Annotation 30 - Article I

  Congressional Regulation of Commerce as Traffic

  The Sherman Act: Sugar Trust Case .--Congress' chief effort to regulate commerce in the primary sense of ''traffic'' is embodied in the Sherman Antitrust Act of 1890, the opening section of which declares ''every contract, combination in the form of trust or otherwise,'' or ''conspiracy in restraint of trade and commerce among the several States, or with foreign nations'' to be ''illegal,'' while the second section makes it a misdemeanor for anybody to ''monopolize or attempt to monopolize any part of such commerce.'' 698 The act was passed to curb the growing tendency to form industrial combinations and the first case to reach the Court under it was the famous Sugar Trust Case, United States v. E. C. Knight Co. 699 Here the Government asked for the cancellation of certain agreements, whereby the American Sugar Refining Company, had ''acquired,'' it was conceded, ''nearly complete control of the manufacture of refined sugar in the United States.''

The question of the validity of the Act was not expressly discussed by the Court but was subordinated to that of its proper construction. The Court, in pursuance of doctrines of constitutional law then dominant with it, turned the Act from its intended purpose and destroyed its effectiveness for several years, as that of the Interstate Commerce Act was being contemporaneously impaired. The following passage early in Chief Justice Fuller's opinion for the Court, sets forth the conception of the federal system that controlled the decision: ''It is vital that the independence of the commercial power and of the police power, and the delimination 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 ap pear 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.'' 700  

In short, what was needed, the Court felt, was a hard and fast line between the two spheres of power, and in a series of propositions it endeavored to lay down such a line: (1) production is always local, and under the exclusive domain of the States; (2) commerce among the States does not begin until goods ''commence their final movement from their State of origin to that of their destination;'' (3) the sale of a product is merely an incident of its production and, while capable of ''bringing the operation of commerce into play,'' affects it only incidentally; (4) such restraint as would reach commerce, as above defined, in consequence of combinations to control production ''in all its forms,'' would be ''indirect, however inevitable and whatever its extent,'' and as such beyond the purview of the Act. 701 Applying the above reasoning to the case before it, the Court proceeded: ''The object [of the combination] was manifestly private gain in the manufacture of the commodity, but not through the control of interstate or foreign commerce. It is true that the bill alleged that the products of these refineries were sold and distributed among the several States, and that all the companies were engaged in trade or commerce with the several States and with foreign nations; but this was no more than to say that trade and commerce served manufacture to fulfill its function.

''Sugar was refined for sale, and sales were probably made at Philadelphia for consumption, and undoubtedly for resale by the first purchasers throughout Pennsylvania and other States, and refined sugar was also forwarded by the companies to other States for sale. Nevertheless it does not follow that an attempt to monopolize, or the actual monopoly of, the manufacture was an attempt, whether executory or consummated, to monopolize commerce, even though, in order to dispose of the product, the instrumentality of commerce was necessarily invoked. There was nothing in the proofs to indicate any intention to put a restraint upon trade or commerce, and the fact, as we have seen that trade or commerce might be indirectly affected was not enough to entitle complainants to a decree.'' 702  

  Sherman Act Revived .--Four years later came the case of Addyston Pipe and Steel Co. v. United States, 703 in which the Antitrust Act was successfully applied as against an industrial combination for the first time. The agreements in the case, the parties to which were manufacturing concerns, effected a division of territory among them, and so involved, it was held, a ''direct'' restraint on the distribution and hence of the transportation of the products of the contracting firms. The holding, however, did not question the doctrine of the earlier case, which in fact continued substantially undisturbed until 1905, when Swift and Co. v. United States, 704 was decided.

  The ''Current of Commerce'' Concept: The Swift Case .--Defendants in Swift were some thirty firms engaged in Chicago and other cities in the business of buying livestock in their stockyards, in converting it at their packing houses into fresh meat, and in the sale and shipment of such fresh meat to purchasers in other States. The charge against them was that they had entered into a combination to refrain from bidding against each other in the local markets, to fix the prices at which they would sell, to restrict shipments of meat, and to do other forbidden acts. The case was appealed to the Supreme Court on defendants' contention that certain of the acts complained of were not acts of interstate commerce and so did not fall within a valid reading of the Sherman Act. The Court, however, sustained the Government on the ground that the ''scheme as a whole'' came within the act, and that the local activities alleged were simply part and parcel of this general scheme. 705  

Referring to the purchase of livestock at the stockyards, the Court, speaking by Justice Holmes, said: ''Commerce among the States is not a technical legal conception, but a practical one, drawn from the course of business. When cattle are sent for sale from a place in one State, with the expectation that they will end their transit, after purchase, in another, and when in effect they do so, with only the interruption necessary to find a purchaser at the stockyards, and when this is a typical, constantly recurring course, the current thus existing is a current of commerce among the States, and the purchase of the cattle is a part and incident of such commerce.'' 706 Likewise the sales alleged of fresh meat at the slaughtering places fell within the general design. Even if they imported a technical passing of title at the slaughtering places, they also imported that the sales were to persons in other States, and that shipments to such States were part of the transaction. 707 Thus, sales of the type that in the Sugar Trust case were thrust to one side as immaterial from the point of view of the law, because they enabled the manufacturer ''to fulfill its function,'' were here treated as merged in an interstate commerce stream.

