict between the statute and the Constitution of the United States. Upon demurrer the District Court gave judgment for the defendant dismissing the complaint, and the Circuit Court of Appeals for the Fifth Circuit affirmed. 89 F.(2d) 207. The decision is in accord with judgments of the Supreme Judicial Court of Massachusetts (Howes Brothers Co. v. Massachusetts Unemployment Compensation Commission, December 30, 1936, 5 N.E.(2d) 720), the Supreme Court of California (Gillum v. Johnson, November 25, 1936, 62 P.(2d) 1037), and the Supreme Court of Alabama (Beeland Wholesale Co. v. Kaufman, March 18, 1937, 174 So. 516). It is in conflict with a judgment of the Circuit Court of Appeals for the First Circuit, from which one judge dissented. Davis v. Boston & Maine R.R. Co., April 14, 1937, 89 F. ( 2d) 368. An important question of constitutional law being involved, we granted certiorari. 300 U.S. 652 , 57 S.Ct. 673, 81 L.Ed. --. [301 U.S. 548, 574] The Social Security Act (Act of August 14, 1935, c. 531, 49 Stat. 620, 42 U.S.C., c. 7 (Supp.II), 42 U.S.C.A. 301-1305) is divided into eleven separate titles, of which only titles IX and III are so related to this case as to stand in need of summary.

The caption of title IX is 'Tax on Employers of Eight or More.' Every employer (with stated exceptions) is to pay for each calendar year 'an excise tax, with respect to having individuals in his employ,' the tax to be measured by prescribed percentages of the total wages payable by the employer during the calendar year with respect to such employment. Section 901, 42 U.S.C.A. 1101. One is not, however, an 'employer' within the meaning of the act unless he employs eight persons or more. Section 907(a), 42 U.S.C.A. 1107(a). There are also other limitations of minor importance. The term 'employment' too has its special definition, excluding agricultural labor, domestic service in a private home, and some other smaller classes. Section 907(c), 42 U.S.C.A. 1107(c). The tax begins with the year 1936, and is payable for the first time on January 31, 1937. During the calendar year 1936 the rate is to be 1 per cent., during 1937 2 per cent., and 3 per cent. thereafter. The proceeds, when collected, go into the Treasury of the United States like internal revenue collections generally. Section 905(a), 42 U.S.C.A. 1105(a). They are not earmarked in any way. In certain circumstances, however, credits are allowable. Section 902, 42 U.S.C.A. 1102. If the taxpayer has made contributions to an unemployment fund under a state law, he may credit such contributions against the federal tax, provided, however, that the total credit allowed to any taxpayer shall not exceed 90 per centum of the tax against which it is credited, and provided also that the state law shall have been certified to the Secretary of the Treasury by the Social Security Board as satisfying certain minimum criteria. Section 902. The provisions of section 903 (42 U.S.C.A. 1103) defining those criteria are stated in the[301 U.S. 548, 575] margin. 1 Some of the conditions thus attached to the allowance of a credit are designed to give assurance that the state unemployment compensation law shall be one in substance as well as name. Others are designed

to give assurance that the contributions shall be protected against loss after payment to the state. To this last end there [301 U.S. 548, 576] are provisions that before a state law shall have the approval of the Board it must direct that the contributions to the state fund be paid over immediately to the Secretary of the Treasury to the credit of the 'Unemployment Trust Fund.' Section 904 (42 U.S.C.A. 1104) establishing this fund is quoted below. 2 For the moment it is enough to say that the fund is to be held by the Secretary of the Treasury, who is to invest in government securities any portion not required in his judgment to meet current withdrawals. He is authorized and directed to pay out of the fund to any competent state agency such sums as it may duly requisition from the amount standing to its credit. Section 904(f), 42 U.S.C.A. 1104(f). [301 U.S. 548, 577] Title III, which is also challenged as invalid, has the caption 'Grants to States for Unemployment Compensation Administration.' Under this title, certain sums of money are 'authorized to be appropriated' for the purpose of assisting the states in the administration of their unemployment compensation laws, the maximum for the fiscal year ending June 30, 1936, to be $4,000,000, and $49,000,000 for each fiscal year thereafter. Section 301, 42 U.S.C.A. 501. No present appropriation is made to the extent of a single dollar. All that the title does is to authorize future appropriations. Actually only $2,250,000 of the $4,000, 000 authorized was appropriated for 1936 (Act of Feb. 11, [301 U.S. 548, 578] 1936, c. 49, 49 Stat. 1109, 1113) and only $29,000,000 of the $49,000,000 authorized for the following year (Act of June 22, 1936, c. 689, 49 Stat. 1597, 1605). The appropriations when made were not specifically out of the proceeds of the employment tax, but out of any moneys in the Treasury. Other sections of the title prescribe the method by which the payments are to be made to the state (section 302, 42 U.S.C.A. 502) and also certain conditions to be established to the satisfaction of the Social Security Board before certifying the propriety of a payment to the Secretary of the Treasury (section 303, 42 U.S.C.A. 503). They are designed to give assurance to the federal government that the moneys granted by it will not be expended for purposes alien to the grant, and will be used in the administration of genuine unemployment compensation laws.

The assault on the statute proceeds on an extended front. Its assailants take the ground that the tax is not an excise; that it is not uniform throughout the United States as excises are required to be; that its exceptions are so many and arbitrary as to violate the Fifth Amendment; that its purpose was not revenue, but an unlawful invasion of the reserved powers of the states; and that the states in submitting to it have yielded to coercion and have abandoned governmental functions which they are not permitted to surrender.

The objections will be considered seriatim with such further explanation as may be necessary to make their meaning clear.

First: The tax, which is described in the statute as an excise, is laid with uniformity throughout the United States as a duty, an impost, or an excise upon the relation of employment.

1. We are told that the relation of employment is one so essential to the pursuit of happiness that it may not be burdened with a tax. Appeal is made to history. From the precedents of colonial days, we are supplied with [301 U.S. 548, 579] illustrations of excises common in the colonies. They are said to have been bound up with the enjoyment of particular commodities. Appeal is also made to principle or the analysis of concepts. An excise, we are told, imports a tax upon a privilege; employment, it is said, is a right, not a privilege, from which it follows that employment is not subject to an excise. Neither the one appeal nor the other leads to the desired goal.

As to the argument from history: Doubtless there were many excises in colonial days and later that were associated, more or less intimately, with the enjoyment or the use of property. This would not prove, even if no others were then known, that the forms then accepted were not subject to enlargement. Cf. Pensacola Teleg. Co. v. Western Union Telegraph Co., 96 U.S. 1 , 9; In re Debs, 158 U.S. 564, 591 , 15 S.Ct. 900; South Carolina v. United States, 199 U.S. 437, 448 , 449 S., 26 S.Ct. 110, 4 Ann.Cas. 737. But in truth other excises were known, and known since early times. Thus in 1695 (6 & 7 Wm. III, c. 6), Parliament passed an act which granted 'to His Majesty certain Rates and Duties upon Marriages, Births and Burials,' all for the purpose of 'carrying on the War against France with Vigour.' See Opinion of the Justices, 196 Mass. 603, 609, 85 N.E. 545, 547. No commodity was affected there. The industry of counsel has supplied us with an apter illustration where the tax was not different in substance from the one now challenged as invalid. In 1777, before our Constitutional Convention, Parliament laid upon employers an annual 'duty' of 21 shillings for 'every male Servant' employed in stated forms of work. 3 [301 U.S. 548, 580] Revenue Act of 1777, 17 George III, c. 39.4 The point is made as a distinction that a tax upon the use of male servants was thought of as a tax upon a luxury. Davis v. Boston & Maine R.R. Co., supra. It did not touch employments in husbandry or business. This is to throw over the argument that historically an excise is a tax upon the enjoyment of commodities. But the attempted distinction, whatever may be thought of its validity, is inapplicable to a statute of Virginia passed in 1780. There a tax of 3 pounds, 6

shillings, and 8 pence was to be paid for every male tithable above the age of twenty-one years (with stated exceptions), and a like tax for 'every white servant whatsoever, except apprentices under the age of twenty one years.' 10 Hening's Statutes of Virginia, p. 244. Our colonial forbears knew more about ways of taxing than some of their descendants seem to be willing to concede. 5

The historical prop failing, the prop or fancied prop of principle remains. We learn that employment for lawful gain is a 'natural' or 'inherent' or 'inalienable' right, and not a 'privilege' at all. But natural rights, so called, are as much subject to taxation as rights of less importance. 6 An excise is not limited to vocations or activities [301 U.S. 548, 581] that may be prohibited altogether. It is not limited to those that are the outcome of a franchise. It extends to vocations or activities pursued as of common right. What the individual does in the operation of a business is amenable to taxation just as much as what he owns, at all events if the classification is not tyrannical or arbitrary. 'Business is as legitimate an object of the taxing power as property.' City of Newton v. Atchison, 31 Kan. 151, 154, 1 P. 288, 290, 47 Am.Rep. 486 (per Brewer, J.). Indeed, ownership itself, as we had occasion to point out the other day, is only a bundle of rights and privileges invested with a single name. Henneford v. Silas Mason Co., Inc. (March 29, 1937) 300 U.S. 577 , 57 S.Ct. 524, 527. 'A state is at liberty, if it pleases, to tax them all collectively, or to separate the faggots and lay the charge distributively.' Id. Employment is a business relation, if not itself a business. It is a relation without which business could seldom be carried on effectively. The power to tax the activities and relations that constitute a calling considered as a unit is the power to tax any of them. The whole includes the parts. Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U.S. 249, 267 , 268 S., 53 S.Ct. 345, 349, 350, 87 A.L.R. 1191

The subject-matter of taxation open to the power of the Congress is as comprehensive as that open to the power of the states, though the method of apportionment may at times be different. 'The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises.' Article 1, 8. If the tax is a direct one, it shall be apportioned according to the census or enumeration. If it is a duty, impost, or excise, it shall be uniform throughout the United States. Together, these classes include every form of tax appropriate to sovereignty. Cf. Burnet v. Brooks, 288 U.S. 378, 403 , 405 S., 53 S.Ct. 457, 464, 465, 86 A.L.R. 747; Brushaber v. Union Pacific R.R. Co., 240 U.S. 1, 12 , 36 S.Ct. 236, L.R.A.1917D, 414, Ann.Cas.1917B, 713. Whether the tax is to be [301 U.S. 548, 582] classified as an 'excise' is in truth not of critical importance. If not that, it is an 'impost' (Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601, 622 , 625 S., 15 S.Ct. 912; Pacific Insurance Co. v. Soule, 7 Wall. 433, 445), or a 'duty' (Veazie Bank v. Fenno, 8 Wall. 533, 546, 547; Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 570 , 15 S.Ct. 673; Knowlton v. Moore, 178 U.S. 41, 46 , 20 S.Ct. 747). A capitation or other 'direct' tax it certainly is not. 'Although there have been, from time to time, intimations that there might be some tax which was not a direct tax, nor included under the words 'duties, imposts, and excises,' such a tax, for more than 100 years of national existence, has as yet remained undiscovered, notwithstanding the stress of particular circumstances has invited thorough investigation into sources of revenue.' Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 557 , 15 S.Ct. 673, 680. There is no departure from that thought in later cases, but rather a new emphasis of it. Thus, in Thomas v. United States, 192 U.S. 363, 370 , 24 S.Ct. 305, 306, it was said of the words 'duties, imposts, and excises' that 'they were used comprehensively to cover customs and excise duties imposed on importation, consumption, manufacture, and sale of certain commodities, privileges, particular business transactions, vocations, occupations, and the like.' At times taxpayers have contended that the Congress is without power to lay an excise on the enjoyment of a privilege created by state law. The contention has been put aside as baseless. Congress may tax the transmission of property by inheritance or will, though the states and not Congress have created the privilege of succession. Knowlton v. Moore, supra, 178 U.S. 41 , at page 58, 20 S.Ct. 747. Congress may tax the enjoyment of a corporate franchise, though a state and not Congress has brought the franchise into being. Flint v. Stone Tracy Co., 220 U.S. 107, 108 , 155 S., 31 S.Ct. 342, Ann.Cas.1912B, 1312. The statute books of the states are strewn with illustrations of taxes laid on [301 U.S. 548, 583] occupations pursued of common right. 7 We find no basis for a holding that the power in that regard which belongs by accepted practice to the Legislatures of the states, has been denied by the Constitution to the Congress of the nation.

2. The tax being an excise, its imposition must conform to the canon of uniformity. There has been no departure from this requirement. According to the settled doctrine, the uniformity exacted is geographical, not intrinsic. Knowlton v. Moore, supra, 178 U.S. 41 , at page 83, 20 S.Ct. 747; Flint v. Stone Tracy Co., supra,220 U.S. 107 , at page 158, 31 S.Ct. 342, Ann.Cas.1912B, 1312; Billings v. United States, 232 U.S. 261, 282 , 34 S.Ct. 421; Stellwagen v. Clum, 245 U.S. 605, 613 , 38 S.Ct. 215; LaBelle Iron Works v. United States, 256 U.S. 377, 392 , 41 S.Ct. 528, 532; Poe v. Seaborn, 282 U.S. 101, 117 , 51 S.Ct. 58, 61; Wright v. Vinton Branch of Mountain Trust Bank (March 29, 1937) 300 U.S. 440 , 57 S. Ct. 556. 'The rule of liability shall be alike in all parts of the United States.' Florida v. Mellon, 273 U.S. 12, 17 , 47 S.Ct. 265, 266.

Second: The excise is not invalid under the provisions of the Fifth Amendment by force of its exemptions. [301 U.S. 548, 584] The statute does not apply, as we have seen, to employers of less then eight. It does not apply to agricultural labor, or domestic service in a private home or to some other classes of less importance. Petitioner contends that the effect of these restrictions is an arbitrary discrimination vitiating the tax.

The Fifth Amendment unlike the Fourteenth has no equal protection clause. LaBelle Iron Works v. United States, supra; Brushaber v. Union Pacific R.R. Co., supra,240 U.S. 1 , at page 24, 36 S.Ct. 236, L.R.A.1917D, 414, Ann.Cas.1917B, 713. But even the states, though subject to such a clause, are not confined to a formula of rigid uniformity in framing measures of taxation. Swiss Oil Corporation v. Shanks, 273 U.S. 407, 413 , 47 S.Ct. 393, 395. They may tax some kinds of property at one rate, and others at another, and exempt others altogether. Bell's Gap R.R. Co. v. Pennsylvania, 134 U.S. 232 , 10 S. Ct. 533; Stebbins v. Riley, 268 U.S. 137, 142 , 45 S.Ct. 424, 426, 44 A.L.R. 1454; Ohio Oil Co. v. Conway, 281 U.S. 146, 150 , 50 S.Ct. 310. They may lay an excise on the operations of a particular kind of business, and exempt some other kind of business closely akin thereto. Quong Wing v. Kirkendall, 223 U.S. 59, 62 , 32 S.Ct. 192; American Sugar Refining Co. v. Louisiana, 179 U.S. 89, 94 , 21 S.Ct. 43; Armour Packing Co. v. Lacy, 200 U.S. 226, 235 , 26 S.Ct. 232; Brown-Forman Co. v. Kentucky, 217 U.S. 563, 573 , 30 S.Ct. 578; Heisler v. Thomas Colliery Co., 260 U.S. 245, 255 , 43 S.Ct. 83, 84; State Board of Tax Com'rs v. Jackson, 283 U.S. 527, 537 , 538 S., 51 S.Ct. 540, 543, 73 A.L. R. 1464, 75 A.L.R. 1536. If this latitude of judgment is lawful for the states, it is lawful, a fortiori, in legislation by the Congress, which is subject to restraints less narrow and confining. Quong Wing v. Kirkendall, supra.

The classifications and exemptions directed by the statute now in controversy have support in considerations of policy and practical convenience that cannot be condemned as arbitrary. The classifications and exemptions would therefore be upheld if they had been adopted by a state and the provisions of the Fourteenth Amendment were invoked to annul them. This is held in two cases [301 U.S. 548, 585] passed upon today in which precisely the same provisions were the subject of attack, the provisions being contained in the Unemployment Compensation Law of the state of Alabama (Gen.Acts Ala.1935, p. 950, as amended). Carmichael v. Southern Coal & Coke Co. (Carmichael v. Gulf States Paper Corporation), 301 U.S. 495 , 57 S.Ct. 868, 81 L.Ed. --. The opinion rendered in those cases covers the ground fully. It would be useless to repeat the argument. The act of Congress is therefore valid, so far at least as its system of exemptions is concerned, and this though we assume that discrimination, if gross enough, is equivalent to confiscation and subject under the Fifth Amendment to challenge and annulment.

Third: The excise is not void as involving the coercion of the states in contravention of the Tenth Amendment or of restrictions implicit in our federal form of government.

The proceeds of the excise when collected are paid into the Treasury at Washington, and thereafter are subject to appropriation like public moneys generally. Cincinnati Soap Co. v. United States (May 3, 1937) 301 U.S. 308 , 57 S.Ct. 764, 81 L.Ed. --. No presumption can be indulged that they will be misapplied or wasted. 8 Even if they were collected in the hope or expectation that some other and collateral good would be furthered as an incident, that without more would not make the act invalid. Sonzinsky v. United States (March 29, 1937) 300 U.S. 506 , 57 S.Ct. 554, 555. This indeed is hardly questioned. The case for the petitioner is built on the contention that here an ulterior aim is wrought into the very structure of the act, and what is [301 U.S. 548, 586] even more important that the aim is not only ulterior, but essentially unlawful. In particular, the 90 per cent. credit is relied upon as supporting that conclusion. But before the statute succumbs to an assault upon these lines, two propositions must be made out by the assailant. Cincinnati Soap Co. v. United States, supra. There must be a showing in the first place that separated from the credit the revenue provisions are incapable of standing by themselves. There must be a showing in the second place that the tax and the credit in combination are weapons of coercion, destroying or impairing the autonomy of the states. The truth of each proposition being essential to the success of the assault, we pass for convenience to a consideration of the second, without pausing to inquire whether there has been a demonstration of the first.

To draw the line intelligently between duress and inducement, there is need to remind ourselves of facts as to the problem of unemployment that are now matters of common knowledge. West Coast Hotel Co. v. Parrish ( March 29, 1937) 300 U.S. 379 , 57 S.Ct. 578. The relevant statistics are gathered in the brief of counsel for the government. Of the many available figures a few only will be mentioned. During the years 1929 to 1936, when the country was passing through a cyclical depression, the number of the unemployed mounted to unprecedented heights. Often the average was more than 10 million; at times a peak was attained of 16 million or more. Disaster to the breadwinner meant disaster to dependents. Accordingly the roll of the unemployed, itself formidable enough, was only a partial roll of the destitute or needy. The fact developed quickly that the states were unable to give the requisite relief. The problem had become

national in area and dimensions. There was need of help from the nation if the people were not to starve. It is too late today for the argument to be heard with tolerance that in a crisis so extreme the use of the moneys of the nation to relieve the unemployed [301 U.S. 548, 587] and their dependents is a use for any purpose narrower than the promotion of the general welfare. Cf. United States v. Butler, 297 U.S. 1, 65 , 66 S., 56 S.Ct. 312, 319, 102 A.L.R. 914; Helvering v. Davis, 301 U.S. 619, 672 , 57 S.Ct. 904, 81 L.Ed. --, decided herewith. The nation responded to the call of the distressed. Between January 1, 1933, and July 1, 1936, the states (according to statistics submitted by the government) incurred obligations of $689,291,802 for emergency relief; local subdivisions an additional $775,675,366. In the same period the obligations for emergency relief incurred by the national government were $ 2,929,307,125, or twice the obligations of states and local agencies combined. According to the President's budget message for the fiscal year 1938, the national government expended for public works and unemployment relief for the three fiscal years 1934, 1935, and 1936, the stupendous total of $8,681,000,000. The parens patriae has many reasons-fiscal and economic as well as social and moral-for planning to mitigate disasters that bring these burdens in their train.

In the presence of this urgent need for some remedial expedient, the question is to be answered whether the expedient adopted has overlept the bounds of power. The assailants of the statute say that its dominant end and aim is to drive the state Legislatures under the whip of economic pressure into the enactment of unemployment compensation laws at the bidding of the central government. Supporters of the statute say that its operation is not constraint, but the creation of a larger freedom, the states and the nation joining in a co-operative endeavor to avert a common evil. Before Congress acted, unemployment compensation insurance was still, for the most part, a project and no more. Wisconsin was the pioneer. Her statute was adopted in 1931. At times bills for such insurance were introduced elsewhere, but they did not reach the stage of law. In 1935, four states (California, Massachusetts, New Hampshire, and New York) passed unem- [301 U.S. 548, 588] ployment laws on the eve of the adoption of the Social Security Act, and two others did likewise after the federal act and later in the year. The statutes differed to some extent in type, but were directed to a common end. In 1936, twenty-eight other states fell in line, and eight more the present year. But if states had been holding back before the passage of the federal law, inaction was not owing, for the most part, to the lack of sympathetic interest. Many held back through alarm lest in laying such a toll upon their industries, they would place themselves in a position of economic disadvantage as compared with neighbors or competitors. See House Report, No. 615, 74th Congress, 1st session, p. 8; Senate Report, No. 628, 74th Congress, 1st session, p. 11.9 Two consequences ensued. One was that the freedom of a state to contribute its fair share to the solution of a national problem was paralyzed by fear. The other was that in so far as there was failure by the states to contribute relief according to the measure of their capacity, a disproportionate burden, and a mountainous one, was laid upon the resources of the government of the nation.

The Social Security Act is an attempt to find a method by which all these public agencies may work together to a common end. Every dollar of the new taxes will continue in all likelihood to be used and needed by the [301 U.S. 548, 589] nation as long as states are unwilling, whether through timidity or for other motives, to do what can be done at home. At least the inference is permissible that Congress so believed, though retaining undiminished freedom to spend the money as it pleased. On the other hand, fulfillment of the home duty will be lightened and encouraged by crediting the taxpayer upon his account with the Treasury of the nation to the extent that his contributions under the laws of the locality have simplified or diminished the problem of relief and the probable demand upon the resources of the fisc. Duplicated taxes, or burdens that approach them are recognized hardships that government, state or national, may properly avoid. Henneford v. Silas Mason Co., Inc., supra; Kidd v. Alabama, 188 U.S. 730, 732 , 23 S.Ct. 401; Watson v. State Comptroller, 254 U.S. 122, 125 , 41 S.Ct. 43, 44. If Congress believed that the general welfare would better be promoted by relief through local units than by the system then in vogue, the co-operating localities ought not in all fairness to pay a second time.

Who then is coerced through the operation of this statute? Not the taxpayer. He pays in fulfillment of the mandate of the local legislature. Not the state. Even now she does not offer a suggestion that in passing the unemployment law she was affected by duress. See Carmichael v. Southern Coal & Coke Co. (Carmichael v. Gulf States Paper Corporation), supra. For all that appears, she is satisfied with her choice, and would be sorely disappointed if it were now to be annulled. The difficulty with the petitioner's contention is that it confuses motive with coercion. 'Every tax is in some measure regulatory. To some extent it interposes an economic impediment to the activity taxed as compared with others not taxed.' Sonzinsky v. United States, supra. In like manner every rebate from a tax when conditioned upon conduct is in some measure a temptation. But to hold that motive [301 U.S. 548, 590] or temptation is equivalent to coercion is to plunge the law in endless difficulties. The outcome of such a doctrine is the acceptance of a philosophical determinism by which choice becomes impossible. Till now the law has been guided by a robust common sense which assumes the freedom of the will as a working hypothesis in the solution of its problems. The wisdom of the hypothesis has

illustration in this case. Nothing in the case suggests the exertion of a power akin to undue influence, if we assume that such a concept can ever be applied with fitness to the relations between state and nation. Even on that assumption the location of the point at which pressure turns into compulsion, and ceases to be inducement, would be a question of degree, at times, perhaps, of fact. The point had not been reached when Alabama made her choice. We cannot say that she was acting, not of her unfettered will, but under the strain of a persuasion equivalent to undue influence, when she chose to have relief administered under laws of her own making, by agents of her own selection, instead of under federal laws, administered by federal officers, with all the ensuing evils, at least to many minds, of federal patronage and power. There would be a strange irony, indeed, if her choice were now to be annulled on the basis of an assumed duress in the enactment of a statute which her courts have accepted as a true expression of her will. Beeland Wholesale Co. v. Kaufman, supra. We think the choice must stand.

In ruling as we do, we leave many questions open. We do not say that a tax is valid, when imposed by act of Congress, if it is laid upon the condition that a state may escape its operation through the adoption of a statute unrelated in subject-matter to activities fairly within the scope of national policy and power. No such question is before us. In the tender of this credit Congress does not intrude upon fields foreign to its function. The purpose [301 U.S. 548, 591] of its intervention, as we have shown, is to safeguard its own treasury and as an incident to that protection to place the states upon a footing of equal opportunity. Drains upon its own resources are to be checked; obstructions to the freedom of the states are to be leveled. It is one thing to impose a tax dependent upon the conduct of the taxpayers, or of the state in which they live, where the conduct to be stimulated or discouraged is unrelated to the fiscal need subserved by the tax in its normal operation, or to any other end legitimately national. The Child Labor Tax Case, 259 U.S. 20 , 42 S.Ct. 449, 21 A.L.R. 1432, and Hill v. Wallace, 259 U.S. 44 , 42 S.Ct. 453, were decided in the belief that the statutes there condemned were exposed to that reproach. Cf. United States v. Constantine, 296 U.S. 287 , 56 S.Ct. 223. It is quite another thing to say that a tax will be abated upon the doing of an act that will satisfy the fiscal need, the tax and the alternative being approximate equivalents. In such circumstances, if in no others, inducement or persuasion does not go beyond the bounds of power. We do not fix the outermost line. Enough for present purposes that wherever the line may be, this statute is within it. Definition more precise must abide the wisdom of the future.

Florida v. Mellon, 273 U.S. 12 , 47 S.Ct. 265, supplies us with a precedent, if precedent be needed. What was in controversy there was section 301 of the Revenue Act of 1926 (44 Stat. 69), which imposes a tax upon the transfer of a decedent's estate, while at the same time permitting a credit, not exceeding 80 per cent., for 'the amount of any estate, inheritance, legacy, or succession taxes actually paid to any State or Territory.' Florida challenged that provision as unlawful. Florida had no inheritance taxes and alleged that under its constitution it could not levy any. 273 U.S. 12, 15 , 47 S.Ct. 265. Indeed, by abolishing inheritance taxes, it had hoped to induce wealthy persons to become its citizens. See 67 Cong. Rec., Part 1, pp. 735, 752. It argued at our bar that 'the Estate Tax provision was not passed for the purpose [301 U.S. 548, 592] of raising federal revenue' ( 273 U.S. 12, 14 , 47 S.Ct. 265), but rather 'to coerce States into adopting estate or inheritance tax laws' ( 273 U.S. 12, 13 , 47 S.Ct. 265). In fact, as a result of the 80 per cent. credit, material changes of such laws were made in thirty-six states. 10 In the face of that attack we upheld the act as valid. Cf. Massachusetts v. Mellon, 262 U.S. 447, 482 , 43 S.Ct. 597, 599; also Act of August 5, 1861, c. 45, 12 Stat. 292; Act of May 13, 1862, c. 66, 12 Stat. 384.

United States v. Butler, supra, is cited by petitioner as a decision to the contrary. There a tax was imposed on processors of farm products, the proceeds to be paid to farmers who would reduce their acreage and crops under agreements with the Secretary of Agriculture, the plan of the act being to increase the prices of certain farm products by decreasing the quantities produced. The court held (1) that the socalled tax was not a true one ( 297 U.S. 1 , at pages 56, 61, 56 S.Ct. 312, 315, 317, 102 A.L.R. 914), the proceeds being earmarked for the benefit of farmers complying with the prescribed conditions, (2) that there was an attempt to regulate production without the consent of the state in which production was affected, and (3) that the payments to farmers were coupled with coercive contracts ( 297 U.S. 1 , at page 73, 56 S.Ct. 312, 322, 102 A.L.R. 914), unlawful in their aim and oppressive in their consequences. The decision was by a a divided court, a minority taking the view that the objections were untenable. None of them is applicable to the situation here developed.

(a) The proceeds of the tax in controversy are not earmarked for a special group.

(b) The unemployment compensation law which is a condition of the credit has had the approval of the state and could not be a law without it.

(c) The condition is not linked to an irrevocable agreement, for the state at its pleasure may repeal its unemployment law (section 903(a)(6), 42 U.S.C.A. 1103(a)(6), terminate the credit, [301 U.S. 548, 593] and place itself where it was before the credit was accepted.

(d) The condition is not directed to the attainment of an unlawful end, but to an end, the relief of unemployment, for which nation and state may lawfully coo perate.

Fourth: The statute does not call for a surrender by the states of powers essential to their quasi sovereign existence.

Argument to the contrary has its source in two sections of the act. One section (90311) defines the minimum criteria to which a state compensation system is required to conform if it is to be accepted by the Board as the basis for a credit. The other section (90412) rounds out the requirement with complementary rights and duties. Not all the criteria or their incidents are challenged as unlawful. We will speak of them first generally, and then more specifically in so far as they are questioned.

A credit to taxpayers for payments made to a state under a state unemployment law will be manifestly futile in the absence of some assurance that the law leading to the credit is in truth what it professes to be. An unemployment law framed in such a way that the unemployed who look to it will be deprived of reasonable protection is one in name and nothing more. What is basic and essential may be assured by suitable conditions. The terms embodied in these sections are directed to that end. A wide range of judgment is given to the several states as to the particular type of statute to be spread upon their books. For anything to the contrary in the provisions of this act they may use the pooled unemployment form, which is in effect with variations in Alabama, California, Michigan, New York, and elsewhere. They may establish a system of merit ratings applicable at [301 U.S. 548, 594] once or to go into effect later on the basis of subsequent experience. Cf. Sections 909, 910, 42 U.S.C.A. 1109, 1110. They may provide for employee contributions as in Alabama and California, or put the entire burden upon the employer as in New York. They may choose a system of unemployment reserve accounts by which an employer is permitted after his reserve has accumulated to contribute at a reduced rate or even not at all. This is the system which had its origin in Wisconsin. What they may not do, if they would earn the credit, is to depart from those standards which in the judgment of Congress are to be ranked as fundamental. Even if opinion may differ as to the fundamental quality of one or more of the conditions, the difference will not avail to vitiate the statute. In determining essentials, Congress must have the benefit of a fair margin of discretion. One cannot say with reason that this margin has been exceeded, or that the basic standards have been determined in any arbitrary fashion. In the event that some particular condition shall be found to be too uncertain to be capable of enforcement, it may be severed from the others, and what is left will still be valid.

We are to keep in mind steadily that the conditions to be approved by the Board as the basis for a credit are not provisions of a contract, but terms of a statute, which may be altered or repealed. Section 903(a)(6). The state does not bind itself to keep the law in force. It does not even bind itself that the moneys paid into the federal fund will be kept there indefinitely or for any stated time. On the contrary, the Secretary of the Treasury will honor a requisition for the whole or any part of the deposit in the fund whenever one is made by the appropriate officials. The only consequence of the repeal or excessive amendment of the statute, or the expenditure of the money, when requisitioned, for other than compensation uses or administrative expenses, is [301 U.S. 548, 595] that approval of the law will end, and with it the allowance of a credit, upon notice to the state agency and an opportunity for hearing. Section 903(b, c), 42 U.S.C.A. 1103(b, c).

These basic considerations are in truth a solvent of the problem. Subjected to their test, the several objections on the score of abdication are found to be unreal.

Thus, the argument is made that by force of an agreement the moneys when withdrawn must be 'paid through public employment offices in the State or such other agencies as the Board may approve.' Section 903(a)(1), 42 U.S.C.A. 1103(a)(1). But in truth there is no agreement as to the method of disbursement. There is only a condition which the state is free at pleasure to disregard or to fulfill. Moreover, approval is not requisite if public employment offices are made the disbursing instruments. Approval is to be a check upon resort to 'other agencies' that may perchance, be irresponsible. A state looking for a credit must give assurance that her system has been organized upon a base of rationality.

There is argument again that the moneys when withdrawn are to be devoted to specific uses, the relief of unemployment, and that by agreement for such payment the quasi-sovereign position of the state has been impaired, if not abandoned. But again there is confusion between promise and condition. Alabama is still free, without breach of an agreement to change her system over night. No officer or agency of the national government can force a compensation law upon her or keep it in existence. No officer or agency of that government, either by suit or other means, can supervise or control the application of the payments.

Finally and chiefly, abdication is supposed to follow from section 904 of the statute and the parts of section 903 that are complementary thereto. Section 903(a)(3). By these the Secretary of the Treasury is authorized and directed to receive and hold in the Unemployment Trust Fund all [301 U.S. 548, 596] moneys deposited therein by a state agency for a state unemployment fund and to invest in obligations of the United States such portion of the fund as is not in his judgment required to meet current withdrawals. We are told that Alabama in consenting to that deposit has renounced the plenitude of power inherent in her statehood.

The same pervasive misconception is in evidence again. All that the state has done is to say in effect through the enactment of a statute that her agents shall be authorized to deposit the unemployment tax receipts in the Treasury at Washington. Alabama Unemployment Act of September 14, 1935, section 10(i) (Gen.Acts Ala.1935, p. 961). The statute may be repealed. Section 903(a)(6), 42 U.S.C.A. 1103(a)(6). The consent may be revoked. The deposits may be withdrawn. The moment the state commission gives notice to the depositary that it would like the moneys back, the Treasurer will return them. To find state destruction there is to find it almost anywhere. With nearly as much reason one might say that a state abdicates its functions when it places the state moneys on deposit in a national bank.

There are very good reasons of fiscal and governmental policy why a state should be willing to make the Secretary of the Treasury the custodian of the fund. His possession of the moneys and his control of investments will be an assurance of stability and safety in times of stress and strain. A report of the Ways and Means Committee of the House of Representatives, quoted in the margin, develops the situation clearly. 13 Nor is there risk of loss [301 U.S. 548, 597] or waste. The credit of the Treasury is at all times back of the deposit, with the result that the right of withdrawal will be unaffected by the fate of any intermediate investments, just as if a checking account in the usual form had been opened in a bank.

The inference of abdication thus dissolves in thinnest air when the deposit is conceived of as dependent upon a statutory consent, and not upon a contract effective to create a duty. By this we do not intimate that the conclusion would be different if a contract were discovered. Even sovereigns may contract without derogating from their sovereignty. Perry v. United States, 294 U.S. 330, 353 , 55 S.Ct. 432, 436, 95 A.L.R. 1335; 1 Oppenheim, International Law (4th Ed.) 493, 494; Hall, International Law (8th Ed.) 107; 2 Hyde, International Law, 489. The states are at liberty, upon obtaining the consent of Congress, to make agreements with one another. Constitution, art. 1, 10, par. 3. Poole v. Fleeger, 11 Pet. 185, 209; Rhode Island v. Massachusetts, 12 Pet. 657, 725. We find no room for doubt that they may do the like with Congress if the essence of their statehood is maintained without impairment. 14 Alabama [301 U.S. 548, 598] is seeking and obtaining a credit of many millions in favor of her citizens out of the Treasury of the nation. Nowhere in our scheme of government-in the limitations express or implied of our Federal Constitution-do we find that she is prohibited from assenting to conditions that will assure a fair and just requital for benefits received. But we will not labor the point further. An unreal prohibition directed to an unreal agreement will not vitiate an act of Congress, and cause it to collapse in ruin.

Fifth: Title III of the act is separable from title IX, and its validity is not at issue.

The essential provisions of that title have been stated in the opinion. As already pointed out, the title does not appropriate a dollar of the public moneys. It does no more than authorize appropriations to be made in the future for the purpose of assisting states in the administration of their laws, if Congress shall decide that appropriations are desirable. The title might be expunged, and title IX would stand intact. Without a severability clause we should still be led to that conclusion. The presence of such a clause (section 1103, 42 U.S.C.A. 1303) makes the conclusion even clearer. Williams v. Standard Oil Co., 278 U.S. 235, 242 , 49 S.Ct. 115, 117, 60 A.L.R. 596; Utah Power & Light Co. v. Pfost, 286 U.S. 165, 184 , 52 S.Ct. 548, 553; Carter v. Carter Coal Co., 298 U.S. 238, 312 , 56 S.Ct. 855, 873.

The judgment is affirmed.

Separate opinion of Mr. Justice McREYNOLDS.

That portion of the Social Security legislation here under consideration, I think, exceeds the power granted to Congress. It unduly interferes with the orderly government of the state by her own people and otherwise offends the Federal Constitution.

In Texas v. White (1869) 7 Wall. 700, 725, a cause of momentous importance, this Court, through Chief Justice Chase, declared- [301 U.S. 548, 599] 'But the perpetuity and indissolubility of the Union, by no means implies the loss of distinct and individual existence, or of the right of self-government by the States. Under the Articles of Confederation each State retained its sovereignty, freedom, and independence, and every power, jurisdiction, and right not expressly delegated to the United States. Under the Constitution, though the powers of the States were much restricted, still, all powers not delegated to the United States, nor prohibited to the States, are reserved to the States respectively, or to the people. And we have already had occasion to remark at this term, that 'the people of each State compose a State, having its own government, and endowed with all the functions essential to separate and independent existence,' and that 'without the States in union, there could be no such political body as the United States.' (Lane County v. Oregon, 7 Wall. 71, 76). Not only, therefore, can there be no loss of separate and independent autonomy to the States, through their union under the Constitution, but it may be not unreasonably said that the preservation of the States, and the maintenance of their governments, are as much within the design and care of the Constitution as the preservation of the Union and the maintenance of the National Government. The Constitution, in all its provisions, looks to an indestructible Union, composed of indestructible States.'

The doctrine thus announced and often repeated, I had supposed was firmly established. Apparently the states remained really free to exercise governmental powers, not delegated or prohibited, without interference by the federal government through threats of punitive measures or offers of seductive favors. Unfortunately, the decision just announced opens the way for practical annihilation of this theory; and no cloud of words or ostentatious parade of irrelevant statistics should be permitted to obscure that fact. [301 U.S. 548, 600] The invalidity also the destructive tendency of legislation like the act before us were forecefully pointed out by President Franklin Pierce in a veto message sent to the Senate May 3, 1854.1 He was a scholarly lawyer of distinction and enjoyed the advice and counsel of a rarely able Attorney General-Caleb Cushing of Massachusetts. This message considers with unusual lucidity points here specially important. I venture to set out pertinent portions of it which must appeal to all who continue to respect both the letter and spirit of our great charter.

'To the Senate of the United States: 'The bill entitled 'An Act making a grant of public lands to the several States for the benefit of indigent insane persons,' which was presented to me on the 27th ultimo, has been maturely considered, and is returned to the Senate, the House in which it originated, with a statement of the objections which have required me to withhold from it may approval . ... 'If in presenting my objections to this bill I should say more than strictly belongs to the measure or is required for the discharge of my official obligation, let it be attributed to a sincere desire to justify my act before those whose good opinion I so highly value and to that earnestness which springs from my deliberate conviction that a strict adherence to the terms and purposes of the federal compact offers the best, if not the only, security for the preservation of our blessed inheritance of representative liberty. 'The bill provides in substance: 'First. That 10,000,000 acres of land be granted to the several States, to be apportioned among them in the compound ratio of the geographical area and representation of said States in the House of Representatives. [301 U.S. 548, 601] 'Second. That wherever there are public lands in a State subject to sale at the reguiar price of private entry, the proportion of said 10,000, 000 acres falling to such State shall be selected from such lands within it, and that to the States in which there are no such public lands land scrip shall be issued to the amount of their distributive shares, respectively, said scrip not to be entered by said States, but to be sold by them and subject to entry by their assignees: Provided, That none of it shall be sold at less than $1 per acre, under penalty of forfeiture of the same to the United States. 'Third. That the expenses of the management and superintendence of said lands and of the moneys received therefrom shall be paid by the States to which they may belong out of the treasury of said States. 'Fourth. That the gross proceeds of the sales of such lands or land scrip so granted shall be invested by the several States in safe stocks, to constitute a perpetual fund, the principal of which shall remain forever

undiminished, and the interest to be appropriated to the maintenance of the indigent insane within the several States. 'Fifth. That annual returns of lands or scrip sold shall be made by the States to the Secretary of the Interior, and the whole grant be subject to certain conditions and limitations prescribed in the bill, to be assented to by legislative acts of said States. 'This bill therefore proposes that the Federal Government shall make provision to the amount of the value of 10,000,000 acres of land for an eleemosynary object within the several States, to be administered by the political authority of the same; and it presents at the threshold the question whether any such act on the part of the Federal Government is warranted and sanctioned by the Constitution, the provisions and principles of which are to be protected and sustained as a first and paramount duty. [301 U.S. 548, 602] 'It can not be questioned that if Congress has power to make provision for the indigent insane without the limits of this District it has the same power to provide for the indigent who are not insane, and thus to transfer to the Federal Government the charge of all the poor in all the States. It has the same power to provide hospitals and other local establishments for the care and cure of every species of human infirmity, and thus to assume all that duty of either public philanthropy or public necessity to the dependent, the orphan, the sick, or the needy which is now discharged by the States themselves or by corporate institutions or private endowments existing under the legislation of the States. The whole field of public beneficence is thrown open to the care and culture of the Federal Government. Generous impulses no longer encounter the limitations and control of our imperious fundamental law; for however worthy may be the present object in itself, it is only one of a class. It is not exclusively worthy of benevolent regard. Whatever considerations dictate sympathy for this particular object apply in like manner, if not in the same degree, to idiocy, to physical disease, to extreme destitution. If Congress may and ought to provide for any one of these objects, it may and ought to provide for them all. And if it be done in this case, what answer shall be given when Congress shall be called upon, as it doubtless will be, to pursue a similar course of legislation in the others? It will obviously be vain to reply that the object is worthy, but that the application has taken a wrong direction. The power will have been deliberately assumed, the general obligation will by this act have been acknowledged, and the question of means and expediency will alone be left for consideration. The decision upon the principle in any one case determines it for the whole class. The question presented, therefore, clearly is upon the constitutionality and propriety of the Federal Gov- [301 U.S. 548, 603] ernment assuming to enter into a novel and vast field of legislation, namely, that of providing for the care and support of all those among the people of the United States who by any form of calamity become fit objects of public philanthropy. 'I readily and, I trust, feelingly acknowledge the duty incumbent on us all as men and citizens, and as among the highest and holiest of our duties, to provide for those who, in the mysterious order of Providence, are subject to want and to disease of body or mind; but I can not find any authority in the Constitution for making the Federal Government the great almoner of public charity throughout the United States. To do so would, in my judgment, be contrary to the letter and spirit of the Constitution and subversive of the whole theory upon which the Union of these States is founded. And if it were admissible to contemplate the exercise of this power for any object whatever, I can not avoid the belief that it would in the end be prejudicial rather than beneficial in the noble offices of charity to have the charge of them transferred from the States to the Federal Government. Are we not too prone to forget that the Federal Union is the creature of the States, not they of the Federal Union? We were the inhabitants of colonies distinct in local government one from the other before the Revolution. By the Revolution the colonies each became an independent State. They achieved that independence and secured its recognition by the agency of a consulting body, which, from being an assembly of the ministers of distinct sovereignties instructed to agree to no form of government which did not leave the domestic concerns of each State to itself, was appropriately denominated a Congress. When, having tried the experiment of the Confederation, they resolved to change that for the present Federal Union, and thus to confer on the Federal Government more ample authority, they scrupulously measured such of the [301 U.S. 548, 604] functions of their cherished sovereignty as they chose to delegate to the General Government. With this aim and to this end the fathers of the Republic framed the Constitution, in and by which the independent and sovereign States united themselves for certain specified objects and purposes, and for those only, leaving all powers not therein set forth as conferred on one or another of the three great departments-the legislative, the executive, and the judicial-indubitably with the States. And when the people of the several States had in their State conventions, and thus alone, given effect and force to the Constitution, not content that any doubt should in future arise as to the scope and character of this act, they ingrafted thereon the explicit declaration that '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.'

'Can it be controverted that the great mass of the business of Government-that involved in the social relations, the internal arrangements of the body politic, the mental and moral culture of men, the development of local resources of wealth, the punishment of crimes in general, the preservation of order, the relief of the needy or otherwise unfortunate members of society-did in practice remain with the States; that none of these objects of local concern are by the Constitution expressly or impliedly prohibited to the States, and that none of them are by any express language of the Constitution transferred to the United States? Can it be claimed that any of these functions of local administration and legislation are vested in the Federal Government by any implication? I have never found anything in the Constitution which is susceptible of such a construction. No one of the enumerated powers touches the subject or has even a remote analogy to it. The powers conferred upon the United States have reference to federal relations, or to the means of accom- [301 U.S. 548, 605] plishing or executing things of federal relation. So also of the same character are the powers taken away from the States by enumeration. In either case the powers granted and the powers restricted were so granted or so restricted only where it was requisite for the maintenance of peace and harmony between the States or for the purpose of protecting their common interests and defending their common sovereignty against aggression from abroad or insurrection at home. 'I shall not discuss at length the question of power sometimes claimed for the General Government under the clause of the eighth section of the Constitution, which gives Congress the power 'to lay and collect taxes, duties, imposts, and excises, to pay debts and provide for the common defense and general welfare of the United States,' because if it has not already been settled upon sound reason and authority it never will be. I take the received and just construction of that article, as if written to lay and collect taxes, duties, imposts, and excises in order to pay the debts and in order to provide for the common defense and general welfare. It is not a substantive general power to provide for the welfare of the United States, but is a limitation on the grant of power to raise money by taxes, duties, and imposts. If it were otherwise, all the rest of the Constitution, consisting of carefully enumerated and cautiously guarded grants of specific powers, would have been useless, if not delusive. It would be impossible in that view to escape from the conclusion that these were inserted only to mislead for the present, and, instead of enlightening and defining the pathway of the future, in involve its action in the mazes of doubtful construction. Such a conclusion the character of the men who framed that sacred instrument will never permit us to form. Indeed, to suppose it susceptible of any other construction would be to consign all the rights of the States and of the people of the States to the mere discre- [301 U.S. 548, 606] tion of Congress, and thus to clothe the Federal Government with authority to control the sovereign States, by which they would have been dwarfed into provinces or departments and all sovereignty vested in an absolute consolidated central power, against which the spirit of liberty has so often and in so many countries struggled in vain. 'In my judgment you can not by tributes to humanity make any adequate compensation for the wrong you would inflict by removing the sources of power and political action from those who are to be thereby affected. If the time shall ever arrive when, for an object appealing, however strongly, to our sympathies, the dignity of the States shall bow to the dictation of Congress by conforming their legislation thereto, when the power and majesty and honor of those who created shall become subordinate to the thing of their creation, I but feebly utter my apprehensions when I express my firm conviction that we shall see 'the beginning of the end.' 'Fortunately, we are not left in doubt as to the purpose of the Constitution any more than as to its express lauguage, for although the history of its formation, as recorded in the Madison Papers, shows that the Federal Government in its present form emerged from the conflict of opposing influences which have continued to divide statesmen from that day to this, yet the rule of clearly defined powers and of strict construction presided over the actual conclusion and subsequent adoption of the Constitution. President Madison, in the Federalist, says: "The powers delegated to the proposed Constitution are few and defined. Those which are to remain in the State governments are numerous and indefinite. ... Its (the General Government's) jurisdiction extends to certain enumerated objects only, and leaves to the several States a residuary and inviolable sovereignty over all other objects.' [301 U.S. 548, 607] 'In the same spirit President Jefferson invokes 'the support of the State governments in all their rights as the most competent administrations for our domestic concerns and the surest bulwarks against anti-republican tendencies;' and President Jackson said that our true strength and wisdom are not promoted by invasions of the rights and powers of the several States, but that, on the contrary, they consist 'not in binding the States more closely to the center, but in leaving each more unobstructed in its proper orbit.' 'The framers of the Constitution, in refusing to confer on the Federal Government any jurisdiction over these purely local objects, in my judgment manifested a wise forecast and broad comprehension of the true interests of these objects themselves. It is clear that public charities Within the States can be efficiently administered

only by their authority. The bill before me concedes this, for it does not commit the funds it provides to the administration of any other authority. 'I can not but repeat what I have before expressed, that if the several States, many of which have already laid the foundation of munificent establishments of local beneficence, and nearly all of which are proceeding to establish them, shall be led to suppose, as, should this bill become a law, they will be, that Congress is to make provision for such objects the fountains of charity will be dried up at home and the several States instead of bestowing their own means on the social wants of their own people may themselves, through the strong temptation which appeals to states as to individuals, become humble suppliants for the bounty of the Federal Government, reversing their true relations to this Union. ... 'I have been unable to discover any distinction on constitutional grounds or grounds of expediency between an appropriation of $10,000,000 directly from the money in [301 U.S. 548, 608] the Treasury for the object contemplated and the appropriation of lands presented for my sanction, and yet I can not doubt that if the bill proposed $10,000,000 from the Treasury of the United States for the support of the indigent insane in the several States that the constitutional question involved in the act would have attracted forcibly the attention of Congress. 'I respectfully submit that in a constitutional point of view it is wholly immaterial whether the appropriation be in money or in land. ... 'To assume that the public lands are applicable to ordinary State objects, whether of public structures, police, charity, or expenses of State administration, would be to disregard to the amount of the value of the public lands all the limitations of the Constitution and confound to that extent all distinctions between the rights and powers of the States and those of the United States; for if the public lands may be applied to the support of the poor, whether sane or insane, if the disposal of them and their proceeds be not subject to the ordinary limitations of the Constitution, then Congress possesses unqualified power to provide for expenditures in the States by means of the public lands, even to the degree of defraying the salaries of governors, judges, and all other expenses of the government and internal administration within the several States. 'The conclusion from the general survey of the whole subject is to my mind irresistible, and closes the question both of right and of expediency so far as regards the principle of the appropriation proposed in this bill. Would not the admission of such power in Congress to dispose of the public domain work the practical abrogation of some of the most important provisions of the Constitution? ... [301 U.S. 548, 609] 'The general result at which I have arrived is the necessary consequence of those views of the relative rights, powers, and duties of the States and of the Federal Government which I have long entertained and often expressed and in reference to which my convictions do but increase in force with time and experience.'