Thus, the concept of commerce as trade, that is, as traffic, again entered the constitutional law picture, with the result that conditions directly affecting interstate trade could not be dismissed on the ground that they affected interstate commerce, in the sense of interstate transportation, only ''indirectly.'' Lastly, the Court added these significant words: ''But we do not mean to imply that the rule which marks the point at which State taxation or regulation becomes permissible necessarily is beyond the scope of interference by Congress in cases where such interference is deemed necessary for the protection of commerce among the States.'' 708 That is to say, the line that confines state power from one side does not always confine national power from the other. Even though the line accurately divides the subject matter of the complementary spheres, national power is always entitled to take on the additional extension that is requisite to guarantee its effective exercise and is furthermore supreme.

  The Danbury Hatters Case .--In this respect, the Swift case only states what the Shreveport case was later to declare more explicitly, and the same may be said of an ensuing series of cases in which combinations of employees engaged in such intrastate activities as manufacturing, mining, building, construction, and the distribution of poultry were subjected to the penalties of the Sherman Act because of the effect or intended effect of their activities on interstate commerce. 709  

  Stockyards and Grain Futures Acts .--In 1921, Congress passed the Packers and Stockyards Act 710 whereby the business of commission men and livestock dealers in the chief stockyards of the country was brought under national supervision, and in the year following it passed the Grain Futures Act 711 whereby exchanges dealing in grain futures were subjected to control. The decisions of the Court sustaining these measures both built directly upon the Swift case.

In Stafford v. Wallace, 712 which involved the former act, Chief Justice Taft, speaking for the Court, said: ''The object to be secured by the act is the free and unburdened flow of livestock from the ranges and farms of the West and Southwest through the great stockyards and slaughtering centers on the borders of that region, and thence in the form of meat products to the consuming cities of the country in the Middle West and East, or, still as livestock, to the feeding places and fattening farms in the Middle West or East for further preparation for the market.'' 713 The stockyards, therefore, were ''not a place of rest or final destination.'' They were ''but a throat through which the current flows,'' and the sales there were not merely local transactions. ''They do not stop the flow;--but, on the contrary'' are ''indispensable to its continuity.'' 714  

In Chicago Board of Trade v. Olsen, 715 involving the Grain Futures Act, the same course of reasoning was repeated. Speaking of the Swift case, Chief Justice Taft remarked: ''That case was a milestone in the interpretation of the commerce clause of the Constitution. It recognized the great changes and development in the business of this vast country and drew again the dividing line between interstate and intrastate commerce where the Constitution in tended it to be. It refused to permit local incidents of a great interstate movement, which taken alone are intrastate, to characterize the movement as such.'' 716  

Of special significance, however, is the part of the opinion devoted to showing the relation between future sales and cash sales, and hence the effect of the former upon the interstate grain trade. The test, said the Chief Justice, was furnished by the question of price. ''The question of price dominates trade between the States. Sales of an article which affect the country-wide price of the article directly affect the country-wide commerce in it.'' 717 Thus a practice which demonstrably affects prices would also affect interstate trade ''directly,'' and so, even though local in itself, would fall within the regulatory power of Congress. In the following passage, indeed, Chief Justice Taft whittled down, in both cases, the ''direct-indirect'' formula to the vanishing point: ''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 to meet it. This court will certainly not substitute its judgment for that of Congress in such a matter unless the relation of the subject to interstate commerce and its effect upon it are clearly nonexistent.'' 718  

It was in reliance on the doctrine of these cases that Congress first set to work to combat the Depression in 1933 and the years immediately following. But in fact, much of its legislation at this time marked a wide advance upon the measures just passed in review. They did not stop with regulating traffic among the States and the instrumentalities thereof; they also essayed to govern production and industrial relations in the field of production. Confronted with this expansive exercise of Congress' power, the Court again deemed itself called upon to define a limit to the commerce power that would save to the States their historical sphere, and especially their customary monopoly of legislative power in relation to industry and labor management.