No defense is offered for the legislation under review upon the basis of emergency. The hypothesis is that hereafter it will continuously benefit unemployed members of a class. Forever, so far as we can see, the states are expected to function under federal direction concerning an internal matter. By the sanction of this adventure, the door is open for progressive inauguration of others of like kind under which it can hardly be expected that the states will retain genuine independence of action. And without independent states a Federal Union as contemplated by the Constitution becomes impossible.

At the bar counsel asserted that under the present act the tax upon residents of Alabama during the first year will total $9,000,000. All would remain in the Federal Treasury but for the adoption by the state of measures agreeable to the National Board. If continued, these will bring relief from the payment of $8,000,000 to the United States.

Ordinarily, I must think, a denial that the challenged action of Congress and what has been done under it amount to coercion and impair freedom of government by the people of the state would be regarded as contrary to practical experience. Unquestionably our federate plan of government confronts an enlarged peril.

Separate opinion of Mr. Justice SUTHERLAND.

With most of what is said in the opinion just handed down, I concur. I agree that the pay roll tax levied is an excise within the power of Congress; that the devotion of[301 U.S. 548, 610] not more than 90 per cent. of it to the credit of employers in states which require the payment of a similar tax under so-called unemployment- tax laws is not an unconstitutional use of the proceeds of the federal tax; that the provision making the adoption by the state of an unemployment law of a specified character a condition precedent to the credit of the tax does not render the law invalid. I agree that the states are not coerced by the federal legislation into adopting unemployment legislation. The provisions

of the federal law may operate to induce the state to pass an employment law if it regards such action to be in its interest. But that is not coercion. If the act stopped here, I should accept the conclusion of the court that the legislation is not unconstitutional.

But the question with which I have difficulty is whether the administrative provisions of the act invade the governmental administrative powers of the several states reserved by the Tenth Amendment. A state may enter into contracts; but a state cannot, by contract or statute, surrender the execution, or a share in the execution, of any of its governmental powers either to a sister state or to the federal government, any more than the federal government can surrender the control of any of its governmental powers to a foreign nation. The power to tax is vital and fundamental, and, in the highest degree, governmental in character. Without it, the state could not exist. Fundamental also, and no less important, is the governmental power to expend the moneys realized from taxation, and exclusively to administer the laws in respect of the character of the tax and the methods of laying and collecting it and expending the proceeds.

The people of the United States, by their Constitution, have affirmed a division of internal governmental powers between the federal government and the governments of the several states-committing to the first its powers by express grant and necessary implication; to the latter, or [301 U.S. 548, 611] to the people, by reservation, 'the powers not delegated to the United States by the Constitution, nor prohibited by it to the States.' The Constitution thus affirms the complete supremacy and independence of the state within the field of its powers. Carter v. Carter Coal Co., 298 U.S. 238, 295 , 56 S.Ct. 855, 865. The federal government has no more authority to invade that field than the state has to invade the exclusive field of national governmental powers; for, in the oft-repeated words of this court in Texas v. White, 7 Wall. 700, 725, 'the preservation of the States, and the maintenance of their governments, are as much within the design and care of the Constitution as the preservation of the Union and the maintenance of the National government.' The necessity of preserving each from every form of illegitimate intrusion or interference on the part of the other is so imperative as to require this court, when its judicial power is properly invoked, to view with a careful and discriminating eye any legislation challenged as constituting such an intrusion or interference. See South Carolina v. United States, 199 U.S. 437, 448 , 26 S.Ct. 110, 4 Ann.Cas. 737.

The precise question, therefore, which we are required to answer by an application of these principles is whether the congressional act contemplates a surrender by the state to the federal government, in whole or in part, of any state governmental power to administer its own unemployment law or the state pay roll-tax funds which it has collected for the purposes of that law. An affirmative answer to this question, I think, must be made.

I do not, of course, doubt the power of the state to select and utilize a depository for the safe-keeping of its funds; but it is quite another thing to agree with the selected depository that the funds shall be withdrawn for certain stipulated purposes, and for no other. Nor do I doubt the authority of the federal government and a state government to co- operate to a common end, pro- [301 U.S. 548, 612] vided each of them is authorized to reach it. But such co-operation must be effectuated by an exercise of the powers which they severally possess, and not by an exercise, through invasion or surrender, by one of them of the governmental power of the other.

An illustration of what I regard as permissible co-operation is to be found in title I of the act now under consideration. By that title, federal appropriations for oldage assistance are authorized to be made to any state which shall have adopted a plan for old-age assistance conforming to designated requirements. But the state is not obliged, as a condition of having the federal bounty, to deposit in the federal treasury funds raised by the state. The state keeps its own funds and administers its own law in respect of them, without let or hindrance of any kind on the part of the federal government; so that we have simply the familiar case of federal aid upon conditions which the state, without surrendering any of its powers, may accept or not as it chooses. Massachusetts v. Mellon, 262 U.S. 447, 480 , 482 S., 483, 43 S.Ct. 597, 598, 599.

But this is not the situation with which we are called upon to deal in the present case. For here, the state must deposit the proceeds of its taxation in the federal treasury, upon terms which make the deposit suspiciously like a forced loan to be repaid only in accordance with restrictions imposed by federal law. Title IX, 903(a)(3), 904(a), (b), ( e), 42 U.S.C.A. 1103(a) (3), 1104(a, b, e). All moneys withdrawn from this fund must be used exclusively for the payment of compensation. Section 903(a)(4), 42 U.S.C.A. 1103(a)(4). And this compensation is to be paid through public employment offices in the state or such other agencies as a federal board may approve. Section 903(a)(1), 42 U.S.C.A. 1103(a)(1). The act, it is true, recognizes section 903(a)(6), 42 U.S.C.A . 1103(a)(6) the power of the Legislature to amend or repeal its compensation law at any time. But there is nothing in the act, as I read it, which justifies the conclusion that the state may, in that event, unconditionally withdraw its [301 U.S. 548, 613] funds from the federal treasury. Section

903(b), 42 U.S.C.A. 1103(b), provides that the board shall certify in each taxable year to the Secretary of the Treasury each state whose law has been approved. But the board is forbidden to certify any state which the board finds has so changed its law that it no longer contains the provisions specified in subsection (a), 'or has with respect to such taxable year failed to comply substantially with any such provision.' The federal government, therefore, in the person of its agent, the board, sits not only as a perpetual overseer, interpreter and censor of state legislation on the subject, but, as lord paramount, to determine whether the state is faithfully executing its own law-as though the state were a dependency under pupilage1 and not to be trusted. The foregoing, taken in connection with the provisions that money withdrawn can be used only in payment of compensation and that it must be paid through an agency approved by the federal board, leaves it, to say the least, highly uncertain whether the right of the state to withdraw any part of its own funds exists, under the act, otherwise than upon these various statutory conditions. It is true also that subsection ( f) of section 904, 42 U.S.C.A. 1104(f), authorizes the Secretary of the Treasury to pay to any state agency 'such amount as it may duly requisition, not exceeding the amount standing to the account of such State agency at the time of such payment.' But it is to be observed that the payment is to be made to the state agency, and only such amount as that agency may duly requisition. It is hard to find in this provision any extension of the right of the state to withdraw its funds except in the manner and for the specific purpose prescribed by the act.

By these various provisions of the act, the federal agencies are authorized to supervise and hamper the administrative powers of the state to a degree which not only does not comport with the dignity of a quasi sov- [301 U.S. 548, 614] ereign state-a matter with which we are not judicially concerned-but which deny to it that supremacy and freedom from external interference in respect of its affairs which the Constitution contemplates-a matter of very definite judicial concern. I refer to some, though by no means all, of the cases in point.

In the License Cases, 5 How. 504, 588, Mr. Justice McLean said that the federal government was supreme within the scope of its delegated powers, and the state governments equally supreme in the exercise of the powers not delegated nor inhibited to them; that the states exercise their powers over everything connected with their social and internal condition; and that over these subjects the federal government had no power. 'They appertain to the State sovereignty as exclusively as powers exclusively delegated appertain to the general government.'

In Tarble's Case, 13 Wall. 397, Mr. Justice Field, after pointing out that the general government and the state are separate and distinct sovereignties, acting separately and independently of each other within their respective spheres, said that, except in one particular, they stood in the same independent relation to each other as they would if their authority embraced distinct territories. The one particular referred to is that of the supremacy of the authority of the United States in case of conflict between the two.

In Farrington v. Tennessee, 95 U.S. 679 , 685, this court said, 'Yet every State has a sphere of action where the authority of the national government may not intrude. Within that domain the State is as if the union were not. Such are the checks and balances in our complicated but wise system of State and national polity.'

'The powers exclusively given to the federal government,' it was said in Worcester v. State of Georgia, 6 Pet. 515, 570, 'are limitations upon the state authorities. But [301 U.S. 548, 615] with the exception of these limitations, the states are supreme; and their sovereignty can be no more invaded by the action of the general government, than the action of the state governments can arrest or obstruct the course of the national power.'

The force of what has been said is not broken by an acceptance of the view that the state is not coerced by the federal law. The effect of the dual distribution of powers is completely to deny to the states whatever is granted exclusively to the nation, and, conversely, to deny to the nation whatever is reserved exclusively to the states. 'The determination of the Framers Convention and the ratifying conventions to preserve complete and unimpaired state self-government in all matters not committed to the general government is one of the plainest facts which emerges from the history of their deliberations. And adherence to that determination is incumbent equally upon the federal government and the states. State powers can neither be appropriated on the one hand nor abdicated on the other.' Carter v. Carter Coal Co., supra, 298 U.S. 238 , at page 295, 56 S.Ct. 855, 866. The purpose of the Constitution in that regard does not admit of doubt or qualification; and it can be thwarted no more by voluntary surrender from within than by invasion from without.

Nor may the constitutional objection suggested be overcome by the expectation of public benefit resulting from the federal participation authorized by the act. Such expectation, if voiced in support of a proposed constitutional enactment, would be quite proper for the consideration of the legislative body. But, as we said in the Carter Case, supra, 298 U.S. 238 , at page 291, 56 S.Ct. 855, 864, 'nothing is more certain than that beneficent aims, however great or well directed, can never serve in lieu of constitutional power.' Moreover, everything which the act seeks to do for the relief of unemployment might have been accomplished, as is done by this same act for the relief of the misfortunes of old age, with- [301 U.S. 548, 616] out obliging the state to surrender, or share with another government, any of its powers.

If we are to survive as the United States, the balance between the powers of the nation and those of the states must be maintained. There is grave danger in permitting it to dip in either direction, danger-if there were no other-in the precedent thereby set for further departures from the equipoise. The threat implicit in the present encroachment upon the administrative functions of the states is that greater encroachments, and encroachments upon other functions, will follow.

For the foregoing reasons, I think the judgment below should be reversed.

Mr. Justice VAN DEVANTER joins in this opinion.

Mr. Justice BUTLER, dissenting.

I think that the objections to the challenged enactment expressed in the separate opinions of Mr. Justice McREYNOLDS and Mr. Justice SUTHERLAND are well taken. I am also of opinion that, in principle and as applied to bring about and to gain control over state unemployment compensation, the statutory scheme is repugnant to 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.' The Constitution grants to the United States no power to pay unemployed persons or to require the states to enact laws or to raise or disburse money for that purpose. The provisions in question, if not amounting to coercion in a legal sense, are manifestly designed and intended directly to affect state action in the respects specified. And, if valid as so employed, this 'tax and credit' device may be made effective to enable federal authorities to induce, if not indeed to compel, state enactments for any purpose within the realm of [301 U.S. 548, 617] state power and generally to control state administration of state laws.

The act creates a Social Security Board and imposes upon it the duty of studying and making recommendations as to legislation and as to administrative policies concerning unemployment compensation and related subjects. Section 702, 42 U.S.C.A. 902. It authorizes grants of money by the United States to States for old age assistance, for administration of unemployment compensation, for aid to dependent children, for maternal and child welfare and for public health. Each grant depends upon state compliance with conditions prescribed by federal authority. The amounts given being within the discretion of the Congress, it may at any time make available federal money sufficient effectively to influence state policy, standards and details of administration.

The excise laid by section 901 (42 U.S.C.A. 1101) is limited to specified employers. It is not imposed to raise money to pay unemployment compensation. But it is imposed having regard to that subject for, upon enactment of state laws for that purpose in conformity with federal requirements specified in the act, each of the employers subject to the federal tax becomes entitled to credit for the amount he pays into an unemployment fund under a state law up to 90 per cent. of the federal tax. The amounts yielded by the remaining 10 per cent., not assigned to any specific purpose, may be applied to pay the federal contributions and expenses in respect of state unemployment compensation. It is not yet possible to determine more closely the sums that will be needed for these purposes.

When the federal act was passed, Wisconsin was the only state paying unemployment compensation. Though her plan then in force is by students of the subject generally deemed the best yet devised, she found it necessary to change her law in order to secure federal approval. In the absence of that, Wisconsin employers subject to the [301 U.S. 548, 618] federal tax would not have been allowed any deduction on account of their contribution to the state fund. Any state would be moved to conform to federal requirements, not utterly objectionable, in order to save its taxpayers from the federal tax imposed in addition to the contributions under state laws.

Federal agencies prepared and took draft bills to state Legislatures to enable and induce them to pass laws providing for unemployment compensation in accordance with federal requirements and thus to obtain relief for the employers from the impending federal exaction. Obviously the act creates the peril of federal tax not to raise revenue but to persuade. Of course, each state was free to reject any measure so proposed. But, if it failed to adopt a plan acceptable to federal authority, the full burden of the federal tax would be exacted. And, as federal demands similarly conditioned may be increased from time to time as Congress shall determine, possible federal pressure in that field is without limit. Already at least forty-three states, yielding to the inducement resulting immediately from the application of the federal tax and credit device, have provided for unemployment compensation in form to merit approval of the Social Security Board. Presumably the remaining States will comply whenever convenient for their Legislatures to pass the necessary laws.

The terms of the measure make it clear that the tax and credit device was intended to enable federal officers virtually to control the exertion of powers of the states in a field in which they alone have jurisdiction and from which the United States is by the Constitution excluded.

I am of opinion that the judgment of the Circuit Court of Appeals should be reversed.

Footnotes

[ Footnote 1 ] Sec. 903. (a) The Social Security Board shall approve any State law submitted to it, within thirty days of such submission, which it finds provides that-

(1) All compensation is to be paid through public employment offices in the State or such other agencies as the Board may approve;

(2) No compensation shall be payable with respect to any day of unemployment occurring within two years after the first day of the first period with respect to which contributions are required;

(3) All money received in the unemployment fund shall immediately upon such receipt be paid over to the Secretary of the Treasury to the credit of the Unemployment Trust Fund established by Section 904 (section 1104 of this chapter);

(4) All money withdrawn from the Unemployment Trust Fund by the State agency shall be used solely in the payment of compensation, exclusive of expenses of administration;

(5) Compensation shall not be denied in such State to any otherwise eligible individual for refusing to accept new work under any of the following conditions: (A) If the position offered is vacant due directly to a strike, lockout, or other labor dispute; (B) if the wages, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality; (C) if as a condition of being employed the individual would be required to join a company union or to resign from or refrain from joining any bona fide labor organization;

(6) All the rights, privileges, or immunities conferred by such law or by acts done pursuant thereto shall exist subject to the power of the legislature to amend or repeal such law at any time.

The Board shall, upon approving such law, notify the Governor of the State of its approval.

(b) On December 31 in each taxable year the Board shall certify to the Secretary of the Treasury each State whose law it has previously approved, except that it shall not certify any State which, after reasonable notice and opportunity for hearing to the State agency, the Board finds has changed its law so that it no longer contains the provisions specified in subsection (a) or has with respect to such taxable year failed to comply substantially with any such provision.

(c) If, at any time during the taxable year, the Board has reason to believe that a State whose law it has previously approved, may not be certified under subsection (b), it shall promptly so notify the Governor of such State.

[ Footnote 2 ] Sec. 904. (a) There is hereby established in the Treasury of the United States a trust fund to be known as the 'Unemployment Trust Fund,' hereinafter (in this title) called the 'Fund'. The Secretary of the Treasury is authorized

and directed to receive and hold in the Fund all moneys deposited therein by a State agency from a State unemployment fund. Such deposit may be made directly with the Secretary of the Treasury or with any Federal reserve bank or member bank of the Federal Reserve System designated by him for such purpose.

(b) It shall be the duty of the Secretary of the Treasury to invest such portion of the Fund as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at par, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under the Second Liberty Bond Act, as amended (section 752 of Title 31), are hereby extended to authorize the issuance at par of special obligations exclusively to the Fund. Such special obligations shall bear interest at a rate equal to the average rate of interest, computed as of the end of the calendar month next preceding the date of such issue, borne by all interest-bearing obligations of the United States then forming part of the public debt; except that where such average rate is not a multiple or one- eighth of 1 per centum, the rate of interest of such special obligations shall be the multiple of one-eighth of 1 per centum next lower than such average rate. Obligations other than such special obligations may be acquired for the Fund only on such terms as to provide an investment yield not less than the yield which would be required in the case of special obligations if issued to the Fund upon the date of such acquisition.

(c) Any obligations acquired by the Fund (except special obligations issued exclusively to the Fund) may be sold at the market price, and such special obligations may be redeemed at par plus accrued interest.

(d) The interest on, and the proceeds from the sale or redemption of, any obligations held in the Fund shall be credited to and form a part of the Fund.

(e) The Fund shall be invested as a single fund, but the Secretary of the Treasury shall maintain a separate book account for each State agency and shall credit quarterly on March 31, June 30, September 30, and December 31, of each year, to each account, on the basis of the average daily balance of such account, a proportionate part of the earnings of the Fund for the quarter ending on such date.

(f) The Secretary of the Treasury is authorized and directed to pay out of the Fund to any State agency such amount as it may duly requisition, not exceeding the amount standing to the account of such State agency at the time of such payment.

[ Footnote 3 ] The list of services is comprehensive. It included: 'Maitre d'Hotel, House-steward, Master of the House, Groom of the Chamber, Valet de Chambre, Butler, Under-butler, Clerk of the Kitchen, Confectioner, Cook, House- porter, Footman, Running-footman, Coachman, Groom, Postillion, Stable-boy, and the respective Helpers in the Stables of such Coachman, Groom, or Postillion, or in the Capacity of Gardener (not being a Day-labourer), Park-keeper, Game-keeper, Huntsman, Whipper-in. ...'

[ Footnote 4 ] The statute, amended from time to time, but with its basic structure unaffected, is on the statute books today. Act of 1803, 43 George III, c. 161; Act of 1812, 52 George III, c. 93; Act of 1853, 16 & 17 Vict., c. 90; Act of 1869, 32 & 33 Vict., c. 14. 24 Halsbury's Laws of England, 1st ed., p. 692 et seq.

[ Footnote 5 ] See, also, the following laws imposing occupation taxes: 12 Hening's Statutes of Virginia, p. 285, Act of 1786; Chandler, The Colonial Records of Georgia, vol. 19, Part 2, p. 88, Act of 1778; 1 Potter, Taylor and Yancey, North Carolina Revised Laws, p. 501, Act of 1784.

[ Footnote 6 ] The cases are brought together by Prof. John MacArthur Maguire in an essay, 'Taxing the Exercise of National Rights' (Harvard Legal Essays, 1934, pp. 273, 322).

The Massachusetts decisions must be read in the light of the particular definitions and restrictions of the Massachusetts Constitution. Opinions of the Justices, 282 Mass. 619, 622, 186 N.E. 490; Id., 266 Mass. 590, 593, 165 N.E. 904, 63 A.L.R. 952. And see Howes Brothers Co. v. Massachusetts Unemployment Compensation Commission, supra, 5 N.E.(2d) 720, at pages 730, 731.

[ Footnote 7 ] Alabama General Acts, 1935, No. 194, art. 13, 348 et seq. (flat license tax on occupations); Arizona Revised Code, Supplement (1936) 3138a et seq. (general gross receipts tax); Connecticut General Statutes, Supplement (1935) 457c, 458c (gross receipts tax on unincorporated businesses); Revised Code of Delaware (1935) 192-197 (flat license tax on occupations); Compiled Laws of Florida, Permanent Supplement (1936) Vol. 1, 1279 (1) et seq. (flat license tax on occupations); Georgia Laws, 1935, p. 11 (flat license tax on occupations); Indiana Statutes Ann. (1933 ) 64-2601 et seq. (general gross receipts tax); Louisiana Laws, 3rd Extra Session, 1934, Act No. 15, 1st Extra Session, 1935, Acts Nos. 5, 6 ( general gross receipts tax); Mississippi Laws, 1934, c. 119 (general gross receipts tax); New Mexico Laws, 1935, c. 73 (general gross receipts tax); South Dakota Laws, 1933, c. 184 (general gross receipts tax, expired June 30, 1935); Washington Laws, 1935, c. 180, title 2, p. 709 (general gross receipts tax); West Virginia Code, Supplement (1935) 960 (general gross receipts tax).

[ Footnote 8 ] The total estimated receipts without taking into account the 90 per cent. deduction, range from $225,000,000 in the first year to over $900, 000,000 seven years later. Even if the maximum credits are available to taxpayers in all states, the maximum estimated receipts from Title IX will range between $22,000,000, at one extreme, to $90,000,000 at the other. If some of the states hold out in their unwillingness to pass statutes of their own, the receipts will be still larger.

[ Footnote 9 ] The attitude of Massachusetts is significant. Her act became a law August 12, 1935, two days before the federal act. Even so, she prescribed that its provisions should not become operative unless the federal bill became a law, or unless eleven of the following states (Alabama, Connecticut, Delaware, Georgia, Illinois, Indiana, Iowa, Maine, Maryland, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Rhode Island, South Carolina, Tennessee, Vermont) should impose on their employers burdens substantially equivalent. St. of 1935, c. 479, p. 655. Her fear of competition is thus forcefully attested. See, also, California St.1935, c. 352, art. 1, 2; Idaho Laws 1936 (Third Extra Session) c. 12, 26; Mississippi Laws, 1936, c. 176, 2-a.

[ Footnote 10 ] Perkins, State Action under the Federal Estate Tax Credit Clause, 13 North Carolina L. Rev. 271, 280.

[ Footnote 11 ] See note 1, supra.

[ Footnote 12 ] See note 2, supra.

[ Footnote 13 ] 'This last provision will not only afford maximum safety for these funds but is very essential to insure that they will operate to promote the stability of business rather than the reverse. Unemployment reserve funds have the peculiarity that the demands upon them fluctuate considerably, being heaviest when business slackens. If, in such times, the securities in which these funds are invested are thrown upon the market for liquidation, the net effect is likely to be increased deflation. Such a result is avoided in this bill through the provision that all reserve funds are to be held by the United States Treasury, to be invested and liquidated by the Secretary of the Treasury in a manner calculated to promote business stability. When business conditions are such that investment in securities purchased on the open market is unwise, the Secretary of the Treasury may issue special nonnegotiable obligations exclusively to the unemployment trust fund. When a reverse situation exists and heavy drains are made upon the fund for payment of unemployment benefits, the Treasury does not have to dispose of the securities belonging to the fund in open market but may assume them itself. With such a method of handling the reserve funds, it is believed that this bill will solve the problem often raised in discussions of unemployment compensation, regarding the possibility of transferring purchasing power from boom periods to depression periods. It will in fact operate to sustain purchasing power at the onset of a depression without having any counteracting deflationary tendencies.' House Report, No. 615, 74th Congress, 1st session, p. 9.

[ Footnote 14 ] Cf. 12 Stat. 503 (7 U.S.C.A. 301 et seq.); 26 Stat. 417 (7 U.S.C. A. 321 et seq.).

[ Footnote 1 ] 'Messages and Papers of the President' by James D. Richardson, Vol. V, pp. 247-256.

[ Footnote 1 ] Compare Snow v. United States, 18 Wall. 317, 319, 320.

Williamson v. Lee Optical, Inc., 348 U.S. 483 (1955)

Williamson v. Lee Optical of Oklahoma, Inc.

No. 184

Argued March 2, 1955

Decided March 28, 1955*

348 U.S. 483

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

Syllabus

1. Provisions of an Oklahoma statute making it unlawful for any person not a licensed optometrist or ophthalmologist to fit lenses to a face or to duplicate or replace into frames lenses or other optical appliances except upon written prescriptive authority of an Oklahoma licensed ophthalmologist or optometrist, are not invalid under the Due Process Clause of the Fourteenth Amendment. Roschen v. Ward, 279 U. S. 337. Pp. 348 U. S. 484-488.

2. To subject opticians to this regulatory system while exempting all sellers of ready-to-wear glasses does not violate the Equal Protection Clause of the Fourteenth Amendment. Pp. 348 U. S. 488-489.

3. A provision making it unlawful to solicit the sale of frames, mountings or any other optical appliances does not violate the Due Process Clause of the Fourteenth Amendment. Pp. 348 U. S. 489-490.

4. A provision forbidding any retail merchandiser to rent space, sub-lease departments, or otherwise permit any person "purporting to do eye examination or visual care" to occupy space in a retail store does not violate the Due Process Clause of the Fourteenth Amendment. Pp. 348 U. S. 490-491.

5. A provision making it unlawful to solicit the sale of spectacles, eyeglasses, lenses and prisms by the use of advertising media is constitutional. P. 348 U. S. 491.

120 F.Supp. 128, affirmed in part and reversed in part.

Page 348 U. S. 484

MR. JUSTICE DOUGLAS delivered the opinion of the Court.

This suit was instituted in the District Court to have an Oklahoma law, 59 Okl.Stat.Ann. §§ 941-947, Okl.Laws 1953, c. 13, §§ 1-8, declared unconstitutional and to enjoin state officials from enforcing it, 28 U.S.C. §§ 2201, 2202, 2281, for the reason that it allegedly violated various provisions of the Federal Constitution. The matter was heard by a District Court of three judges,

Page 348 U. S. 485

as required by 28 U.S.C. § 2281. That court held certain provisions of the law unconstitutional. 120 F.Supp. 128. The case is here by appeal, 28 U.S.C. § 1253.

The District Court held unconstitutional portions of three sections of the Act. First, it held invalid under the Due Process Clause of the Fourteenth Amendment the portions of § 2 which make it unlawful for any person not a licensed

optometrist or ophthalmologist to fit lenses to a face or to duplicate or replace into frames lenses or other optical appliances, except upon written prescriptive authority of an Oklahoma licensed ophthalmologist or optometrist. [Footnote 1]

Page 348 U. S. 486

An ophthalmologist is a duly licensed physician who specializes in the care of the eyes. An optometrist examines eyes for refractive error, recognizes (but does not treat) diseases of the eye, and fills prescriptions for eyeglasses. The optician is an artisan qualified to grind lenses, fill prescriptions, and fit frames.

The effect of § 2 is to forbid the optician from fitting or duplicating lenses without a prescription from an ophthalmologist or optometrist. In practical effect, it means that no optician can fit old glasses into new frames or supply a lens, whether it be a new lens or one to duplicate a lost or broken lens, without a prescription. The District Court conceded that it was in the competence of the police power of a State to regulate the examination of the eyes. But it rebelled at the notion that a State could require a prescription from an optometrist or ophthalmologist "to take old lenses and place them in new frames and then fit the completed spectacles to the face of the eyeglass wearer." 120 F.Supp. at page 135. It held that such a requirement was not "reasonably and rationally related to the health and welfare of the people."Id. at 136. The court found that, through mechanical devices and ordinary skills, the optician could take a broken lens or a fragment thereof, measure its power, and reduce it to prescriptive terms. The court held that,

"Although, on this precise issue of duplication, the legislature in the instant regulation was dealing with a matter of public interest, the particular means chosen are neither reasonably necessary nor reasonably related to the end sought to be achieved."

Id. at 137. It was, accordingly, the opinion of the court that this provision of the law violated the Due Process Clause by arbitrarily interfering with the optician's right to do business.

We think the due process question is answered in principle by Roschen v. Ward, 279 U. S. 337, which upheld a

Page 348 U. S. 487

New York statute making it unlawful to sell eyeglasses at retail in any store unless a duly licensed physician or optometrist were in charge and in personal attendance. The Court said,

". . . wherever the requirements of the act stop, there can be no doubt that the presence and superintendence of the specialist tend to diminish an evil."

Id., at 279 U. S. 339.

The Oklahoma law may exact a needless, wasteful requirement in many cases. But it is for the legislature, not the courts, to balance the advantages and disadvantages of the new requirement. It appears that, in many cases, the optician can easily supply the new frames or new lenses without reference to the old written prescription. It also appears that many written prescriptions contain no directive data in regard to fitting spectacles to the face. But in some cases the directions contained in the prescription are essential if the glasses are to be fitted so as to correct the particular defects of vision or alleviate the eye condition. The legislature might have concluded that the frequency of occasions when a prescription is necessary was sufficient to justify this regulation of the fitting of eyeglasses. Likewise, when it is necessary to duplicate a lens, a written prescription may or may not be necessary. But the legislature might have concluded that one was needed often enough to require one in every case. Or the legislature may have concluded that eye examinations were so critical, not only for correction of vision but also for detection of latent ailments or diseases, that every change in frames and every duplication of a lens should be accompanied by a prescription from a medical expert. To be sure, the present law does not require a new examination of the eyes every time the frames are changed or the lenses duplicated. For if the old prescription is on file with the optician, he can go ahead and make the new fitting or duplicate the lenses. But the law need not be in every respect logically consistent with its aims

Page 348 U. S. 488

to be constitutional. It is enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it.

The day is gone when this Court uses the Due Process Clause of the Fourteenth Amendment to strike down state laws, regulatory of business and industrial conditions because they may be unwise, improvident, or out of harmony with a particular school of thought. See Nebbia v. People of State of New York, 291 U. S. 502; West Coast Hotel Co. v. Parrish, 300 U. S. 379; Olsen v. State of Nebraska ex rel. Western Reference & Bond Ass'n, 313 U. S. 236; Lincoln Union v. Northwestern Iron & Metal Co., 335 U. S. 525; Daniel v. Family Sec. Life Ins. Co., 336 U. S. 220; Day-Brite Lighting, Inc., v. State of Missouri, 342 U. S. 421. We emphasize again what Chief Justice Waite said in Munn v. State of Illinois, 94 U. S. 113, "For protection against abuses by legislatures, the people must resort to the polls, not to the courts."

Secondly, the District Court held that it violated the Equal Protection Clause of the Fourteenth Amendment to subject opticians to this regulatory system and to exempt, as § 3 of the Act [Footnote 2] does, all sellers of ready-to-wear glasses.

Page 348 U. S. 489

The problem of legislative classification is a perennial one, admitting of no doctrinaire definition. Evils in the same field may be of different dimensions and proportions, requiring different remedies. Or so the legislature may think. Tigner v. State of Texas, 310 U. S. 141. Or the reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind. Semler v. Oregon State Board of Dental Examiners, 294 U. S. 608. The legislature may select one phase of one field and apply a remedy there, neglecting the others. A.F. of L. v. American Sash Co., 335 U. S. 538. The prohibition of the Equal Protection Clause goes no further than the invidious discrimination. We cannot say that that point has been reached here. For all this record shows, the ready-to-wear branch of this business may not loom large in Oklahoma or may present problems of regulation distinct from the other branch.

Third, the District Court held unconstitutional, as violative of the Due Process Clause of the Fourteenth Amendment, that portion of § 3 which makes it unlawful "to solicit the sale of . . . frames, mountings . . . or any other optical appliances." [Footnote 3] The court conceded that state regulation of advertising relating to eye examinations was a matter "rationally related to the public health and welfare," 120 F.Supp. at 140, and therefore subject to regulation within the principles of Semler v. Oregon State Board of Dental Examiners, supra. But regulation of the advertising of eyeglass frames was said to intrude "into a mercantile field only casually related to the visual care of the public"

Page 348 U. S. 490

and restrict "an activity which in no way can detrimentally affect the people." 120 F.Supp. at 140-141. [Footnote 4]

An eyeglass frame, considered in isolation, is only a piece of merchandise. But an eyeglass frame is not used in isolation, as Judge Murrah said in dissent below; it is used with lenses; and lenses, pertaining as they do to the human eye, enter the field of health. Therefore, the legislature might conclude that to regulate one effectively it would have to regulate the other. Or it might conclude that both the sellers of frames and the sellers of lenses were in a business where advertising should be limited, or even abolished, in the public interest. Semler v. Oregon State Board of Dental Examiners, supra. The advertiser of frames may be using his ads to bring in customers who will buy lenses. If the advertisement of lenses is to be abolished or controlled, the advertising of frames must come under the same restraints -- or so the legislature might think. We see no constitutional reason why a State may not treat all who deal with the human eye as members of a profession was should use no merchandising methods for obtaining customers.

Fourth, the District Court held unconstitutional, as violative of the Due Process Clause of the Fourteenth Amendment, the provision of § 4 of the Oklahoma Act which reads as follows:

"No person, firm, or corporation engaged in the business of retailing merchandise to the general public

Page 348 U. S. 491

shall rent space, sublease departments, or otherwise permit any person purporting to do eye examination or visual care to occupy space in such retail store."

It seems to us that this regulation is on the same constitutional footing as the denial to corporations of the right to practice dentistry. Semler v. Oregon State Board of Dental Examiners, supra, at 294 U. S. 611. It is an attempt to free the profession to as great an extent as possible from all taints of commercialism. It certainly might be easy for an optometrist with space in a retail store to be merely a front for the retail establishment. In any case, the opportunity for that nexus may be too great for safety if the eye doctor is allowed inside the retail store. Moreover, it may be deemed important to effective regulation that the eye doctor be restricted to geographical locations that reduce the temptations of commercialism. Geographical location may be an important consideration in a legislative program which aims to raise the treatment of the human eye to a strictly professional level. We cannot say that the regulation has no rational relation to that objective and therefore is beyond constitutional bounds.

What we have said is sufficient to dispose of the appeal in No. 185 from the conclusion of the District Court that that portion of § 3 which makes it unlawful to solicit the sale of spectacles, eyeglasses, lenses, and prisms by the use of advertising media is constitutional.

The other contentions urged by appellants in No. 185 are without merit.

Affirmed in part and reversed in part.

MR. JUSTICE HARLAN took no part in the consideration or decision of this case.

[Footnote 1]

Section 2 reads as follows:

"It shall be unlawful for any person, firm, corporation, company, or partnership not licensed under the provisions of Chapter 11 or Chapter 13 of Title 59, Oklahoma Statutes 1951, to fit, adjust, adapt, or to in any manner apply lenses, frames, prisms, or any other optical appliances to the face of a person, or to duplicate or attempt to duplicate, or to place or replace into the frames, any lenses or other optical appliances which have been prescribed, fitted, or adjusted for visual correction, or which are intended to aid human vision or to give any treatment or training designed to aid human vision, or to represent or hold himself out to the public as being qualified to do any of the acts listed in this Section, except that persons licensed under the provisions of Chapters 11 or 13 of Title 59, Oklahoma Statutes 1951 may in a written prescription, or its duplicate, authorize any optical supplier to interpret such prescription, and who in accordance therewith may measure, adapt, fit, prepare, dispense, or adjust such lenses, spectacles, eye glasses, prisms, tinted lenses, frames or appurtenances thereto, to the human face for the aid or correction of visual or ocular anomalies of the human eye; and may continue to do the said acts on the aforesaid written prescription, or its duplicate, provided however, that the physician or optometrist writing such prescription shall remain responsible for the full effect of the appliances so furnished by such other person. Provided that this Section shall not prevent a qualified person from making repairs to eye glasses."

Chapter 11, Title 59, Okl.Stat. 1951, provides for the licensing of ophthalmologists and other doctors. Chapter 13 provides for the certification of optometrists.

[Footnote 2]

Section 3 reads as follows:

"It shall be unlawful for any person, firm, company, corporation or partnership to solicit the sale of spectacles, eye glasses, lenses, frames, mountings, prisms or any other optical appliances or devices, eye examinations or visual services, by radio, window display, television, telephone directory display advertisement, or by any other means of advertisement; or to use any other method or means of baiting, persuading, or enticing the public into buying spectacles, eye glasses, lenses, frames, mountings, prisms, or other optical appliances for visual correction. Provided, however, that the

provisions of this Act shall not render any newspaper or other advertising media liable for publishing any advertising furnished them by a vendor of said commodity or material; nor shall anything in this Act prevent ethical education publicity or advertising by legally qualified health groups that does not violate presently existing laws of Oklahoma, nor prevent the proper use of ethical, professional notices. Nothing in this Act shall prohibit the sale of ready-to-wear glasses equipped with convex-spherical lenses, nor sunglasses equipped with plano lenses, nor industrial glasses and goggles with plano lenses used for industrial eye protection when sold as merchandise at any established places of business and where the selection of the glasses is at the discretion of the purchaser."

[Footnote 3]

See note 2 supra.

[Footnote 4]

The court also said:

"Advertising directed exclusively at this feature of eye wear can have no deleterious effect on the public, inasmuch as it has no influence on the prospective wearer of eyeglasses, and to the present wearer (a person already examined by a licensed professional) is but a mere piece of merchandise."

"The dispensing optician, a merchant in this particular, cannot arbitrarily be divested of a substantial portion of his business upon the pretext that such a deprivation is rationally related to the public health."

120 F.Supp. at 142.

Maximo Calalang, petitioner, vs. A.D. Williams, et al., respondents.

No. 47800. December 2, 1940.

Laurel, J.

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this court this petition for a writ of prohibition against the respondents A. D. Williams, as Chairman of the National Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works and Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution o July 17, 1940, resolved to recommend to the Director of Public Works and to the Secretary of Public Works and Communications that animal-drawn vehicles be prohibited from passing along Rosario Street extending from Plaza Calderon de la Barca to Dasmarinas Street, from 7:30 a.m. to 12:30 p.m. for a period of one year from the date of the opening of the Colgante Bridge to traffic; that the Chairman of the National Traffic Commission, on July 18, 1940, recommended to the Director of Public Works the adoption of the measure proposed in the resolution aforementioned, in pursuance of the provisions of Commonwealth Act. No 548 which authorizes said Director of Public Works, with the approval of the Secretary of Public Works and Communications, to promulgate rules and regulations to regulate and control the use of and traffic on national roads; that on August 2, 1940, the Director of Public Works, in his first indorsement to the Secretary of Public Works and Communications, recommended to the latter the approval of the recommendations made by the Chairman of the National Traffic Commission as aforesaid, with the modifications that the closing of Rizal Avenue to traffic of animal-drawn vehicles be limited to the portion thereof extending from the railroad crossing at Antipolo Street to Azcarraga Street; that on August 10, 1940, the Secretary of Public Works and Communications, in his second indorsement addressed to the Director of Public Works, approved the recommendation of the latter that Rosario Street and Rizal Avenue be closed to traffic of animal-drawn vehicles, between the points and during the hours as above

indicated, for a period of one year from the date of the opening of the Colgante Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be enforced the rules and regulations thus adopted; that as a consequence of such enforcement, all animal-drawn vehicles are not now allowed to pass and pick up passengers in the place above-mentioned to the detriment not only of their owners but of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public Works and Communications, is authorized to promulgate rules and regulations for the regulation nd control of the use of and traffic on national roads and streets is unconstitutional because it constitutes an undue delegation of legislative power. This contention is untenable. As was observed by this court in Rubi v. Provincial Board of Mindoro (39 Phil. 660, 700), “The rule ahs nowhere been better stated than in the early Ohio case decided by Judge Ranney and since followed in a multitude of cases, namely: ‘The true distinction therefore is between the delegation of power to make the law, which necessarily involves a discretion as to what is shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter, not valid objection can be made.’ (Cincinnati, W. and Z.R. Co. v. Comm’rs. Clinton County (Ohio St., 88) Discretion, as held by Chief Justice Marshall in Wayman v. Southard (10 Wheat., 1) may be committed by the Legislature to an executive department or official. The Legislature may make decisions of executive departments or subordinate official thereof, to whom it has committed the execution of certain acts, final on questions of fact. (U.S. v. Kinkead, 248 Fed., 141) The growing tendency in the decisions is to give prominence to the ‘necessity’ of the case.”

Section 1 of Commonwealth Act No. 548 reads as follows:

SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as national roads by acts of the National Assembly or by executive orders of the President of the Philippines, the Director of Public Works, with the approval of the Secretary of Public Works and Communications, shall promulgate the necessary rules and regulations to regulate and control the use of traffic on such roads and streets. Such rules and regulations, with the approval of the President, may contain provisions controlling or regulating the construction of buildings or other structures within a reasonable distance from along the national roads. Such roads may be temporarily closed to any or all classes of traffic by the Director of Public Works and his duly authorized representatives whenever the condition of the road or the traffic thereon makes such action necessary or advisable in the public convenience and interest, or for a specified period, with the approval of the Secretary of Public Works and Communications.

The above provisions of law do not confer legislative power upont eh Director of Public Works and the Secretary of Public Works and Communications. The authority therein conferred upon them and under which they promulgated the rules and regulations now complained of is not to determine what public policy demands but merely to carry out the legislative policy laid down by the National Assembly in said Act, to wit, “To promote safe transit upon and avoid obstruction on, roads and streets designated as national roads by acts of the National Assembly or by executive orders of the President of the Philippines” and to close them temporarily to any or all classes of traffic “whenever the conditions of the road or the traffic makes such action necessary of advisable in the public convenience and interest.” The delegated power, if at all, therefore, is not the determination of what the law shall be, but merely the ascertainment of the facts and circumstances upon which the application of said law is to be predicated. To promulgate rules and regulations on the use of national roads and to determine when and how long a national road should be closed to traffic, in view of the condition of the road or the traffic thereon and the requirements of public convenience and interest, is an administrative function which cannot be directly discharged by the National Assembly. It must depend on the discretion of some other government official to whom is confided the duty of determining whether the proper occasion exists for executing the law. But it cannot be said that the exercise of such discretion is the making of the law. As was said in Locke’s Appeal (72 Pa. 491): “To assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the Legislature of the power to act wisely for the public welfare whenever a law is passed relating to a state of affairs not yet developed, or to things future and impossible to fully know.” The proper distinction the court said was this: “The Legislature cannot delegate its power to make the law; but it can make a law to delegate a power to determine some fact or state of things upon which the law makes, or intends to make, its own action depend. To deny this would be to stop the wheels of government. There are many things upon which wise and useful legislation

must depend which cannot be known to the law-making power, and, must therefore, be a subject of inquiry and determination outside of the halls of legislation. (Field v. Clark, 143 U.S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmena, G.R. Nos. 46076 and 46077, promulgated June 12, 1939, and in Pangasinan Transportation v. The Public Services Commission, G.R. No. 47065, promulgated June 26, 1940, this Court had occasion to observe that the principle of separation of powers has been made to adapt itself to the complexities of modern governments, giving rise to the adoption, within certain limits, of the principle of “subordinate legislation,” not only in the United States and England, but in practically all modern governments. Accordingly, with the growing complexity of modern life, the multiplication of the subjects of government regulations and the increased difficulty of administering the laws, the rigidity of the theory of separation of governmental powers has, to a large extent, been relaxed by permitting the delegation of greater powers by the legislative and vesting a larger amount of discretion in administrative and executive officials, not only in the execution of the laws, but also in the promulgation of certain rules and regulations calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated by the respondents pursuant to the provisions of Commonwealth Act No. 548 constitute an unlawful interference with legitimate business or trade and abridge the right ot personal liberty and freedom of locomotion. Commonwealth Act. No. 548 was passed by the National Assembly in the exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote safe transit upon and avoid obstructions on national roads, in the interest and convenience of the public. In enacting said law, therefore, the National Assembly was prompted by considerations of public convenience and welfare. It was inspired by a desire to relieve congestion of traffic, which is, to say the least, a menace to public safety. Public welfare then, lies at the bottom of the enactment of said law, and the state in order to promote the general welfare may interfere with personal liberty, with property, and with business and occupations. Persons and property may be subjected to all kinds of restrains and burdens, in order to secure the general comfort, health, and prosperity of the State. (U.S. v. Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights of the individual are subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made to prevail over authority because then society will fall into anarchy. Neither should authority be made to prevail over liberty because then the individual will fall into slavery. The citizen should achieve the require balance of liberty and authority in his mind through education and personal discipline, so that there may be established the resultant equilibrium, which means peace and order and happiness for all. The moment greater authority is conferred upon the government, logically so much is withdrawn from the residuum of liberty which resides in the people. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very means of insuring its preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins v. Los Angeles (195 U.S. 223, 238; 19 L. ed. 169), “the right to exercise the police power is a continuing one, and a business lawful today may in the future, because of the changed situation, the growth of population, or other causes, become a menace to the public health and welfare, and be required to yield to the public good.” And in People v. Pomar (46 Phil., 440), it was observed that “advancing civilization is bringing within the police power of the state today things which were not thought of as being within such power yesterday. The development of civilization, the rapidly increasing population, the growth of public opinion, with an increasing desire on the part of the masses and of the government to look after and care for the interests of the individuals of the state, have brought within the police power many questions for regulation which formerly were not so considered.”

The petitioner finally avers that the rules and regulations complained of infringe upon the constitutional precept regarding the promotion of social justice to insure the well-being and economic security of all the people. The promotion of social justice, however, is to be achieved not through a mistaken sympathy towards any given group. Social justice is “neither communism, nor despotism, nor atomism, nor anarchy,” but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the

Government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of interdependence among diverse units of society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about “the greatest good to the greatest number.”

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against the petitioner. So ordered.

Avancena, C.J., Imperial, Diaz, and Horrilleno. JJ., concur.

Writ denied.

G.R. No. L-24693 July 31, 1967

ERMITA-MALATE HOTEL AND MOTEL OPERATORS ASSOCIATION, INC., HOTEL DEL MAR INC. and GO CHIU,petitioners-appellees,

vs. THE HONORABLE CITY MAYOR OF MANILA, respondent-appellant.

VICTOR ALABANZA, intervenor-appellee.

Panganiban, Abad and Associates Law Office for respondent-appellant. J. M. Aruego, Tenchavez and Associates for intervenor-appellee.

FERNANDO, J . :

The principal question in this appeal from a judgment of the lower court in an action for prohibition is whether Ordinance No. 4760 of the City of Manila is violative of the due process clause. The lower court held that it is and adjudged it "unconstitutional, and, therefore, null and void." For reasons to be more specifically set forth, such judgment must be reversed, there being a failure of the requisite showing to sustain an attack against its validity.

The petition for prohibition against Ordinance No. 4760 was filed on July 5, 1963 by the petitioners, Ermita-Malate Hotel and Motel Operators Association, one of its members, Hotel del Mar Inc., and a certain Go Chiu, who is "the president and general manager of the second petitioner" against the respondent Mayor of the City of Manila who was sued in his capacity as such "charged with the general power and duty to enforce ordinances of the City of Manila and to give the necessary orders for the faithful execution and enforcement of such ordinances." (par. 1). It was alleged that the petitioner non-stock corporation is dedicated to the promotion and protection of the interest of its eighteen (18) members "operating hotels and motels, characterized as legitimate businesses duly licensed by both national and city authorities, regularly paying taxes, employing and giving livelihood to not less than 2,500 person and representing an investment of more than P3 million."1 (par. 2). It was then alleged that on June 13, 1963, the Municipal Board of the City of Manila enacted Ordinance No. 4760, approved on June 14, 1963 by the then Vice-Mayor Herminio Astorga, who was at the time acting as Mayor of the City of Manila. (par. 3).