  Securities and Exchange Commission .--Not all antidepression legislation, however, was of this new approach. The Securities Exchange Act of 1934 719 and the Public Utility Company Act (''Wheeler-Rayburn Act'') of 1935 720 were not. The former cre ated the Securities and Exchange Commission and authorized it to lay down regulations designed to keep dealing in securities honest and aboveboard and closed the channels of interstate commerce and the mails to dealers refusing to register under the act. The latter required the companies governed by it to register with the Securities and Exchange Commission and to inform it concerning their business, organization and financial structure, all on pain of being prohibited use of the facilities of interstate commerce and the mails; while by Sec. 11, the so-called ''death sentence'' clause, the same act closed after a certain date the channels of interstate communication to certain types of public utility companies whose operations, Congress found, were calculated chiefly to exploit the investing and consuming public. All these provisions have been sustained, 721 Gibbons v. Ogden furnishing the Court its principle reliance.

  Congressional Regulation of Production and Industrial Relations: Antidepression Legislation

In the words of Chief Justice Hughes, spoken in a case decided a few days after President Franklin D. Roosevelt's first inauguration, the problem then confronting the new Administration was clearly set forth. ''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.'' 722  

  National Industrial Recovery Act .--The initial effort of Congress to deal with this situation was embodied in the National Industrial Recovery Act of June 16, 1933. 723 The opening section of the Act asserted the existence of ''a national emergency productive of widespread unemployment and disorganization of industry which'' burdened ''interstate and foreign commerce,'' affected ''the public welfare,'' and undermined ''the standards of living of the American people.'' To affect the removal of these conditions the President was authorized, upon the application of industrial or trade groups, to approve ''codes of fair competition,'' or to prescribe the same in cases where such applications were not duly forthcoming. Among other things such codes, of which eventually more than 700 were promulgated, were required to lay down rules of fair dealing with customers and to furnish labor certain guarantees respect ing hours, wages and collective bargaining. For the time being, business and industry were to be cartelized on a national scale.

In A.L.A. Schechter Poultry Corp. v. United States, 724 one of these codes, the Live Poultry Code, was pronounced unconstitutional. Although it was conceded that practically all poultry handled by the Schechters came from outside the State, and hence via interstate commerce, the Court held, nevertheless, that once the chickens came to rest in the Schechter's wholesale market, interstate commerce in them ceased. The act, however, also purported to govern business activities which ''affected'' interstate commerce. This, Chief Justice Hughes held, must be taken to mean ''directly'' affect such commerce: ''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, . . . there would be virtually no limit to the federal power and for all practical purposes we should have a completely centralized government.'' 725 In short, the case was governed by the ideology of the Sugar Trust case, which was not mentioned in the Court's opinion. 726  

  Agricultural Adjustment Act .--Congress' second attempt to combat the Depression comprised the Agricultural Adjustment Act of 1933. 727 As is pointed out elsewhere, the measure was set aside as an attempt to regulate production, a subject held to be ''prohibited'' to the United States by the Tenth Amendment. 728  

  Bituminous Coal Conservation Act .--The third measure to be disallowed was the Guffey-Snyder Bituminous Coal Conserva tion Act of 1935. 729 The statute created machinery for the regulation of the price of soft coal, both that sold in interstate commerce and that sold ''locally,'' and other machinery for the regulation of hours of labor and wages in the mines. The clauses of the act dealing with these two different matters were declared by the act itself to be separable so that the invalidity of the one set would not affect the validity of the other, but this strategy was ineffectual. A majority of the Court, speaking by Justice Sutherland, held that the act constituted one connected scheme of regulation, which, inasmuch as it invaded the reserved powers of the States over conditions of employment in productive industry, was violative of the Constitution. 730 Justice Sutherland's opinion set out from Chief Justice Hughes' assertion in the Schechter case of the ''fundamental'' character of the distinction between ''direct'' and ''indirect'' effects, that is to say, from the doctrine of the Sugar Trust case. It then proceeded: ''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 . . . 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. The 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 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.'' 731  

  Railroad Retirement Act .--Still pursuing the idea of protecting commerce and the labor engaged in it concurrently, Congress, by the Railroad Retirement Act of June 27, 1934, 732 ordered the compulsory retirement of superannuated employees of interstate carriers, and provided that they be paid pensions out of a fund comprising compulsory contributions from the carriers and their present and future employees. In Railroad Retirement Board v. Alton R. Co., 733 however, a closely divided Court held this legislation to be in excess of Congress' power to regulate commerce and contrary to the due process clause of the Fifth Amendment. Said Justice Roberts for the majority: ''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.'' 734  