After which the alleged grievances against the ordinance were set forth in detail. There was the assertion of its being beyond the powers of the Municipal Board of the City of Manila to enact insofar as it would regulate motels, on the ground that in the revised charter of the City of Manila or in any other law, no reference is made to motels; that Section 1 of the challenged ordinance is unconstitutional and void for being unreasonable and violative of due process insofar as it would impose P6,000.00 fee per annum for first class motels and P4,500.00 for second class motels; that the provision

in the same section which would require the owner, manager, keeper or duly authorized representative of a hotel, motel, or lodging house to refrain from entertaining or accepting any guest or customer or letting any room or other quarter to any person or persons without his filling up the prescribed form in a lobby open to public view at all times and in his presence, wherein the surname, given name and middle name, the date of birth, the address, the occupation, the sex, the nationality, the length of stay and the number of companions in the room, if any, with the name, relationship, age and sex would be specified, with data furnished as to his residence certificate as well as his passport number, if any, coupled with a certification that a person signing such form has personally filled it up and affixed his signature in the presence of such owner, manager, keeper or duly authorized representative, with such registration forms and records kept and bound together, it also being provided that the premises and facilities of such hotels, motels and lodging houses would be open for inspection either by the City Mayor, or the Chief of Police, or their duly authorized representatives is unconstitutional and void again on due process grounds, not only for being arbitrary, unreasonable or oppressive but also for being vague, indefinite and uncertain, and likewise for the alleged invasion of the right to privacy and the guaranty against self-incrimination; that Section 2 of the challenged ordinance classifying motels into two classes and requiring the maintenance of certain minimum facilities in first class motels such as a telephone in each room, a dining room or, restaurant and laundry similarly offends against the due process clause for being arbitrary, unreasonable and oppressive, a conclusion which applies to the portion of the ordinance requiring second class motels to have a dining room; that the provision of Section 2 of the challenged ordinance prohibiting a person less than 18 years old from being accepted in such hotels, motels, lodging houses, tavern or common inn unless accompanied by parents or a lawful guardian and making it unlawful for the owner, manager, keeper or duly authorized representative of such establishments to lease any room or portion thereof more than twice every 24 hours, runs counter to the due process guaranty for lack of certainty and for its unreasonable, arbitrary and oppressive character; and that insofar as the penalty provided for in Section 4 of the challenged ordinance for a subsequent conviction would, cause the automatic cancellation of the license of the offended party, in effect causing the destruction of the business and loss of its investments, there is once again a transgression of the due process clause.

There was a plea for the issuance of preliminary injunction and for a final judgment declaring the above ordinance null and void and unenforceable. The lower court on July 6, 1963 issued a writ of preliminary injunction ordering respondent Mayor to refrain from enforcing said Ordinance No. 4760 from and after July 8, 1963.

In the a answer filed on August 3, 1963, there was an admission of the personal circumstances regarding the respondent Mayor and of the fact that petitioners are licensed to engage in the hotel or motel business in the City of Manila, of the provisions of the cited Ordinance but a denial of its alleged nullity, whether on statutory or constitutional grounds. After setting forth that the petition did fail to state a cause of action and that the challenged ordinance bears a reasonable relation, to a proper purpose, which is to curb immorality, a valid and proper exercise of the police power and that only the guests or customers not before the court could complain of the alleged invasion of the right to privacy and the guaranty against self incrimination, with the assertion that the issuance of the preliminary injunction ex parte was contrary to law, respondent Mayor prayed for, its dissolution and the dismissal of the petition.

Instead of evidence being offered by both parties, there was submitted a stipulation of facts dated September 28, 1964, which reads:

1. That the petitioners Ermita-Malate Hotel and Motel Operators Association, Inc. and Hotel del Mar Inc. are duly organized and existing under the laws of the Philippines, both with offices in the City of Manila, while the petitioner Go Chin is the president and general manager of Hotel del Mar Inc., and the intervenor Victor Alabanza is a resident of Baguio City, all having the capacity to sue and be sued;

2. That the respondent Mayor is the duly elected and incumbent City Mayor and chief executive of the City of Manila charged with the general power and duty to enforce ordinances of the City of Manila and to give the necessary orders for the faithful execution and enforcement of such ordinances;

3. That the petitioners are duly licensed to engage in the business of operating hotels and motels in Malate and Ermita districts in Manila;

4. That on June 13, 1963, the Municipal Board of the City of Manila enacted Ordinance No. 4760, which was approved on June 14, 1963, by Vice-Mayor Herminio Astorga, then the acting City Mayor of Manila, in the

absence of the respondent regular City Mayor, amending sections 661, 662, 668-a, 668-b and 669 of the compilation of the ordinances of the City of Manila besides inserting therein three new sections. This ordinance is similar to the one vetoed by the respondent Mayor (Annex A) for the reasons stated in its 4th Indorsement dated February 15, 1963 (Annex B);

5. That the explanatory note signed by then Councilor Herminio Astorga was submitted with the proposed ordinance (now Ordinance 4760) to the Municipal Board, copy of which is attached hereto as Annex C;

6. That the City of Manila derived in 1963 an annual income of P101,904.05 from license fees paid by the 105 hotels and motels (including herein petitioners) operating in the City of Manila.1äwphï1.ñët

Thereafter came a memorandum for respondent on January 22, 1965, wherein stress was laid on the presumption of the validity of the challenged ordinance, the burden of showing its lack of conformity to the Constitution resting on the party who assails it, citing not only U.S. v. Salaveria, but likewise applicable American authorities. Such a memorandum likewise refuted point by point the arguments advanced by petitioners against its validity. Then barely two weeks later, on February 4, 1965, the memorandum for petitioners was filed reiterating in detail what was set forth in the petition, with citations of what they considered to be applicable American authorities and praying for a judgment declaring the challenged ordinance "null and void and unenforceable" and making permanent the writ of preliminary injunction issued.

After referring to the motels and hotels, which are members of the petitioners association, and referring to the alleged constitutional questions raised by the party, the lower court observed: "The only remaining issue here being purely a question of law, the parties, with the nod of the Court, agreed to file memoranda and thereafter, to submit the case for decision of the Court." It does appear obvious then that without any evidence submitted by the parties, the decision passed upon the alleged infirmity on constitutional grounds of the challenged ordinance, dismissing as is undoubtedly right and proper the untenable objection on the alleged lack of authority of the City of Manila to regulate motels, and came to the conclusion that "the challenged Ordinance No. 4760 of the City of Manila, would be unconstitutional and, therefore, null and void." It made permanent the preliminary injunction issued against respondent Mayor and his agents "to restrain him from enforcing the ordinance in question." Hence this appeal.

As noted at the outset, the judgment must be reversed. A decent regard for constitutional doctrines of a fundamental character ought to have admonished the lower court against such a sweeping condemnation of the challenged ordinance. Its decision cannot be allowed to stand, consistently with what has hitherto been the accepted standards of constitutional adjudication, in both procedural and substantive aspects.

Primarily what calls for a reversal of such a decision is the absence of any evidence to offset the presumption of validity that attaches to a challenged statute or ordinance. As was expressed categorically by Justice Malcolm: "The presumption is all in favor of validity x x x . The action of the elected representatives of the people cannot be lightly set aside. The councilors must, in the very nature of things, be familiar with the necessities of their particular municipality and with all the facts and circumstances which surround the subject and necessitate action. The local legislative body, by enacting the ordinance, has in effect given notice that the regulations are essential to the well being of the people x x x . The Judiciary should not lightly set aside legislative action when there is not a clear invasion of personal or property rights under the guise of police regulation.2

It admits of no doubt therefore that there being a presumption of validity, the necessity for evidence to rebut it is unavoidable, unless the statute or ordinance is void on its face which is not the case here. The principle has been nowhere better expressed than in the leading case of O'Gorman & Young v. Hartford Fire Insurance Co.,3 where the American Supreme Court through Justice Brandeis tersely and succinctly summed up the matter thus: The statute here questioned deals with a subject clearly within the scope of the police power. We are asked to declare it void on the ground that the specific method of regulation prescribed is unreasonable and hence deprives the plaintiff of due process of law. As underlying questions of fact may condition the constitutionality of legislation of this character, the resumption of constitutionality must prevail in the absence of some factual foundation of record for overthrowing the statute." No such factual foundation being laid in the present case, the lower court deciding the matter on the pleadings and the stipulation of facts, the presumption of validity must prevail and the judgment against the ordinance set aside.

Nor may petitioners assert with plausibility that on its face the ordinance is fatally defective as being repugnant to the due process clause of the Constitution. The mantle of protection associated with the due process guaranty does not cover petitioners. This particular manifestation of a police power measure being specifically aimed to safeguard public morals is immune from such imputation of nullity resting purely on conjecture and unsupported by anything of substance. To hold otherwise would be to unduly restrict and narrow the scope of police power which has been properly characterized as the most essential, insistent and the least limitable of powers,4 extending as it does "to all the great public needs."5 It would be, to paraphrase another leading decision, to destroy the very purpose of the state if it could be deprived or allowed itself to be deprived of its competence to promote public health, public morals, public safety and the genera welfare.6 Negatively put, police power is "that inherent and plenary power in the State which enables it to prohibit all that is hurt full to the comfort, safety, and welfare of society.7

There is no question but that the challenged ordinance was precisely enacted to minimize certain practices hurtful to public morals. The explanatory note of the Councilor Herminio Astorga included as annex to the stipulation of facts, speaks of the alarming increase in the rate of prostitution, adultery and fornication in Manila traceable in great part to the existence of motels, which "provide a necessary atmosphere for clandestine entry, presence and exit" and thus become the "ideal haven for prostitutes and thrill-seekers." The challenged ordinance then proposes to check the clandestine harboring of transients and guests of these establishments by requiring these transients and guests to fill up a registration form, prepared for the purpose, in a lobby open to public view at all times, and by introducing several other amendatory provisions calculated to shatter the privacy that characterizes the registration of transients and guests." Moreover, the increase in the licensed fees was intended to discourage "establishments of the kind from operating for purpose other than legal" and at the same time, to increase "the income of the city government." It would appear therefore that the stipulation of facts, far from sustaining any attack against the validity of the ordinance, argues eloquently for it.

It is a fact worth noting that this Court has invariably stamped with the seal of its approval, ordinances punishing vagrancy and classifying a pimp or procurer as a vagrant;8 provide a license tax for and regulating the maintenance or operation of public dance halls;9 prohibiting gambling;10prohibiting jueteng;11 and monte;12 prohibiting playing of panguingui on days other than Sundays or legal holidays;13 prohibiting the operation of pinball machines;14 and prohibiting any person from keeping, conducting or maintaining an opium joint or visiting a place where opium is smoked or otherwise used,15 all of which are intended to protect public morals.

On the legislative organs of the government, whether national or local, primarily rest the exercise of the police power, which, it cannot be too often emphasized, is the power to prescribe regulations to promote the health, morals, peace, good order, safety and general welfare of the people. In view of the requirements of due process, equal protection and other applicable constitutional guaranties however, the exercise of such police power insofar as it may affect the life, liberty or property of any person is subject to judicial inquiry. Where such exercise of police power may be considered as either capricious, whimsical, unjust or unreasonable, a denial of due process or a violation of any other applicable constitutional guaranty may call for correction by the courts.

We are thus led to considering the insistent, almost shrill tone, in which the objection is raised to the question of due process.16 There is no controlling and precise definition of due process. It furnishes though a standard to which the governmental action should conform in order that deprivation of life, liberty or property, in each appropriate case, be valid. What then is the standard of due process which must exist both as a procedural and a substantive requisite to free the challenged ordinance, or any governmental action for that matter, from the imputation of legal infirmity sufficient to spell its doom? It is responsiveness to the supremacy of reason, obedience to the dictates of justice. Negatively put, arbitrariness is ruled out and unfairness avoided. To satisfy the due process requirement, official action, to paraphrase Cardozo, must not outrun the bounds of reason and result in sheer oppression. Due process is thus hostile to any official action marred by lack of reasonableness. Correctly it has been identified as freedom from arbitrariness. It is the embodiment of the sporting idea of fair play.17 It exacts fealty "to those strivings for justice" and judges the act of officialdom of whatever branch "in the light of reason drawn from considerations of fairness that reflect [democratic] traditions of legal and political thought."18 It is not a narrow or "technical conception with fixed content unrelated to time, place and circumstances,"19decisions based on such a clause requiring a "close and perceptive inquiry into fundamental principles of our society."20 Questions of due process are not to be treated narrowly or pedantically in slavery to form or phrases.21

It would thus be an affront to reason to stigmatize an ordinance enacted precisely to meet what a municipal lawmaking body considers an evil of rather serious proportion an arbitrary and capricious exercise of authority. It would seem that

what should be deemed unreasonable and what would amount to an abdication of the power to govern is inaction in the face of an admitted deterioration of the state of public morals. To be more specific, the Municipal Board of the City of Manila felt the need for a remedial measure. It provided it with the enactment of the challenged ordinance. A strong case must be found in the records, and, as has been set forth, none is even attempted here to attach to an ordinance of such character the taint of nullity for an alleged failure to meet the due process requirement. Nor does it lend any semblance even of deceptive plausibility to petitioners' indictment of Ordinance No. 4760 on due process grounds to single out such features as the increased fees for motels and hotels, the curtailment of the area of freedom to contract, and, in certain particulars, its alleged vagueness.

Admittedly there was a decided increase of the annual license fees provided for by the challenged ordinance for hotels and motels, 150% for the former and over 200% for the latter, first-class motels being required to pay a P6,000 annual fee and second-class motels, P4,500 yearly. It has been the settled law however, as far back as 1922 that municipal license fees could be classified into those imposed for regulating occupations or regular enterprises, for the regulation or restriction of non-useful occupations or enterprises and for revenue purposes only.22 As was explained more in detail in the above Cu Unjieng case: (2) Licenses for non-useful occupations are also incidental to the police power and the right to exact a fee may be implied from the power to license and regulate, but in fixing amount of the license fees the municipal corporations are allowed a much wider discretion in this class of cases than in the former, and aside from applying the well-known legal principle that municipal ordinances must not be unreasonable, oppressive, or tyrannical, courts have, as a general rule, declined to interfere with such discretion. The desirability of imposing restraint upon the number of persons who might otherwise engage in non-useful enterprises is, of course, generally an important factor in the determination of the amount of this kind of license fee. Hence license fees clearly in the nature of privilege taxes for revenue have frequently been upheld, especially in of licenses for the sale of liquors. In fact, in the latter cases the fees have rarely been declared unreasonable.23

Moreover in the equally leading case of Lutz v. Araneta24 this Court affirmed the doctrine earlier announced by the American Supreme Court that taxation may be made to implement the state's police power. Only the other day, this Court had occasion to affirm that the broad taxing authority conferred by the Local Autonomy Act of 1959 to cities and municipalities is sufficiently plenary to cover a wide range of subjects with the only limitation that the tax so levied is for public purposes, just and uniform.25

As a matter of fact, even without reference to the wide latitude enjoyed by the City of Manila in imposing licenses for revenue, it has been explicitly held in one case that "much discretion is given to municipal corporations in determining the amount," here the license fee of the operator of a massage clinic, even if it were viewed purely as a police power measure.26 The discussion of this particular matter may fitly close with this pertinent citation from another decision of significance: "It is urged on behalf of the plaintiffs-appellees that the enforcement of the ordinance could deprive them of their lawful occupation and means of livelihood because they can not rent stalls in the public markets. But it appears that plaintiffs are also dealers in refrigerated or cold storage meat, the sale of which outside the city markets under certain conditions is permitted x x x . And surely, the mere fact, that some individuals in the community may be deprived of their present business or a particular mode of earning a living cannot prevent the exercise of the police power. As was said in a case, persons licensed to pursue occupations which may in the public need and interest be affected by the exercise of the police power embark in these occupations subject to the disadvantages which may result from the legal exercise of that power."27

Nor does the restriction on the freedom to contract, insofar as the challenged ordinance makes it unlawful for the owner, manager, keeper or duly authorized representative of any hotel, motel, lodging house, tavern, common inn or the like, to lease or rent room or portion thereof more than twice every 24 hours, with a proviso that in all cases full payment shall be charged, call for a different conclusion. Again, such a limitation cannot be viewed as a transgression against the command of due process. It is neither unreasonable nor arbitrary. Precisely it was intended to curb the opportunity for the immoral or illegitimate use to which such premises could be, and, according to the explanatory note, are being devoted. How could it then be arbitrary or oppressive when there appears a correspondence between the undeniable existence of an undesirable situation and the legislative attempt at correction. Moreover, petitioners cannot be unaware that every regulation of conduct amounts to curtailment of liberty which as pointed out by Justice Malcolm cannot be absolute. Thus: "One thought which runs through all these different conceptions of liberty is plainly apparent. It is this: 'Liberty' as understood in democracies, is not license; it is 'liberty regulated by law.' Implied in the term is restraint by law for the good of the individual and for the greater good of the peace and order of society and the general well-being. No man can do exactly as he pleases. Every man must renounce unbridled license. The right of the individual is necessarily

subject to reasonable restraint by general law for the common good x x x The liberty of the citizen may be restrained in the interest of the public health, or of the public order and safety, or otherwise within the proper scope of the police power."28

A similar observation was made by Justice Laurel: "Public welfare, then, lies at the bottom of the enactment of said law, and the state in order to promote the general welfare may interfere with personal liberty, with property, and with business and occupations. Persons and property may be subjected to all kinds of restraints and burdens, in order to secure the general comfort, health, and prosperity of the state x x x To this fundamental aim of our Government the rights of the individual are subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made to prevail over authority because then society will fall into anarchy. Neither should authority be made to prevail over liberty because then the individual will fall into slavery. The citizen should achieve the required balance of liberty and authority in his mind through education and personal discipline, so that there may be established the resultant equilibrium, which means peace and order and happiness for all.29

It is noteworthy that the only decision of this Court nullifying legislation because of undue deprivation of freedom to contract, People v. Pomar,30no longer "retains its virtuality as a living principle. The policy of laissez faire has to some extent given way to the assumption by the government of the right of intervention even in contractual relations affected with public interest.31 What may be stressed sufficiently is that if the liberty involved were freedom of the mind or the person, the standard for the validity of governmental acts is much more rigorous and exacting, but where the liberty curtailed affects at the most rights of property, the permissible scope of regulatory measure is wider.32 How justify then the allegation of a denial of due process?

Lastly, there is the attempt to impugn the ordinance on another due process ground by invoking the principles of vagueness or uncertainty. It would appear from a recital in the petition itself that what seems to be the gravamen of the alleged grievance is that the provisions are too detailed and specific rather than vague or uncertain. Petitioners, however, point to the requirement that a guest should give the name, relationship, age and sex of the companion or companions as indefinite and uncertain in view of the necessity for determining whether the companion or companions referred to are those arriving with the customer or guest at the time of the registry or entering the room With him at about the same time or coming at any indefinite time later to join him; a proviso in one of its sections which cast doubt as to whether the maintenance of a restaurant in a motel is dependent upon the discretion of its owners or operators; another proviso which from their standpoint would require a guess as to whether the "full rate of payment" to be charged for every such lease thereof means a full day's or merely a half-day's rate. It may be asked, do these allegations suffice to render the ordinance void on its face for alleged vagueness or uncertainty? To ask the question is to answer it. From Connally v. General Construction Co.33 to Adderley v. Florida,34 the principle has been consistently upheld that what makes a statute susceptible to such a charge is an enactment either forbidding or requiring the doing of an act that men of common intelligence must necessarily guess at its meaning and differ as to its application. Is this the situation before us? A citation from Justice Holmes would prove illuminating: "We agree to all the generalities about not supplying criminal laws with what they omit but there is no canon against using common sense in construing laws as saying what they obviously mean."35

That is all then that this case presents. As it stands, with all due allowance for the arguments pressed with such vigor and determination, the attack against the validity of the challenged ordinance cannot be considered a success. Far from it. Respect for constitutional law principles so uniformly held and so uninterruptedly adhered to by this Court compels a reversal of the appealed decision.

Wherefore, the judgment of the lower court is reversed and the injunction issued lifted forthwith. With costs.

Reyes, J.B.L., Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro and Angeles, JJ., concur. Concepcion, C.J. and Dizon, J., are on leave.

Footnotes

1The eighteen members are Waldorf Hotel, Hotel Monte Carlo, Golden Gate Motel, Miami Hotel, Palm Spring Hotel, Flamingo Motel, Holiday Motel, Rainbow Motel, Palo Alto Hotel, Paradise Hotel, Mayfair Hotel, Siesta Court, Sun Valley Hotel, Springfield Hotel, New Palace Hotel, Hotel del Mar Longbeach Hotel and Ritz Motel.

2U.S. V. Salaveria (1918), 39 Phil. 102, at p. 111. There was an affirmation of the presumption of validity of municipal ordinance as announced in the leading Salaveria decision in Eboña v. Daet, (1950) 85 Phil. 369.

3282 US 251, 328, January 5, 1931.

4Cf. Ichong v. Hernandez, (1957) 101 Phil. 1155, at p. 1163. Also: "To Frankfurter the police power, true to its etymology is the power to shape policy. It defies legal definition; as a response to the dynamic aspects of society, it cannot be reduced to a constitutional formula. The law must be sensitive to life; in resolving cases, it must not fall back upon sterile claims; its judgments are not derived from an abstract duel between liberty and the police power. Instead, in a world of trusts and unions and large-scale industry, it must meet the challenge of drastic social change. For him as for Holmes, 'society is more than bargain and business' and the jurist's art rises to no higher peak than in vindicating interests not represented by the items in a balance-sheet. In a progressive society, new interests emerge, new attitudes appeal, social consciousness quickens. In the face of the unknown one cannot choose with certainty. Nor as yet, has the whole of truth been brought up from its bottomless well and how fragile in scientific proof is the ultimate validity of any particular economic adjustment. Social development is a process of trial and error; in the making of policy the fullest possible opportunity must be given for the play of the human mind. If Congress or legislature does not regulate, laissez faire — not the individual — must be the regulator. (Hamilton, Preview of a Justice (1939) 48 Yale Law Journal, 819).

5Noble state Bank v. Haskell, 219 U.S. 412.

6U.S. v. Gomez-Jesus, (1915) 31 Phil. 218.

7Rubi v. Provincial Board, (1918) 39 Phil. 660.

8U.S. vs. Giner Cruz, (1918) 38 Phil. 677.

9U.S. vs. Rodriguez, (1918) 38 Phil. 759. See also Sarmiento v. Belderol, L-15719, May 31, 1961; Lapera v. Vicente, L-18102, June 30, 1962.

10U.S. v. Pacis, (1915) 31 Phil. 524.

11U.S. vs. Espiritu-Santo, (1912) 23 Phil. 610; U.S. vs. Joson, (1913) 26 Phil. 1; People vs. Chan Hong, (1938) 65 Phil. 625.

12U.S. v. Tamparong, (1915) 31 Phil. 321.

13U.S. v. Salaveria, (1918) 39 Phil. 102.

14Uy Ha v. The City Mayor, L-14149, May 30, 1969; Miranda v. City of Manila, L-17252, May 31, 1961.

15U.S. v. Ten Yu, (1912) 24 Phil. 1.

16There is no occasion to consider even cursorily the alleged invasion of the right of privacy or the prohibition against self-incrimination. Petitioners obviously are not the proper parties to do so. Nor may such an incurable defect be remedied by an accommodating intervenor "who has always taken advantage of as he exclusively relies on, the facilities, services and accommodations offered by petitioner-motels. A general merchant, doing business not only in Baguio City but in the City of Manila, has no legitimate cause for complaint. At least, not according to the case as it has been developed.

17Frankfurter, Mr. Justice Holmes and the Supreme Court, (1938) pp. 32- 33.

18Frankfurter, Hannah v. Larche, (1960) 363 U.S. 420, at 487.

19Cafeteria Workers v. McElroy, (1961) 367 U.S. 1230.

20Bartkus v. Illinois, (1959) 359 U.S. 121.

21Pearson v. McGraw, (1939) 308 U.S. 313.

22Cu Unjieng v. Postpone, (1922) 42 Phil. 818, 828.

23Citing Swarth v. People, 109 Ill. 621; Dennehy v. City of Chicago, 120 Ill. 627; 12 N.E., 227; United States Distilling Co. v. City of Chicago, 112 Ill. 19: Drew County v. Bennet, 43 Ark. 364; Merced County v. Fleming, Ill Cal. 46; 43 Pac. 392; Williams v. City Council of West Point, 68 Ga. 816; Cheny v. Shellbyville, 19 Ind. 84; Wiley y. Owens, 39 Ind. 429; Sweet v. City of Wabash, 41 Ind. 7; Jones v. Grady, 25 La. Ann. 586; Goldsmith v. City of New Orleans, 31 La. Ann. 646; People ex rel., Cramer v. Medberry, 39 N.Y.S. 207; 17 Misc. Rep., 8 ; McGuigan v. Town of Belmont, 89 Wis. 637; 62 N.W., 421; Ex parte Burnett 30 Ala. 461; Craig v. Burnett 32 Ala., 728, and Muhlenbrinck v. Long Branch Commissioner, 42 N.J.L. 364; 36 Am. Rep., 518. At pp. 829-830.

2498 Phil. 148 (1955), citing Great Atl & Pac. Tea Co. v Grosjean, 301 U.S. 412, 81 L. Ed. 1193; U.S. v. Butler, 297 US 1, 80 L. Ed 477; M'Culloch v. Maryland, 4 Wheat 316, 4 L. Ed 579. The Lutz decision was followed in Republic v. Bacolod Murcia Milling, L-19824, July 9, 1966.

25Ormoc Sugar Co. v. Municipal Board of Ormoc City, L-24322, July 21, 1967.

26Physical Therapy Organization v. Municipal Board, (1957) 101 Phil. 1142.

27Co Kian & Lee Ban v. City of Manila, (1955) 96 Phil. 649, 654, citing City of New Orleans v. Stafford, 27 L. Ann. 417.

28Rubi v. Provincial Board, (1919) 39 Phil. 660, at 706, citing Hall v. Geiger-Jones (1916), 242 U.S. 539; Hardie-Tynes Manufacturing Co. vs. Cruz (1914), 189 Ala. 66.

29Calalang v. Williams (1940), 70 Phil. 726, at 733-734.

3046 Phil. 440 (1924). The Philippines was then under American sovereignty, American Supreme Court decisions having thus an obligatory effect. No alternative was left to this Court except to follow the then controlling decision in Adkins v. Children's Hospital (1924), 261 U.S. 525, which subsequently was overruled in West Coast Hotel v. Parrish (1937), 300 U.S. 379.

31Antamok Goldfields Mining Co. v. Court (1940), 70 Phil. 340, at 360, quoting a concurring opinion of Justice Laurel in Ang Tibay v. Court, G.R. No. 46496.

32Cf. "In weighing arguments of the parties it is important to distinguish between the due process clause of the Fourteenth Amendment as an instrument for transmitting the principles of the First Amendment and those cases in which it is applied for its own sake. The test of legislation which collides with the Fourteenth Amendment because it also collides with the principles of the First, is much more definite than the test when only the Fourteen is involved. Much of the vagueness of the due process clause disappears when the specific prohibition of the First become its standard. The right of a State to regulate, for example, a public utility may well include, so far as the due process test is concerned, power to impose all of the restrictions which a legislature may have a 'rational basis' for adopting. But freedoms of speech and of press, of assembly, and of worship may well be infringed on such slender grounds. They are susceptible of restriction only to prevent an immediate danger to interests which the state may lawfully protect." (West Virginia State Bd. of Edu v. Barnette, (1942), 319 U.S. 624, at 639).

33269 U.S. 385 (1926).

3417 L. ed. 2d 149, Nov. 14, 1966.

35Roschen v. Ward (1929), 279 U. S. 337,339.

G.R. No. L-21484 November 29, 1969

THE AGRICULTURAL CREDIT and COOPERATIVE FINANCING ADMINISTRATION (ACCFA), petitioner,

vs. ACCFA SUPERVISORS' ASSOCIATION, ACCFA WORKERS'

ASSOCIATION, and THE COURT OF INDUSTRIAL RELATIONS, respondents.

Deogracias E. Lerma and Esmeraldo U. Guloy for petitioner Agricultural Credit and Cooperative Financing Administration. Office of the Agrarian Counsel, Department of Justice for petitioner Agricultural Credit Administration J. C. Espinas and Associates for respendents Confederation of Unions in Government Corporations Offices, et al. Mariano B. Tuason for respondent Court of Industrial Relations.

MAKALINTAL, J . :

These are two separate appeals by certiorari from the decision dated March 25, 1963 (G.R. No. L-21484) and the order dated May 21, 1964 (G.R. No. L-23605) as affirmed by the resolutions en banc, of the Court of Industrial Relations, in Cases Nos. 3450-ULP and 1327-MC, respectively. The parties, except the Confederation of Unions in Government Corporations and Offices (CUGCO), being practically the same and the principal issues involved related, only one decision is now rendered in these two cases.

The Agricultural Credit and Cooperative Financing Administration (ACCFA) was a government agency created under Republic Act No. 821, as amended. Its administrative machinery was reorganized and its name changed to Agricultural Credit Administration (ACA) under the Land Reform Code (Republic Act No. 3844). On the other hand, the ACCFA Supervisors' Association (ASA) and the ACCFA Workers' Association (AWA), hereinafter referred to as the Unions, are labor organizations composed of the supervisors and the rank-and-file employees, respectively, in the ACCFA (now ACA).

G.R. No. L-21484

On September 4, 1961 a collective bargaining agreement, which was to be effective for a period of one (1) year from July 1, 1961, was entered into by and between the Unions and the ACCFA. A few months thereafter, the Unions started protesting against alleged violations and non-implementation of said agreement. Finally, on October 25, 1962 the Unions declared a strike, which was ended when the strikers voluntarily returned to work on November 26, 1962.

On October 30, 1962 the Unions, together with its mother union, the Confederation of Unions in Government Corporations and Offices (CUGCO), filed a complaint with the Court of Industrial Relations against the ACCFA (Case No. 3450-ULP) for having allegedly committed acts of unfair labor practice, namely: violation of the collective bargaining agreement in order to discourage the members of the Unions in the exercise of their right to self-organization, discrimination against said members in the matter of promotions, and refusal to bargain. The ACCFA denied the charges and interposed as affirmative and special defenses lack of jurisdiction of the CIR over the case, illegality of the bargaining contract, expiration of said contract and lack of approval by the office of the President of the fringe benefits provided for therein. Brushing aside the foregoing defenses, the CIR in its decision dated March 25, 1963 ordered the ACCFA:

1. To cease and desist from committing further acts tending to discourage the members of complainant unions in the exercise of their right to self-organization;

2. To comply with and implement the provision of the collective bargaining contract executed on September 4, 1961, including the payment of P30.00 a month living allowance;

3. To bargain in good faith and expeditiously with the herein complainants.

The ACCFA moved to reconsider but was turned down in a resolution dated April 25, 1963 of the CIR en banc. Thereupon it brought this appeal by certiorari.

The ACCFA raises the following issues in its petition, to wit:

1. Whether or not the respondent court has jurisdiction over this case, which in turn depends on whether or not ACCFA exercised governmental or proprietary functions.

2. Whether or not the collective bargaining agreement between the petitioner and the respondent union is valid; if valid, whether or not it has already lapsed; and if not, whether or not its (sic) fringe benefits are already enforceable.

3. Whether or not there is a legal and/or factual basis for the finding of the respondent court that the petitioner had committed acts of unfair labor practice.

4. Whether or not it is within the competence of the court to enforce the collective bargaining agreement between the petitioner and the respondent unions, the same having already expired.

G.R. No. L-23605

During the pendency of the above mentioned case (G.R. No. L-21484), specifically on August 8, 1963, the President of the Philippines signed into law the Agricultural Land Reform Code (Republic Act No. 3844), which among other things required the reorganization of the administrative machinery of the Agricultural Credit and Cooperative Financing Administration (ACCFA) and changed its name to Agricultural Credit Administration (ACA). On March 17, 1964 the ACCFA Supervisors' Association and the ACCFA Workers' Association filed a petition for certification election with the Court of Industrial Relations (Case No. 1327-MC) praying that they be certified as the exclusive bargaining agents for the supervisors and rank-and-file employees, respectively, in the ACA. The trial Court in its order dated March 30, 1964 directed the Manager or Officer-in-Charge of the ACA to allow the posting of said order "for the information of all employees and workers thereof," and to answer the petition. In compliance therewith, the ACA, while admitting most of the allegations in the petition, denied that the Unions represented the majority of the supervisors and rank-and-file workers, respectively, in the ACA. It further alleged that the petition was premature, that the ACA was not the proper party to be notified and to answer the petition, and that the employees and supervisors could not lawfully become members of the Unions, nor be represented by them. However, in a joint manifestation of the Unions dated May 7, 1964, with the conformity of the ACA Administrator and of the Agrarian Counsel in his capacity as such and as counsel for the National Land Reform Council, it was agreed "that the union petitioners in this case represent the majority of the employees in their respective bargaining units" and that only the legal issues raised would be submitted for the resolution of the trial Court.

Finding the remaining grounds for ACA's opposition to the petition to be without merit, the trial Court in its order dated May 21, 1964 certified "the ACCFA Workers' Association and the ACCFA Supervisors' Association as the sole and exclusive bargaining representatives of the rank-and-file employees and supervisors, respectively, of the Agricultural Credit Administration." Said order was affirmed by the CIR en banc in its resolution dated August 24, 1964.

On October 2, 1964 the ACA filed in this Court a petition for certiorari with urgent motion to stay the CIR order of May 21, 1964. In a resolution dated October 6, 1964, this Court dismissed the petition for "lack of adequate allegations,"

but the dismissal was later reconsidered when the ACA complied with the formal requirement stated in said resolution. As prayed for, this Court ordered the CIR to stay the execution of its order of May 21, 1964.

In this appeal, the ACA in effect challenges the jurisdiction of the CIR to entertain the petition of the Unions for certification election on the ground that it (ACA) is engaged in governmental functions. The Unions join the issue on this single point, contending that the ACA forms proprietary functions.

Under Section 3 of the Agricultural Land Reform Code the ACA was established, among other governmental agencies,1 to extend credit and similar assistance to agriculture, in pursuance of the policy enunciated in Section 2 as follows:

SEC. 2. Declaration of Policy. — It is the policy of the State:

(1) To establish owner-cultivatorships and the economic family-size farm as the basis of Philippine agriculture and, as a consequence, divert landlord capital in agriculture to industrial development;

(2) To achieve a dignified existence for the small farmers free from pernicious institutional restraints and practices;

(3) To create a truly viable social and economic structure in agriculture conducive to greater productivity and higher farm incomes;

(4) To apply all labor laws equally and without discrimination to both industrial and agricultural wage earners;

(5) To provide a more vigorous and systematic land resettlement program and public land distribution; and

(6) To make the small farmers more independent, self-reliant and responsible citizens, and a source of genuine strength in our democratic society.

The implementation of the policy thus enunciated, insofar as the role of the ACA therein is concerned, is spelled out in Sections 110 to 118, inclusive, of the Land Reform Code. Section 110 provides that "the administrative machinery of the ACCFA shall be reorganized to enable it to align its activities with the requirements and objective of this Code and shall be known as the Agricultural Credit Administration." Under Section 112 the sum of P150,000,000 was appropriated out of national funds to finance the additional credit functions of the ACA as a result of the land reform program laid down in the Code. Section 103 grants the ACA the privilege of rediscounting with the Central Bank, the Development Bank of the Philippines and the Philippine National Bank. Section 105 directs the loaning activities of the ACA "to stimulate the development of farmers' cooperatives," including those "relating to the production and marketing of agricultural products and those formed to manage and/or own, on a cooperative basis, services and facilities, such as irrigation and transport systems, established to support production and/or marketing of agricultural products." Section 106 deals with the extension by ACA of credit to small farmers in order to stimulate agricultural production. Sections 107 to 112 lay down certain guidelines to be followed in connection with the granting of loans, such as security, interest and supervision of credit. Sections 113 to 118, inclusive, invest the ACA with certain rights and powers not accorded to non-governmental entities, thus:

SEC. 113. Auditing of Operations. — For the effective supervision of farmers' cooperatives, the head of the Agricultural Credit Administration shall have the power to audit their operations, records and books of account and to issue subpoena and subpoena duces tecum to compel the attendance of witnesses and the production of books, documents and records in the conduct of such audit or of any inquiry into their affairs. Any person who, without lawful cause, fails to obey such subpoena or subpoena duces tecum shall, upon application of the head of Agricultural Credit Administration with the proper court, be liable to punishment for contempt in the manner provided by law and if he is an officer of the Association, to suspension or removal from office.

SEC. 114. Prosecution of officials. — The Agricultural Credit Administration, through the appropriate provincial or city fiscal, shall have the power to file and prosecute any and all actions which it may have against any and all officials or employees of farmers' cooperatives arising from misfeasance or malfeasance in office.

SEC. 115. Free Notarial Service. — Any justice of the peace, in his capacity as notary ex-officio, shall render service free of charge to any person applying for a loan under this Code either in administering the oath or in the acknowledgment of instruments relating to such loan.

SEC. 116. Free Registration of Deeds. — Any register of deeds shall accept for registration, free of charge any instrument relative to a loan made under this Code.

SEC. 117. Writing-off Unsecured and Outstanding Loans. — Subject to the approval of the President upon recommendation of the Auditor General, the Agricultural Credit Administration may write-off from its books, unsecured and outstanding loans and accounts receivable which may become uncollectible by reason of the death or disappearance of the debtor, should there be no visible means of collecting the same in the foreseeable future, or where the debtor has been verified to have no income or property whatsoever with which to effect payment. In all cases, the writing-off shall be after five years from the date the debtor defaults.

SEC. 118. Exemption from Duties, Taxes and Levies. — The Agricultural Credit Administration is hereby exempted from the payment of all duties, taxes, levies, and fees, including docket and sheriff's fees, of whatever nature or kind, in the performance of its functions and in the exercise of its powers hereunder.

The power to audit the operations of farmers' cooperatives and otherwise inquire into their affairs, as given by Section 113, is in the nature of the visitorial power of the sovereign, which only a government agency specially delegated to do so by the Congress may legally exercise.

On March 19, 1964 Executive Order No. 75 was promulgated. It is entitled: "Rendering in Full Force and Effect the Plan of Reorganization Proposed by the Special Committee on Reorganization of Agencies for Land Reform for the Administrative Machinery of the Agricultural Land Reform Code," and contains the following pertinent provisions:

Section 3. The Land Reform Project Administration2 shall be considered a single organization and the personnel complement of the member agencies including the legal officers of the Office of the Agrarian Counsel which shall provide legal services to the LRPA shall be regarded as one personnel pool from which the requirements of the operations shall be drawn and subject only to the civil service laws, rules and regulations, persons from one agency may be freely assigned to positions in another agency within the LRPA when the interest of the service so demands.

Section 4. The Land Reform Project Administration shall be considered as one organization with respect to the standardization of job descriptions position classification and wage and salary structures to the end that positions involving the same or equivalent qualifications and equal responsibilities and effort shall have the same remuneration.

Section 5. The Civil Service laws, rules and regulations with respect to promotions, particularly in the consideration of person next in rank, shall be made applicable to the Land Reform Project Administration as a single agency so that qualified individuals in one member agency must be considered in considering promotion to higher positions in another member agency.

The implementation of the land reform program of the government according to Republic Act No. 3844 is most certainly a governmental, not a proprietary, function; and for that purpose Executive Order No. 75 has placed the ACA under the Land Reform Project Administration together with the other member agencies, the personnel complement of all of which are placed in one single pool and made available for assignment from one agency to another, subject only to Civil Service laws, rules and regulations, position classification and wage structures.

The appointing authority in respect of the officials and employees of the ACA is the President of the Philippines, as stated in a 1st indorsement by his office to the Chairman of the National Reform Council dated May 22, 1964, as follows:

Appointments of officials and employees of the National Land Reform Council and its agencies may be made only by the President, pursuant to the provisions of Section 79(D) of the Revised Administrative Code. In accordance with the policy and practice, such appointments should be prepared for the signature of the Executive Secretary, "By Authority ofthe President".3

When the Agricultural Reform Code was being considered by the Congress, the nature of the ACA was the subject of the following exposition on the Senate floor:

Senator Tolentino: . . . . "The ACA is not going to be a profit making institution. It is supposed to be a public service of the government to the lessees and farmer-owners of the lands that may be bought after expropriation from owners. It is the government here that is the lender. The government should not exact a higher interest than what we are telling a private landowner now in his relation to his tenants if we give to their farmers a higher rate of interest . . . ." (pp. 17 & 18, Senate Journal No. 16, July 3, 1963)

The reason is obvious, to pinpoint responsibility for many losses in the government, in order to avoid irresponsible lending of government money — to pinpoint responsibility for many losses . . . .

Senator Manglapus: ". . . But assuming that hypothesis, that is the reason why we are appropriating P150,000,000.00 for the Agricultural Credit Administration which will go to intensified credit operations on the barrio level . . ." (p. 3, Senate Journal No. 7).

That it is the reason why we are providing for the expansion of the ACCFA and the weeding out of the cooperative activity of the ACCFA and turning this over to the Agricultural Productivity Commission, so that the Agricultural Credit Administration will concentrate entirely on the facilitation of credit on the barrio level with the massive support of 150 million provided by the government. . . . (pp. 4 & 5 of Senate Journal No. 7, July 3, 1963)

. . . But by releasing them from this situation, we feel that we are putting them in a much better condition than that in which they are found by providing them with a business-like way of obtaining credit, not depending on a paternalistic system but one which is business-like — that is to say, a government office, which on the barrio level will provide them that credit directly . . . . (p. 40, Senate Journal No. 7, July 3, 1963) (emphasis supplied).

The considerations set forth above militate quite strongly against the recognition of collective bargaining powers in the respondent Unions within the context of Republic Act No. 875, and hence against the grant of their basic petition for certification election as proper bargaining units. The ACA is a government office or agency engaged in governmental, not proprietary functions. These functions may not be strictly what President Wilson described as "constituent" (as distinguished from "ministrant"),4 such as those relating to the maintenance of peace and the prevention of crime, those regulating property and property rights, those relating to the administration of justice and the determination of political duties of citizens, and those relating to national defense and foreign relations. Under this traditional classification, such constituent functions are exercised by the State as attributes of sovereignty, and not merely to promote the welfare, progress and prosperity of the people — these letter functions being ministrant he exercise of which is optional on the part of the government.

The growing complexities of modern society, however, have rendered this traditional classification of the functions of government quite unrealistic, not to say obsolete. The areas which used to be left to private enterprise and initiative and which the government was called upon to enter optionally, and only "because it was better equipped to administer for the public welfare than is any private individual or group of individuals,"5continue to lose their well-defined boundaries and to be absorbed within activities that the government must undertake in its sovereign capacity if it is to meet the increasing social challenges of the times. Here as almost everywhere else the tendency is undoubtedly towards a greater socialization of economic forces. Here of course this development was envisioned, indeed adopted as a national policy, by the Constitution itself in its declaration of principle concerning the promotion of social justice.

It was in furtherance of such policy that the Land Reform Code was enacted and the various agencies, the ACA among them, established to carry out its purposes. There can be no dispute as to the fact that the land reform program contemplated in the said Code is beyond the capabilities of any private enterprise to translate into reality. It is a purely governmental function, no less than, say, the establishment and maintenance of public schools and public hospitals. And when, aside from the governmental objectives of the ACA, geared as they are to the implementation of the land reform program of the State, the law itself declares that the ACA is a government office, with the formulation of policies, plans and programs vested no longer in a Board of Governors, as in the case of the ACCFA, but in the National Land Reform Council, itself a government instrumentality; and that its personnel are subject to Civil Service laws and to rules of standardization with respect to positions and salaries, any vestige of doubt as to the governmental character of its functions disappears.

In view of the foregoing premises, we hold that the respondent Unions are not entitled to the certification election sought in the Court below. Such certification is admittedly for purposes of bargaining in behalf of the employees with respect to terms and conditions of employment, including the right to strike as a coercive economic weapon, as in fact the said unions did strike in 1962 against the ACCFA (G.R. No. L-21824).6 This is contrary to Section 11 of Republic Act No. 875, which provides:

SEC. 11. Prohibition Against Strike in the Government — The terms and conditions of employment in the Government, including any political subdivision or instrumentality thereof, are governed by law and it is declared to be the policy of this Act that employees therein shall not strike for the purposes of securing changes or modification in their terms and conditions of employment. Such employees may belong to any labor organization which does not impose the obligation to strike or to join in strike: Provided, However, that this section shall apply only to employees employed in governmental functions of the Government including but not limited to governmental corporations.7

With the reorganization of the ACCFA and its conversion into the ACA under the Land Reform Code and in view of our ruling as to the governmental character of the functions of the ACA, the decision of the respondent Court dated March 25, 1963, and the resolution en banc affirming it, in the unfair labor practice case filed by the ACCFA, which decision is the subject of the present review in G. R. No. L-21484, has become moot and academic, particularly insofar as the order to bargain collectively with the respondent Unions is concerned.

What remains to be resolved is the question of fringe benefits provided for in the collective bargaining contract of September 4, 1961. The position of the ACCFA in this regard is that the said fringe benefits have not become enforceable because the condition that they should first be approved by the Office of the President has not been complied with. The Unions, on the other hand, contend that no such condition existed in the bargaining contract, and the respondent Court upheld this contention in its decision.

It is to be listed that under Section 3, Article XIV, of the agreement, the same "shall not become effective unless and until the same is duly ratified by the Board of Governors of the Administration." Such approval was given even before the formal execution of the agreement, by virtue of "Resolution No. 67, Regular Meeting No. 7, FY 1960-61, held on August 17, 1961," but with the proviso that "the fringe benefits contained therein shall take effect only if approved by the office of the President." The condition is, therefore, deemed to be incorporated into the agreement by reference.

On October 23, 1962 the Office of the President, in a letter signed by the Executive Secretary, expressed its approval of the bargaining contract "provided the salaries and benefits therein fixed are not in conflict with applicable laws and regulations, are believed to be reasonable considering the exigencies of the service and the welfare of the employees, and are well within the financial ability of the particular corporation to bear."

On July 1, 1963 the ACCFA management and the Unions entered into an agreement for the implementation of the decision of the respondent Court concerning the fringe benefits, thus:

In the meantime, only Cost of Living Adjustment, Longevity Pay, and Night Differential Benefits accruing from July 1, 1961 to June 30, 1963 shall be paid to all employees entitled thereto, in the following manner:

A) The sum of P180,000 shall be set aside for the payment of:

1) Night differential benefits for Security Guards.

2) Cost of Living Adjustment and Longevity Pay.

3) The unpaid balance due employees on Item A (1) and (2) this paragraph shall be paid in monthly installments as finances permit but not beyond December 20, 1963.

3. All benefits accruing after July 1, 1963, shall be allowed to accumulate but payable only after all benefits accruing up to June 30, 1963, as per CIR decision hereinabove referred to shall have been settled in full; provided, however, that commencing July 1, 1963 and for a period of only two (2) months thereafter (during which period the ACCFA and the Unions shall negotiate a new Collective Bargaining Agreement) the provisions of the September 4, 1961 Collective Bargaining Agreement shall be temporarily suspended, except as to Cost of Living Adjustment and "political" or non-economic privileges and benefits thereunder.

On July 24, 1963 the ACCFA Board of Governors ratified the agreement thus entered into, pursuant to the provision thereof requiring such ratification, but with the express qualification that the same was "without prejudice to the pending appeal in the Supreme Court . . . in Case No. 3450-ULP." The payment of the fringe benefits agreed upon, to our mind, shows that the same were within the financial capability of the ACCFA then, and hence justifies the conclusion that this particular condition imposed by the Office of the President in its approval of the bargaining contract was satisfied.

We hold, therefore, that insofar as the fringe benefits already paid are concerned, there is no reason to set aside the decision of the respondent Court, but that since the respondent Unions have no right to the certification election sought by them nor, consequently, to bargain collectively with the petitioner, no further fringe benefits may be demanded on the basis of any collective bargaining agreement.

The decisions and orders appealed from are set aside and/or modified in accordance with the foregoing pronouncements. No costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Sanchez, Castro, Teehankee and Barredo, JJ., concur. Zaldivar, J., concurs in the result.

Separate Opinions

FERNANDO, J . , concurring:

The decision reached by this Court so ably given expression in the opinion of Justice Makalintal, characterized with vigor, clarity and precision, represents what for me is a clear tendency not to be necessarily bound by our previous pronouncements on what activities partake of a nature that is governmental.1 Of even greater significance, there is a definite rejection of the "constituent-ministrant" criterion of governmental functions, followed in Bacani v. National Coconut Corporation.2 That indeed is cause for gratification. For me at least, there is again full adherence to the basic philosophy of the Constitution as to the extensive and vast power lodged in our government to cope with the social and economic problems that even now sorely beset us. There is therefore full concurrence on my part to the opinion of the Court, distinguished by its high quality of juristic craftsmanship. I feel however that the matter is of such vital importance that a separate concurring opinion is not inappropriate. It will also serve to give expression to my view, which is that of the Court likewise, that our decision today does not pass upon the rights of labor employed in instrumentalities of the state discharging governmental functions.

1. In the above Bacani decision, governmental functions are classified into constituent and ministrant. "The former are those which constitute the very bonds of society and are compulsory in nature; the latter are those that are undertaken only by way of advancing the general interests of society, and are merely optional. President Wilson enumerates the constituent functions as follows: '(1) The keeping of order and providing for the protection of persons and property from violence and robbery. (2) The fixing of the legal relations between man and wife and between parents and children.

(3) The regulation of the holding, transmission, and interchange of property, and the determination of its liabilities for debt or for crime. (4) The determination of contract rights between individuals. (5) The definition and punishment of crime. (6) The administration of justice in civil cases. (7) The determination of the political duties, privileges, and relations of citizens. (8) Dealings of the state with foreign powers: the preservation of the state from external danger or encroachment and the advancement of its international interests.' "3

The ministrant functions were then enumerated, followed by a statement of the basis that would justify engaging in such activities. Thus: "The most important of the ministrant functions are: public works, public education, public charity, health and safety regulations, and regulations of trade and industry. The principles determining whether or not a government shall exercise certain of these optional functions are: (1) that a government should do for the public welfare those things which private capital would not naturally undertake and (2) that a government should do these things which by its very nature it is better equipped to administer for the public welfare than is any private individual or group of individuals."4

Reference is made in the Bacani decision to the first of the many publications of Justice Malcolm on the Philippine government, which appeared in 1916,5 adopting the formulation of the then Professor, later President, Woodrow Wilson of the United States, in a textbook on political science the first edition of which was published in 1898. The Wilson classification reflected the primacy of the dominant laissez-faire concept carried into the sphere of government.

A most spirited defense of such a view was given by former President Hadley of Yale in a series of three lectures delivered at Oxford University in 1914. According to President Hadley: "I shall begin with a proposition which may sound somewhat startling, but which I believe to be literally true. The whole American political and social system is based on industrial property right, far more completely than has ever been the case in any European country. In every nation of Europe there has been a certain amount of traditional opposition between the government and the industrial classes. In the United States no such tradition exists. In the public law of European communities industrial freeholding is a comparatively recent development. In the United States, on the contrary, industrial freeholding is the foundation on which the whole social order has been established and built up."6

The view is widely accepted that such a fundamental postulate did influence American court decisions on constitutional law. As was explicitly stated by Justice Cardozo, speaking of that era: "Laissez-faire was not only a counsel of caution which statesmen would do well to heed. It was a categorical imperative which statesmen as well as judges, must obey."7 For a long time, legislation tending to reduce economic inequality foundered on the rock that was the due process clause, enshrining as it did the liberty of contract. To cite only one instance, the limitation of employment in bakeries to sixty hours a week and ten hours a day under a New York statute was stricken down for being tainted with a due process objection in Lochner v. New York.8 It provoked one of the most vigorous dissents of Justice Holmes, who was opposed to the view that the United States Constitution did embody laissez-faire. Thus: "General propositions do not decide concrete cases. The decision will depend on a judgment or intuition more subtle than any articulate major premise. But I think that the proposition just stated, if it is accepted, will carry us far toward the end. Every opinion tends to become a law. I think that the word 'liberty,' in the 14th Amendment, is perverted when it is held to prevent the natural outcome of a dominant opinion, unless it can be said that a rational and fair man necessarily would admit that the statute proposed would infringe fundamental principles as they have been understood by the traditions of our people and our law. It does not need research to show that no such sweeping condemnation can be passed upon the statute before us. A reasonable man might think it a proper measure on the score of health. Men whom I certainly could not pronounce unreasonable would uphold it as a first installment of a general regulation of the hours of work. Whether in the latter aspect it would be open to the charge of inequality I think it unnecessary to discuss." It was not until 1908, in Muller v. Oregon,9 that the American Supreme Court held valid a ten-hour maximum for women workers in laundries and not until 1917 in Bunting v. Oregon10 that such a regulatory ten-hour law applied to men and women passed the constitutional test.

Similarly, state legislation fixing minimum wages was deemed offensive to the due process clause in a 1923 decision in Adkins v. Children's Hospital.11 Only in 1937, in the leading case of West Coast Hotel v. Parrish,12 was the Adkins case overruled and a minimum wage law New York statute upheld. The same unsympathetic attitude arising from the laissez-faire concept was manifest in decisions during such period, there being the finely-spun distinctions in the Wolff Packing Co. v. Court of Industrial Relations13 decision, as to when certain businesses could be classified as affected with public interest to justify state regulation as to prices. After eleven years, in 1934, in Nebbia v. New York,14 the air of unreality was swept away by this explicit pronouncement from the United States Supreme Court: "The phrase 'affected with a public

interest' can, in the nature of things, mean no more than that an industry, for adequate reason, is subject to control for the public good."

It is thus apparent that until the administration of President Roosevelt, the laissez-faire principle resulted in the contraction of the sphere where governmental entry was permissible. The object was to protect property even if thereby the needs of the general public would be left unsatisfied. This was emphatically put forth in a work of former Attorney General, later Justice, Jackson, citing an opinion of Judge Van Orsdel. Thus: "It should be remembered that of the three fundamental principles which underlie government, and for which government exists, the protection of life, liberty, and property, the chief of these is property . . . ."15 The above excerpt from Judge Van Orsdel forms part of his opinion in Children's Hospital v. Adkins, when decided by the Circuit Court of Appeals.16

Nonetheless, the social and economic forces at work in the United States to which the new deal administration of President Roosevelt was most responsive did occasion, as of 1937, greater receptivity by the American Supreme Court to a philosophy less rigid in its obeisance to property rights. Earlier legislation deemed offensive to the laissez-faire concept had met a dismal fate. Their nullity during his first term could, more often than not, be expected.17

As a matter of fact, even earlier, in 1935, Professor Coker of Yale, speaking as a historian, could already discern a contrary drift. Even then he could assert that the range of governmental activity in the United States had indeed expanded. According to him: "Thus both liberals and conservatives approve wide and varied governmental intervention; the latter condemning it, it is true, when the former propose it, but endorsing it, after it has become a fixed part of the status quo, as so beneficial in its effects that no more of it is needed. Our history for the last half-century shows that each important governmental intervention we have adopted has been called socialistic or communistic by contemporary conservatives, and has later been approved by equally conservative men who now accept it both for its proved benefits and for the worthy traditions it has come to represent. Both liberal and conservative supporters of our large-scale business under private ownership advocate or concede the amounts and kinds of governmental limitation and aid which they regard as necessary to make the system work efficiently and humanely. Sooner or later, they are willing to have government intervene for the purpose of preventing the system from being too oppressive to the masses of the people, protecting it from its self-destructive errors, and coming to its help in other ways when it appears not to be able to take care of itself."18

At any rate, by 1943, the United States was reconciled to laissez-faire having lost its dominance. In the language of Justice Jackson in the leading case of West Virginia State Board of Education v. Barnette:19 "We must transplant these rights to a soil in which the laissez-faire concept or principle of non-interference has withered at least as to economic affairs, and social advancements are increasingly sought through closer integration of society and through expanded and strengthened governmental controls."

2. The influence exerted by American constitutional doctrines unavoidable when the Philippines was still under American rule notwithstanding, an influence that has not altogether vanished even after independence, the laissez-faire principle never found full acceptance in this jurisdiction, even during the period of its full flowering in the United States. Moreover, to erase any doubts, the Constitutional Convention saw to it that our fundamental law embodies a policy of the responsibility thrust on government to cope with social and economic problems and an earnest and sincere commitment to the promotion of the general welfare through state action. It would thus follow that the force of any legal objection to regulatory measures adversely affecting property rights or to statutes organizing public corporations that may engage in competition with private enterprise has been blunted. Unless there be a clear showing of any invasion of rights guaranteed by the Constitution, their validity is a foregone conclusion. No fear need be entertained that thereby spheres hitherto deemed outside government domain have been enchroached upon. With our explicit disavowal of the "constituent-ministrant" test, the ghost of the laissez-faire concept no longer stalks the juridical stage.

As early as 1919, in the leading case of Rubi V. Provincial Board of Mindoro,20 Justice Malcolm already had occasion to affirm: "The doctrines oflaissez-faire and of unrestricted freedom of the individual, as axioms of economic and political theory, are of the past. The modern period has shown a widespread belief in the amplest possible demonstration of governmental activity. The Courts unfortunately have sometimes seemed to trail after the other two branches of the Government in this progressive march."

It was to be expected then that when he spoke for the Court in Government of the Philippine Islands v. Springer,21 a 1927 decision, he found nothing objectionable in the government itself organizing and investing public funds in such corporations as the National Coal Co., the Phil. National Bank, the National Petroleum Co., the National Development Co., the National Cement Co. and the National Iron Co. There was not even a hint that thereby the laissez-faire concept was not honored at all. It is true that Justice Malcolm concurred with the majority in People v. Pomar,22 a 1924 opinion, which held invalid under the due process clause a provision providing for maternity leave with pay thirty days before and thirty days after confinement. It could be that he had no other choice as the Philippines was then under the United States, and only recently the year before, the above-cited case of Adkins v. Children's Hospital,23 in line with the laissez-faire principle, did hold that a statute providing for minimum wages was constitutionally infirm on the same ground.

Our constitution which took effect in 1935, upon the inauguration of the Commonwealth of the Philippines, erased whatever doubts there might be on that score. Its philosophy is antithetical to the laissez-faire concept. Delegate, later President, Manuel Roxas, one of the leading members of the Constitutional Convention, in answer precisely to an objection of Delegate Jose Reyes of Sorsogon, who noted the "vast extensions in the sphere of governmental functions" and the "almost unlimited power to interfere in the affairs of industry and agriculture as well as to compete with existing business" as "reflections of the fascination exerted by [the then] current tendencies" in other jurisdictions,24 spoke thus: "My answer is that this constitution has a definite and well defined philosophy, not only political but social and economic. A constitution that in 1776 or in 1789 was sufficient in the United States, considering the problems they had at that time, may not now be sufficient with the growing and ever-widening complexities of social and economic problems and relations. If the United States of America were to call a constitutional convention today to draft a constitution for the United States, does any one doubt that in the provisions of that constitution there will be found definite declarations of policy as to economic tendencies; that there will be matters which are necessary in accordance with the experience of the American people during these years when vast organizations of capital and trade have succeeded to a certain degree to control the life and destiny of the American people? If in this constitution the gentleman will find declarations of economic policy, they are there because they are necessary to safeguard the interests and welfare of the Filipino people because we believe that the days have come when in self-defense, a nation may provide in its constitution those safeguards, the patrimony, the freedom to grow, the freedom to develop national aspirations and national interests, not to be hampered by the artificial boundaries which a constitutional provision automatically imposes."25

Delegate Roxas continued further: "The government is the creature of the people and the government exercises its powers and functions in accordance with the will and purposes of the people. That is the first principle, the most important one underlying this document. Second, the government established in this document is, in its form, in our opinion, the most adapted to prevailing conditions, circumstances and the political outlook of the Filipino people. Rizal said, 'Every people has the kind of government that they deserve.' That is just another form of expressing the principle in politics enunciated by the French philosophers when they said: 'Every people has the right to establish the form of government which they believe is most conducive to their welfare and their liberty.' Why have we preferred the government that is established in this draft? Because it is the government with which we are familiar. It is the form of government fundamentally such as it exists today; because it is the only kind of government that our people understand; it is the kind of government we have found to be in consonance with our experience, with the necessary modification, capable of permitting a fair play of social forces and allowing the people to conduct the affairs of that government."26

One of the most prominent delegates, a leading intellectual, former President Rafael Palma of the University of the Philippines, stressed as a fundamental principle in the draft of the Constitution the limitation on the right to property. He pointed out that the then prevailing view allowed the accumulation of wealth in one family down to the last remote descendant, resulting in a grave disequilibrium and bringing in its wake extreme misery side by side with conspicuous luxury. He did invite attention to the few millionaires at one extreme with the vast masses of Filipinos deprived of the necessities of life at the other. He asked the Convention whether the Filipino people could long remain indifferent to such a deplorable situation. For him to speak of a democracy under such circumstances would be nothing but an illusion. He would thus emphasize the urgent need to remedy the grave social injustice that had produced such widespread impoverishment, thus recognizing the vital role of government in this sphere.27

Another delegate, Tomas Confesor of Iloilo, was quite emphatic in his assertion for the need of a social justice provision which is a departure from the laissez-faire principle. Thus: "Take the case of the tenancy system in the Philippines. You have a tenant. There are hundreds of thousands of tenants working day in and day out, cultivating the fields of their landlords. He puts all his time, all his energy, the labor and the assistance of his wife and children, in cultivating a piece

of ground for his landlord but when the time comes for the partition of the products of his toil what happens? If he produces 25 cavanes of rice, he gets only perhaps five and the twenty goes to the landlord. Now can he go to court? Has he a chance to go to court in order to secure his just share of the products of his toil? No. Under our present regime of law, under our present regime of justice, you do not give that to the poor tenant. Gentlemen, you go to the Cagayan Valley and see the condition under which those poor farmers are being exploited day in and day out. Can they go to court under our present regime of justice, of liberty, or democracy? The other day, workmen were shot by the police just because they wanted to increase or they desired that their wages be increased from thirty centavos a day to forty or fifty centavos. Is it necessary to spill human blood just to secure an increase of ten centavos in the daily wages of an ordinary laborer? And yet under our present regime of social justice, liberty and democracy, these things are happening; these things, I say, are happening. Are those people getting any justice? No. They cannot get justice now from our courts. For this reason, I say it is necessary that we insert 'social justice' here and that social justice must be established by law. Proper legal provisions, proper legal facilities must be provided in order that there be a regime not of justice alone, because we have that now and we are seeing the oppression arising from such a regime. Consequently, we must emphasize the term 'social justice'."28

Delegate Ventenilla of Pangasinan reflected the attitude of the Convention as to why laissez-faire was no longer acceptable. After speaking of times having changed, he proceeded: "Since then new problems have arisen. The spiritual mission of government has descended to the level of the material. Then its function was primarily to soothe the aching spirit. Now, it appears, it must also appease hunger. Now that we may read history backwards, we know for instance, that the old theory of 'laissez-faire' has degenerated into 'big business affairs' which are gradually devouring the rights of the people — the same rights intended to be guarded and protected by the system of constitutional guaranties. Oh, if the Fathers were now alive to see the changes that the centuries have wrought in our life! They might contemplate the sad spectacle of organized exploitation greedily devouring the previous rights of the individual. They might also behold the gradual disintegration of society, the fast disappearance of the bourgeois — the middle class, the backbone of the nation — and the consequent drifting of the classes toward the opposite extremes — the very rich and the very poor."29

Shortly after the establishment of the Commonwealth, the then Justice Jose P. Laurel, himself one of the foremost delegates of the Constitutional Convention, in a concurring opinion, later quoted with approval in the leading case of Antamok Goldfields Mining Co. v. Court of Industrial Relations,30 decided in 1940, explained clearly the need for the repudiation of the laissez-faire doctrine. Thus: "It should be observed at the outset that our Constitution was adopted in the midst of surging unrest and dissatisfaction resulting from economic and social distress which was threatening the stability of governments the world over. Alive to the social and economic forces at work, the framers of our Constitution boldly met the problems and difficulties which faced them and endeavored to crystallize, with more or less fidelity, the political, social and economic propositions of their age, and this they did, with the consciousness that the political and philosophical aphorism of their generation will, in the language of a great jurist, 'be doubted by the next and perhaps entirely discarded by the third.' . . . Embodying the spirit of the present epoch, general provisions were inserted in the Constitution which are intended to bring about the needed social and economic equilibrium between component elements of society through the application of what may be termed as the justitia communis advocated by Grotius and Leibnits many years ago to be secured through the counterbalancing of economic and social forces and opportunities which should be regulated, if not controlled, by the State or placed, as it were, in custodia societatis. 'The promotion of social justice to insure the well-being and economic security of all the people' was thus inserted as vital principle in our Constitution. ... ."31 In the course of such concurring opinion and after noting the changes that have taken place stressing that the policy of laissez-faire had indeed given way to the assumption by the government of the right to intervene although qualified by the phrase "to some extent", he made clear that the doctrine in People v. Pomar no longer retain, "its virtuality as a living principle."32

3. It must be made clear that the objection to the "constituent-ministrant" classification of governmental functions is not to its formulation as such. From the standpoint of law as logic, it is not without merit. It has neatness and symmetry. There are hardly any loose ends. It has the virtue of clarity. It may be said in its favor likewise that it reflects all-too-faithfully the laissez-faire notion that government cannot extend its operation outside the maintenance of peace and order, protection against external security, and the administration of justice, with private rights, especially so in the case of property, being safeguarded and a hint that the general welfare is not to be entirely ignored.

It must not be lost sight of though that logic and jural symmetry while undoubtedly desirable are not the prime consideration. This is especially so in the field of public law. What was said by Holmes, almost nine decades ago, carry greater conviction now. "The life of the law has not been logic; it has been experience. The felt necessities of the time,

the prevalent moral and political theories, intuitions of public policy avowed or unconscious, even the prejudices which judges share with their fellow-men, have had a good deal more to do than the syllogism in determining the rules by which men should be governed."33 Then too, there was the warning of Geny cited by Cardozo that undue stress or logic may result in confining the entire system of positive law, "within a limited number of logical categories, predetermined in essence, immovable in basis, governed by inflexible dogmas," thus rendering it incapable of responding to the ever varied and changing exigencies of life.34,

It is cause enough for concern if the objection to the Bacani decision were to be premised on the score alone that perhaps there was fidelity to the requirements of logic and jural symmetry carried to excess. What appears to me much more deplorable is that it did fail to recognize that there was a repudiation of the laissez-faire concept in the Constitution. As was set forth in the preceding pages, the Constitution is distinguished precisely by a contrary philosophy. The regime of liberty if provided for, with the realization that under the then prevalent social and economic conditions, it may be attained only through a government with its sphere of activity ranging far and wide, not excluding matters hitherto left to the operation of free enterprise. As rightfully stressed in our decision today in line with what was earlier expressed by Justice Laurel, the government that we have established has as a fundamental principle the promotion of social justice.35 The same jurist gave it a comprehensive and enduring definition as the "promotion of the welfare of all the people, the adoption by the government of measures calculated to insure economic stability of all the component elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments in the time honored principle of salus populi estsuprema lex."36

There is thus from the same distinguished pen, this time writing for the Court, a reiteration of the view of the laissez-faire doctrine being repugnant to the fundamental law. It must be added though that the reference to extra-constitutional measures being allowable must be understood in the sense that there is no infringement of specific constitutional guarantees. Otherwise, the judiciary will be hard put to sustain their validity if challenged in an appropriate legal proceeding.

The regime of liberty contemplated in the Constitution with social justice as a fundamental principle to reinforce the pledge in the preamble of promoting the general welfare reflects traditional concepts of a democratic policy infused with an awareness of the vital and pressing need for the government to assume a much more active and vigorous role in the conduct of public affairs. The framers of our fundamental law were as one in their strongly-held belief that thereby the grave and serious infirmity then confronting our body-politic, on the whole still with us now, of great inequality of wealth and mass poverty, with the great bulk of our people ill-clad, ill-housed, ill-fed, could be remedied. Nothing else than communal effort, massive in extent and earnestly engaged in, would suffice.

To paraphrase Laski, with the necessary modification in line with such worthy constitutional ends, we look upon the state as an organization to promote the happiness of individuals, its authority as a power bound by subordination to that purpose, liberty while to be viewed negatively as absence of restraint impressed with a positive aspect as well to assure individual self-fulfillment in the attainment of which greater responsibility is thrust on government; and rights as boundary marks defining areas outside its domain.37 From which it would follow as Laski so aptly stated that it is the individual's "happiness and not its well-being [that is] the criterion by which its behavior [is] to be judged. His interests, and not its power, set the limits to the authority it [is] entitled to exercise."38 We have under such a test enlarged its field of competence. 4. With the decision reached by us today, the government is freed from the compulsion exerted by the Bacani doctrine of the "constituent-ministrant" test as a criterion for the type of activity in which it may engage. Its constricting effect is consigned to oblivion. No doubts or misgivings need assail us that governmental efforts to promote the public weal, whether through regulatory legislation of vast scope and amplitude or through the undertaking of business activities, would have to face a searching and rigorous scrutiny. It is clear that their legitimacy cannot be challenged on the ground alone of their being offensive to the implications of the laissez-faire concept. Unless there be a repugnancy then to the limitations expressly set forth in the Constitution to protect individual rights, the government enjoys a much wider latitude of action as to the means it chooses to cope with grave social and economic problems that urgently press for solution. For me, at least, that is to manifest deference to the philosophy of our fundamental law. Hence my full concurrence, as announced at the outset.

5. The opinion of Justice Makalintal contains this footnote: "It must be stated, however, that we do not here decide the question — not at issue in this case — of whether or not a labor organization composed employees discharging

governmental functions, which is allowed under the legal provision just quoted, provided such organization does not impose the obligation to strike or to join in strike, may petition for a certification election and compel the employer to bargain collectively with it for purposes other than to secure changes or conditions in the terms and conditions of employment."

With such an affirmation as to the scope of our decision there being no holding on the vexing question of the effects on the rights of labor in view of the conclusion reached that the function engaged in is governmental in character, I am in full agreement. The answer to such a vital query must await another day.

Footnotes

1 Land Authority, Land Bank, Agricultural Productivity Commission; Office of the Agrarian Counsel.

2 The Land Reform Project Administration is the organization through which the field operations of member agencies (of which the ACA is one) shall be undertaken by their respective personnel under a unified administration. (Section 2 of Article 1, Executive Order No. 75)

3 Section 79 (D) of the Revised Administrative Code provides in part: "The Department Head, upon the recommendation of the Chief of bureaus or office concerned, shall appoint all subordinate officers and employees whose appointment is not expressly vested by law in the President of the Philippines. . . . ."

4 Bacani vs. National Coconut Corporation, G.R. No. L-9657, Nov. 29, 1956, 53 O.G. p. 2800.

5 Malcolm, The Government of the Philippines, pp. 19-20; Bacani vs. National Coconut Corporation, supra.

6 It must be stated, however, that we do not here decide the question — not at issue in this case — of whether or not a labor organization composed of employees discharging governmental functions, which is allowed under the legal provision just quoted provided such organization does not impose the obligation to strike or to join in strike, may petition for a certification election and compel the employer to bargain collectively with it for purposes other than to secure changes or modifications in the terms and conditions of their employment. Withal, it may not be amiss to observe, albeit obiter, that the right to organize thus allowed would be meaningless unless there is a correlative right on the part of the organization to be recognized as the proper representative of the employees and to bargain in their behalf in relation to matters outside the limitations imposed by the statute, such as those provided for in Section 28 (b) of Republic Act No. 2260, concerning complaints and grievances of the employees.

7 Reenacted in Sec. 28 (c) of the Civil Service Act of 1959, R.A. No. 2260.

FERNANDO, J., CONCURRING:

1 National Coal Co. v. Collector, 46 Phil. 583 (1924); Gov't. of P.I. v. Springer, 50 Phil. 259 (1927); Govt. of P.I. v. China Banking Corp., 54 Phil. 845 (1930); Association Cooperativa de Credito Agricola de Miagao v. Monteclaro, 74 Phil. 281 (1943); Abad Santos v. Auditor General, 79 Phil. 190 (1947); National Airports Corp. v. Teodoro, 91 Phil. 203 (1952); GSIS v. Castillo, 98 Phil. 876 (1956); Price Stabilization Corp., 102 Phil. 515 (1957); Boy Scouts of Phil. v. Araos, 102 Phil. 1080 (1958); Naric Worker's Union v. Alvendia, 107 Phil. 404 (1960); GSIS Employees Asso. v. Alvendia, L-15614, May 30, 1960; National Dev. Co. v. Tobias, 7 SCRA 692 (1963); SSS Employees Asso. v. Soriano, 7 SCRA 1016 (1963); PAL Employees' Asso. v. Phil. Airlines, Inc., 11 SCRA 387 (1964); Nawasa v. NWSA Consolidated Unions, 11 SCRA 766 (1964); Phil. Mfg. Co. v. Manila Port Service, 16 SCRA 95 (1966) and Phil. Postal Savings Bank v. Court, 21 SCRA 1330 (1967).

2 100 Phil. 468 (1956).

3 Ibid., p. 472.

4 Ibid.

5 Malcolm, The Government of Philippine Islands.

6 The Constitutional Position of the Property Owner in 2 Selected Essays on Constitutional Law, p. 2 (1938).

7 Cardozo, The Nature of Judicial Process, p. 77 (1921).

8 198 US 45 (1905).

9 208 US 412.

10 243 US 426.

11 261 Us 525. Again there was a vigorous dissent from Holmes.

12 300 US 379.

13 262 US 522.

14 291 US 502.

15 Jackson, Struggle for Judicial Supremacy, p. 74, (1941).

16 284 Fed. 613 (1922).

17 As was stated in the above work of Jackson: "But in just three years, beginning with the October 1933 term, the Court refused to recognize the power of Congress in twelve cases. Five of these twelve decisions occurred during a single year: that is, the October 1935 term; four of the five, by a sharply divided court." Jackson, op. cit. p. 41..

18 2 Selected Essays on Constitutional Law, op, cit., p. 27.

19 319 US 624.

20 39 Phil. 660, 717-718.

21 50 Phil. 259.

22 46 Phil. 440.

23 261 US 525.

24 III Proceedings of the Philippine Constitutional Convention, Laurel ed., pp. 173-174 (1966).

25 Ibid., pp. 177-178.

26 Ibid., p. 178.

27 Cf. Ibid., pp. 227-228. To quote from Delegate Palma: "Uno de los principios constitucionales es el referente a la limitacion de la propiedad individual. Por que se va a limitar la adquisicion de la propiedad. Ese es otro de los prejuicios y preocupaciones que tenemos nosotros, cuando en realidad el mundo esta sufiendo actualmente por causa de las teorias antiguas sobre la propiedad. Ya he dicho aqui, o no se si en otra parte, que la nocion actual sobre propiedad es la vinculacion perpetua de todos los bienes que se pueden acumular por una familia, hasta el ultimo de sus mas remotos descendientes, ha producido ese enorme desnivel de riqueza que se nota en todas partes del mundo, la extrema miseria al lado del extremo lujo. Una docena de enormes millonarios, al lado de millones y millones de seres desprovistos de lo mas elemental y rudimentario, para satisfacer las necesidades ordinarias. Y que? Vamos a permanecer indiferentes antes que ante nuestra propia situacion? Hablamos tanto de democracia, de prosperidad para el gran numero hacemos algo a favor de ese gran numero que constituye la fuerza de la nacion? No vamos siquiera a dedicar un momento de nuestra atencion a la gran injusticia social que supone el resultado de una extrema miseria y de un lujo extremo? Fue Henry George el primero que llamo la atencion del mundo sobre este problema. Toda la bendicion de nuestra civilizacion, las enormes conquistas que el mundo ha realizado en el orden cientifico, han tendido solamente a producir la felicidad de unos pocos y la miseria de las grandes muchedumbres. Creo que este problema es digno de atencion en todas partes del mundo, y a menos que nosotros pongamos las medidas que han de atajar los peligros de futuro, nuestra sociedad estara siempre sujeta a las alarmas que puedan producir las muchedumbres hambrientas y deseosas de su propio bienestar."

28 Ibid., pp. 293-294.

29 Ibid., I, Laurel ed., pp. 471-472.

30 70 Phil. 340.

31 Ibid., pp. 356-357.

32 Ibid., p. 360.

33 Holmes, The Common Law, p. 1 (1881).

34 Cardozo, op. cit., p. 47.

35 Art. II, Sec. 5, Constitution.

36 Calalang v. Williams, 70 Phil. 726, 734-735 (1940).

37 Laski, The State in Theory and Practice, p. 35 (1935).

38 Ibid., at p. 36.

United States v. Carolene Products Co., 304 U.S. 144 (1938)

United States v. Carolene Products Co.

No. 640

Argued April 6, 1938

Decided April 25, 1938

304 U.S. 144

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE SOUTHERN DISTRICT OF ILLINOIS

Syllabus

The Filled Milk Act of Congress of Mar. 4, 1923, defines the term Filled Milk as meaning any milk, cream, or skimmed milk, whether or not condensed or dried, etc., to which has been added, or which has been blended or compounded with, any fat or oil other than milk fat, so that the resulting product is in imitation or semblance of milk, cream, or skimmed milk, whether or not condensed, dried, etc.; it declares that Filled Milk, as so defined, "is an adulterated article of food, injurious to the public health, and its sale constitutes a fraud upon the public", and it forbids and penalizes the shipment of such Filled Milk in interstate commerce. Defendant was indicted for shipping interstate certain packages of an article described in the indictment as a compound of condensed skimmed milk and coconut oil made in the imitation or semblance of condensed milk or cream, and further characterized by the indictment in the words of the statute, as "an adulterated article of food, injurious to the public health."

Held:

Page 304 U. S. 145

1. That upon its face, and as supported by judicial knowledge, including facts found in the reports of the congressional committees, the Act is presumptively within the scope of the power to regulate interstate commerce and consistent with due process. Demurrer to the indictment should have been overruled. Hebe Co. v. Shaw,248 U. S. 297. P. 304 U. S. 147.

2. It is no valid objection that the prohibition of the Act does not extend to oleomargarine or other butter substitutes in which vegetable fats or oils replace butter. P.304 U. S. 151.

3. The statutory characterization of filled milk as injurious to health and as a fraud upon the public may, for the purposes of this case, be considered as a declaration of legislative findings deemed to support the Act as a constitutional exertion of the legislative power, aiding informed judicial review by revealing the rationale of the legislation, as do the reports of legislative committees. P. 304 U. S. 152.

7 F.Supp. 500, reversed.

APPEAL under the Criminal Appeals Act from a judgment sustaining a demurrer to an indictment.

MR. JUSTICE STONE delivered the opinion of the Court

The question for decision is whether the "Filled Milk Act" of Congress of March 4, 1923 (c. 262, 42 Stat. 1486, 21 U.S.C. § 61-63), [Footnote 1] which prohibits the shipment in

Page 304 U. S. 146

interstate commerce of skimmed milk compounded with any fat or oil other than milk fat, so as to resemble milk or cream, transcends the power of Congress to regulate interstate commerce or infringes the Fifth Amendment.

Appellee was indicted in the district court for southern Illinois for violation of the Act by the shipment in interstate commerce of certain packages of "Milnut," a compound of condensed skimmed milk and coconut oil made in imitation or semblance of condensed milk or cream. The indictment states, in the words of the statute, that Milnut "is an

adulterated article of food, injurious to the public health," and that it is not a prepared food product of the type excepted from the prohibition of the Act. The trial court sustained a demurrer to the indictment on the authority of an earlier case in the same court, United States v. Carolene Products Co., 7 F.Supp. 500. The case was brought here on appeal under the Criminal Appeals Act of March 2, 1907, 34 Stat. 1246, 18 U.S.C. § 682. The Court of Appeals for the Seventh Circuit has meanwhile, in another case, upheld the Filled Milk Act as an appropriate exercise of the commerce power in Carolene Products Co. v. Evaporated Milk Assn., 93 F. (2d) 202.

Appellee assails the statute as beyond the power of Congress over interstate commerce, and hence an invasion of a field of action said to be reserved to the states by the Tenth Amendment. Appellee also complains that the

Page 304 U. S. 147

statute denies to it equal protection of the laws and, in violation of the Fifth Amendment, deprives it of its property without due process of law, particularly in that the statute purports to make binding and conclusive upon appellee the legislative declaration that appellee's product "is an adulterated article of food injurious to the public health and its sale constitutes a fraud on the public."

First. The power to regulate commerce is the power "to prescribe the rule by which commerce is to be governed," 22 U. S. 196, and extends to the prohibition of shipments in such commerce. Reid v. Colorado, 187 U. S. 137; Lottery Case, 188 U. S. 321; United States v. Delaware & Hudson Co., 213 U. S. 366; Hope v. United States, 227 U. S. 308; Clark Distilling Co. v. Western Maryland R. Co., 242 U. S. 311; United States v. Hill, 248 U. S. 420; McCormick & Co. v. Brown,286 U. S. 131. The power "is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed by the Constitution." Gibbons v. Ogden, supra, 22 U. S. 196. Hence, Congress is free to exclude from interstate commerce articles whose use in the states for which they are destined it may reasonably conceive to be injurious to the public health, morals or welfare, Reid v. Colorado, supra; Lottery Case, supra; Hipolite Egg Co. v. United States, 220 U. S. 45; Hope v. United States, supra, or which contravene the policy of the state of their destination. Kentucky Whip & Collar Co. v. Illinois Central R. Co., 299 U. S. 334. Such regulation is not a forbidden invasion of state power either because its motive or its consequence is to restrict the use of articles of commerce within the states of destination, and is not prohibited unless by the due process clause of the Fifth Amendment. And it is no objection to the exertion of the power to regulate interstate commerce that its exercise is attended by the same incidents which attend the exercise of the police power of the states. Seven Cases v. United States, 239 U. S. 510, 239 U. S. 514; 251 U. S. 156. The prohibition of the shipment of filled milk in interstate commerce is a permissible regulation of commerce, subject only to the restrictions of the Fifth Amendment.

Second. The prohibition of shipment of appellee's product in interstate commerce does not infringe the Fifth Amendment. Twenty years ago, this Court, in Hebe Co. v. Shaw, 248 U. S. 297, held that a state law which forbids the manufacture and sale of a product assumed to be wholesome and nutritive, made of condensed skimmed milk, compounded with coconut oil, is not forbidden by the Fourteenth Amendment. The power of the legislature to secure a minimum of particular nutritive elements in a widely used article of food and to protect the public from fraudulent substitutions was not doubted, and the Court thought that there was ample scope for the legislative judgment that prohibition of the offending article was an appropriate means of preventing injury to the public.

We see no persuasive reason for departing from that ruling here, where the Fifth Amendment is concerned, and since none is suggested, we might rest decision wholly on the presumption of constitutionality. But affirmative evidence also sustains the statute. In twenty years, evidence has steadily accumulated of the danger to the public health from the general consumption of foods which have been stripped of elements essential to the maintenance of health. The Filled Milk Act was adopted by Congress after committee hearings, in the course of which eminent scientists and health experts testified. An extensive investigation was made of the commerce in milk compounds in which vegetable oils have been substituted for natural milk fat, and of the effect upon the public health of the use of such compounds as a food substitute for milk. The conclusions drawn from evidence presented at the hearings were embodied in reports of the

Page 304 U. S. 149

House Committee on Agriculture, H.R. No. 365, 67th Cong., 1st Sess., and the Senate Committee on Agriculture and Forestry, Sen.Rep. No. 987, 67th Cong., 4th Sess. Both committees concluded, as the statute itself declares, that the use of filled milk as a substitute for pure milk is generally injurious to health and facilitates fraud on the public. [Footnote 2]

There is nothing in the Constitution which compels a legislature, either national or state, to ignore such evidence, nor need it disregard the other evidence which amply supports the conclusions of the Congressional committees that the danger is greatly enhanced where an inferior product, like appellee's, is indistinguishable from

Page 304 U. S. 150

a valuable food of almost universal use, thus making fraudulent distribution easy and protection of the consumer difficult. [Footnote 3]

Page 304 U. S. 151

Here, the prohibition of the statute is inoperative unless the product is "in imitation or semblance milk, cream, or skimmed milk, whether or not condensed." Whether in such circumstances the public would be adequately protected by the prohibition of false labels and false branding imposed by the Pure Food and Drugs Act, or whether it was necessary to go farther and prohibit a substitute food product thought to be injurious to health if used as a substitute when the two are not distinguishable, was a matter for the legislative Judgment, and not that of courts. Hebe Co. v. Shaw, supra; South Carolina v. Barnwell Bros. Inc., 303 U. S. 177. It was upon this ground that the prohibition of the sale of oleomargarine made in imitation of butter was held not to infringe the Fourteenth Amendment in Powell v. Pennsylvania, 127 U. S. 678; Capital City Dairy Co. v. Ohio, 183 U. S. 238. Compare McCray v. United States, 195 U. S. 27, 195 U. S. 63; Purity Extract & Tonic Co. v. Lynch, 226 U. S. 192.

Appellee raises no valid objection to the present statute by arguing that its prohibition has not been extended to oleomargarine or other butter substitutes in which vegetable fats or oils are substituted for butter fat. The Fifth Amendment has no equal protection clause, and even that of the Fourteenth, applicable only to the states, does not compel their legislatures to prohibit all like evils, or none. A legislature may hit at an abuse which it has found, even though it has failed to strike at another.Central Lumber Co. v. South Dakota, 226 U. S. 157, 226 U. S. 160; Miller v. Wilson, 236 U. S. 373, 236 U. S. 384; Hall v. Geiger-Jones Co., 242 U. S. 539, 242 U. S. 556; Farmers & Merchants Bank v. Federal Reserve Bank, 262 U. S. 649, 262 U. S. 661.

Page 304 U. S. 152

Third. We may assume for present purposes that no pronouncement of a legislature can forestall attack upon the constitutionality of the prohibition which it enacts by applying opprobrious epithets to the prohibited act, and that a statute would deny due process which precluded the disproof in judicial proceedings of all facts which would show or tend to show that a statute depriving the suitor of life, liberty or property had a rational basis.

But such we think is not the purpose or construction of the statutory characterization of filled milk as injurious to health and as a fraud upon the public. There is no need to consider it here as more than a declaration of the legislative findings deemed to support and justify the action taken as a constitutional exertion of the legislative power, aiding informed judicial review, as do the reports of legislative committees, by revealing the rationale of the legislation. Even in the absence of such aids, the existence of facts supporting the legislative judgment is to be presumed, for regulatory legislation affecting ordinary commercial transactions is not to be pronounced unconstitutional unless, in the light of the facts made known or generally assumed, it is of such a character as to preclude the assumption that it rests upon some rational basis within the knowledge and experience of the legislators. [Footnote 4] @See 294 U. S. 584, and cases cited. The present statutory findings affect appellee n more than the reports of the Congressional committees, and since, in the absence of the statutory findings, they would be presumed, their incorporation in the statute is no more prejudicial than surplusage.

Where the existence of a rational basis for legislation whose constitutionality is attacked depends upon facts beyond the sphere of judicial notice, such facts may properly be male the subject of judicial inquiry, Boren's Farm Products Co. v. Baldwin, 293 U. S. 194, and the constitutionality of a statute predicated upon the existence of a particular state of facts may be challenged by showing to the court that those facts have ceased to exist. Chastleton Corporation v. Sinclair, 264 U. S. 543. Similarly we recognize that the constitutionality of a statute, valid on its face, may be assailed by proof of facts tending to show that the statute as applied to a particular

Page 304 U. S. 154

article is without support in reason because the article, although within the prohibited class, is so different from others of the class as to be without the reason for the prohibition, Railroad Retirement Board v. Alton R. Co., 295 U. S. 330, 295 U. S. 349, 295 U. S. 351, 295 U. S. 352; see Whitney v. California, 274 U. S. 357, 274 U. S. 379; cf. Morf v. Bingaman, 298 U. S. 407, 298 U. S. 413, though the effect of such proof depends on the relevant circumstances of each case, as, for example, the administrative difficulty of excluding the article from the regulated class. Carmichael v. Southern Coal & Coke Co., 301 U. S. 495, 301 U. S. 511-512; South Carolina v. Barnwell Bros., 303 U. S. 177, 303 U. S. 192-193. But, by their very nature, such inquiries, where the legislative judgment is drawn in question, must be restricted to the issue whether any state of facts either known or which could reasonably be assumed affords support for it. Here, the demurrer challenges the validity of the statute on its face, and it is evident from all the considerations presented to Congress, and those of which we may take judicial notice, that the question is at least debatable whether commerce in filled milk should be left unregulated, or in some measure restricted, or wholly prohibited. As that decision was for Congress, neither the finding of a court arrived at by weighing the evidence nor the verdict of a jury can be substituted for it. Price v. Illinois, 238 U. S. 446,238 U. S. 452; Hebe Co. v. Shaw, supra, 248 U. S. 303; Standard Oil Co. v. Marysville, 279 U. S. 582, 279 U. S. 584; South Carolina v. Barnwell Bros., Inc., supra, 303 U. S. 191, citing Worcester County Trust Co. v. Riley, 302 U. S. 292, 302 U. S. 299.

The prohibition of shipment in interstate commerce of appellee's product, as described in the indictment, is a constitutional exercise of the power to regulate interstate commerce. As the statute is not unconstitutional on its face the demurrer should have been overruled, and the judgment will be

Reversed.

Page 304 U. S. 155

MR. JUSTICE BLACK concurs in the result and in all of the opinion except the part marked "Third."

MR. JUSTICE McREYNOLDS thinks that the judgment should be affirmed.

MR. JUSTICE CARDOZO and MR. JUSTICE REED took no part in the consideration or decision of this case.

[Footnote 1]

The relevant portions of the statute are as follows:

"Section 61. . . . (c) The term 'filled milk' means any milk cream, or skimmed milk, whether or not condensed, evaporated, concentrated, powdered, dried, or desiccated, to which has been added, or which has been blended or compounded with, any fat or oil other than milk fat, so that the resulting product is in imitation or semblance of milk, cream, or skimmed milk, whether or not condensed, evaporated, concentrated, powdered, dried, or desiccated."

"Section 62. . . . It is hereby declared that filled milk, as herein defined, is an adulterated article of food, injurious to the public health, and its sale constitutes a fraud upon the public. It shall be unlawful for any person to . . . ship or deliver for shipment in interstate or foreign commerce, any filled milk."

Section 63 imposes as penalties for violations "a fine of not more than $1,000 or imprisonment of not more than one year, or both . . ."

[Footnote 2]

The reports may be summarized as follows: there is an extensive commerce in milk compounds made of condensed milk from which the butter fat has been extracted and an equivalent amount of vegetable oil, usually coconut oil, substituted. These compounds resemble milk in taste and appearance, and are distributed in packages resembling those in which pure condensed milk is distributed. By reason of the extraction of the natural milk fat, the compounded product can be manufactured and sold at a lower cost than pure milk. Butter fat, which constitutes an important part of the food value

of pure milk, is rich in vitamins, food elements which are essential to proper nutrition and are wanting in vegetable oils. The use of filled milk as a dietary substitute for pure milk results, especially in the case of children, in undernourishment, and induces diseases which attend malnutrition. Despite compliance with the branding and labeling requirements of the Pure Food and Drugs Act, there is widespread use of filled milk as a food substitute for pure milk. This is aided by their identical taste and appearance, by the similarity of the containers in which they are sold, by the practice of dealers in offering the inferior product to customers as being as good as or better than pure condensed milk sold at a higher price, by customers' ignorance of the respective food values of the two products, and, in many sections of the country, by their inability to read the labels placed on the containers. Large amounts of filled milk, much of it shipped and sold in bulk, are purchased by hotels and boarding houses, and by manufacturers of food products, such as ice cream, to whose customers labeling restrictions afford no protection.

[Footnote 3]

There is now an extensive literature indicating wide recognition by scientists and dietitians of the great importance to the public health of butter fat and whole milk as the prime source of vitamins, which are essential growth producing and disease preventing elements in the diet. See Dr. Henry C. Sherman, The Meaning of Vitamin A, in Science, Dec. 21, 1928, p. 619; Dr. E. V. McCollum et al., The Newer Knowledge of Nutrition (1929 ed.), pp. 134, 170, 176, 177; Dr. A. S. Root, Food Vitamins (N.Car. State Board of Health, May 1931), p. 2; Dr. Henry C. Sherman, Chemistry of Food and Nutrition (1932), p. 367; Dr. Mary S. Rose, The Foundations of Nutrition (1933), p. 237.

When the Filled Milk Act was passed, eleven states had rigidly controlled the exploitation of filled milk, or forbidden it altogether. H.R. 365, 67th Cong., 1st Sess. Some thirty-five states have now adopted laws which, in terms or by their operation, prohibit the sale of filled milk. Ala.Agri.Code, 1927, § 51, Art. 8; Ariz.Rev.Code, 1936 Supp., § 943y; Pope's Ark.Dig.1937, § 3103; Deering's Cal.Code, 1933 Supp., Tit. 149, Act 1943, p. 1302; Conn.Gen.Stat., 1930, § 2487, c. 135; Del.Rev.Code, 1935, § 649; Fla.Comp.Gen.Laws, 1927, §§ 3216, 7676; Ga.Code, 1933, § 42-511; Idaho Code, 1932, Tit. 36, §§ 502-504; Jones Ill.Stat.Ann., 1937 Supp., § 53.020(1), (2), (3); Burns Ind.Stat., 1933, § 35-1203; Iowa Code, 1935, § 3062; Kan.Gen.Stat., 1935, c. 65, § 707; Md.Ann.Code, Art. 27, § 281; Mass.Ann.Laws, 1933, § 17-A, c. 94; Mich.Comp.Laws, 1929, § 5358; Mason's Minn.Stat., 1927, § 3926; Mo.Rev.Stat., 1929, §§ 12408-12413; Mont.Rev.Code, Anderson and McFarland, 1935, c. 240, § 2620.39; Neb.Comp.Stat., 1929, § 81-1022; N.H.Pub.L.1926 v. 1, c. 163, § 37, p. 619; N.J.Comp.Stat., 1911-1924, § 8l-8j, p. 1400; Cahill's N.Y.Cons.Laws, 1930, § 60, c. 1; N.D. Comp.Laws, 1913-1925, Pol.Code, c. 38, § 2855(a) 1; Page's Ohio Gen.Code, § 12725; Purdon's Penna.Stat., 1936, Tit. 31, §§ 553, 582; S.D.Comp.Laws, 1929, c.192, § 7926-O, p. 2493; Williams Tenn.Code, 1934, c. 15, §§ 6549, 6551; Vernon's Tex.Pen.Code, Tit. 12, c. 2, Art. 713a; Utah Rev.Stat., 1933, §§ 3-10-59, 3-10-60; Vt.Pub.L., 1933, Tit. 34, c. 303, § 7724, p. 1288; Va.1936 Code, § 1197c; W.Va.1932 Code, § 2036; Wis.Stat., 11th ed.1931, c. 98, § 98.07, p. 1156; cf. N.Mex.Ann.Stat., 1929, §§ 25-104, 25-108. Three others have subjected its sale to rigid regulations. Colo.L.1921, c. 30, § 1007, p. 440; Ore.1930 Code v. 2, c. XII, §§ 41-1208 to 41-1210; Remington's Wash.Rev.Stat. v. 7, Tit. 40, c. 13, §§ 6206, 6207, 6713, 6714, p. 360, et seq.

[Footnote 4]

There may be narrower scope for operation of the presumption of constitutionality when legislation appears on its face to be within a specific prohibition of the Constitution, such as those of the first ten amendments, which are deemed equally specific when held to be embraced within the Fourteenth. See Stromberg v. California, 283 U. S. 359, 283 U. S. 369-370; Lovell v. Griffin, 303 U. S. 444, 303 U. S. 452.

It is unnecessary to consider now whether legislation which restricts those political processes which can ordinarily be expected to bring about repeal of undesirable legislation is to be subjected to more exacting judicial scrutiny under the general prohibitions of the Fourteenth Amendment than are most other types of legislation. On restrictions upon the right to vote, see Nixon v. Herndon, 273 U. S. 536; Nixon v. Condon, 286 U. S. 73; on restraints upon the dissemination of information,see Near v. Minnesota ex rel. Olson, 283 U. S. 697, 283 U. S. 713-714, 283 U. S. 718-720, 283 U. S. 722; Grosjean v. American Press Co., 297 U. S. 233;Lovell v. Griffin, supra; on interferences with political organizations, see Stromberg v. California, supra, 283 U. S. 369; Fiske v. Kansas, 274 U. S. 380;Whitney v. California, 274 U. S. 357, 274 U. S. 373-378; Herndon v. Lowry, 301 U. S. 242, and see Holmes, J., in Gitlow v. New York, 268 U. S. 652, 268 U. S. 673; as to prohibition of peaceable assembly, see De Jonge v. Oregon, 299 U. S. 353, 299 U. S. 365.

Nor need we enquire whether similar considerations enter into the review of statutes directed at particular religious, Pierce v. Society of Sisters, 268 U. S. 510, or national, Meyer v. Nebraska, 262 U. S. 390; Bartels v. Iowa, 262 U. S. 404; Farrington v. Tokushige, 273 U. S. 284, or racial minorities, Nixon v. Herndon, supra; Nixon v. Condon, supra: whether prejudice against discrete and insular minorities may be a special condition, which tends seriously to curtail the operation of those political processes ordinarily to be relied upon to protect minorities, and which may call for a correspondingly more searching judicial inquiry. Compare 17 U. S. 428; South Carolina v. Barnwell Bros.,@ 303 U. S. 177, 303 U. S. 184, n 2, and cases cited.

MR. JUSTICE BUTLER.

I concur in the result. Prima facie, the facts alleged in the indictment are sufficient to constitute a violation of the statute. But they are not sufficient conclusively to establish guilt of the accused. At the trial, it may introduce evidence to show that the declaration of the Act that the described product is injurious to public health and that the sale of it is a fraud upon the public are without any substantial foundation. Mobile, J. & K.C. R. Co. v. Turnipseed, 219 U. S. 35, 219 U. S. 43. Manley v. Georgia, 279 U. S. 1, 279 U. S. 6. The provisions on which the indictment rests should, if possible, be construed to avoid the serious question of constitutionality.Federal Trade Comm'n v. American Tobacco Co., 264 U. S. 298, 264 U. S. 307. Panama R. Co. v. Johnson, 264 U. S. 375, 264 U. S. 390. Missouri Pacific R. Co. v. Boone, 270 U. S. 466, 270 U. S. 472. Richmond Co. v. United States, 275 U. S. 331, 275 U. S. 346. If construed to exclude from interstate commerce wholesome food products that demonstrably are neither injurious to health nor calculated to deceive, they are repugnant to the Fifth Amendment. Weaver v. Palmer Bros. Co., 270 U. S. 402, 270 U. S. 412-13. See People v. Carolene Products Co., 345 Ill. 166. Carolene Products Co. v. McLaughlin, 365 Ill. 62, 5 N.E.2d 447. Carolene Products Co. v. Thomson, 276 Mich. 172, 267 N.W. 608. Carolene Products Co. v. Banning, 131 Neb. 429, 268 N.W. 313. The allegation of the indictment that Milnut "is an adulterated article of food, injurious to the public health," tenders an issue of fact to be determined upon evidence.