Chief Justice Hughes, speaking for the dissenters, contended, on the contrary, that ''the morale of the employees [had] an important bearing upon the efficiency of the transportation service.'' He added: ''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.'' 735 Under subsequent legislation, an excise is levied on interstate carriers and their employees, while by separate but parallel legislation a fund is created in the Treasury out of which pensions are paid along the lines of the original plan. The constitutionality of this scheme appears to be taken for granted in Railroad Retirement Board v. Duquesne Warehouse Co. 736  

  National Labor Relations Act .--The case in which the Court reduced the distinction between ''direct'' and ''indirect'' effects to the vanishing point and thereby placed Congress in the position to regulate productive industry and labor relations in these industries was NLRB v. Jones & Laughlin Steel Corp. 737 Here the statute involved was the National Labor Relations Act of 1935, 738 which declared the right of workers to organize, forbade unlawful employer interference with this right, established procedures by which workers could choose exclusive bargaining representatives with which employers were required to bargain, and created a board to oversee all these processes. 739  

The Court, speaking through Chief Justice Hughes, upheld the Act and found the corporation to be subject to the Act. ''The close and intimate effect,'' he said, ''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.'' Nor will it do to say that such effect is ''indirect.'' Considering defendant's ''far-flung activities,'' the effect of strife between it and its employees ''would be immediate and [it] 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 ef fects in an intellectual vacuum. . . . 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 conception. It is equally true that interferences with that commerce must be appraised by a judgment that does not ignore actual experience.'' 740  

While the Act was thus held to be within the constitutional powers of Congress in relation to a productive concern because the interruption of its business by strike ''might be catastrophic,'' the decision was forthwith held to apply also to two minor concerns, 741 and in a later case the Court stated specifically that the smallness of the volume of commerce affected in any particular case is not a material consideration. 742 Subsequently, the act was declared to be applicable to a local retail auto dealer on the ground that he was an integral part of the manufacturer's national distribution system, 743 to a labor dispute arising during alteration of a county courthouse because one- half of the cost--$225,000--was attributable to materials shipped from out-of-State, 744 and to a dispute involving a retail distributor of fuel oil, all of whose sales were local, but who obtained the oil from a wholesaler who imported it from another State. 745  

Indeed, ''[t]his Court has consistently declared that in passing the National Labor Relations Act, Congress intended to and did vest in the Board the fullest jurisdictional breadth constitutionally permissible under the Commerce Clause.'' 746 Thus, the Board has formulated jurisdictional standards which assume the requisite effect on interstate commerce from a prescribed dollar volume of business and these standards have been implicitly approved by the Court. 747  

  Fair Labor Standards Act .--In 1938, Congress enacted the Fair Labor Standards Act. The measure prohibited not only the shipment in interstate commerce of goods manufactured by employees whose wages are less than the prescribed maximum but also the employment of workmen in the production of goods for such commerce at other than the prescribed wages and hours. Interstate commerce was defined by the act to mean ''trade, commerce, transportation, transmission, or communication among the several States or from any State to any place outside thereof.''

It was further provided that ''for the purposes of this act an employee shall be deemed to have been engaged in the production of goods [that is, for interstate commerce] if such employee was employed . . . in any process or occupation directly essential to the production thereof in any State.'' 748 Sustaining an indictment under the act, a unanimous Court, speaking through Chief Justice Stone, said: ''The motive and purpose of the present regulation are plainly to make effective the congressional conception of public policy that interstate commerce should not be made the instrument of competition in the distribution of goods produced under substandard labor conditions, which competition is injurious to the commerce and to the States from and to which the commerce flows.'' 749 In support of the decision the Court invoked Chief Justice Marshall's reading of the necessary-and-proper clause in McCulloch v. Maryland and his reading of the commerce clause in Gibbons v. Ogden. 750 Objections purporting to be based on the Tenth Amendment were met from the same point of view: ''Our conclusion is unaffected by the Tenth Amendment which provides: '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 amendment states but a truism that all is retained which has not been surrendered. There is nothing in the history of its adoption to suggest that it was more than declaratory of the relationship between the national and State governments as it had been established by the Constitution before the amendment or that its purpose was other than to allay fears that the new National Government might seek to exercise powers not granted, and that the States might not be able to exercise fully their reserved powers.'' 751  

Subsequent decisions of the Court took a very broad view of which employees should be covered by the Act, 752 and in 1949 Congress to some degree narrowed the permissible range of coverage and disapproved some of the Court's decisions. 753 But in 1961, 754 with extensions in 1966, 755 Congress itself expanded by several million persons the coverage of the Act, introducing the ''enterprise'' concept by which all employees in a business producing anything in commerce or affecting commerce were brought within the protection of the minimum wage-maximum hours standards. 756 The ''enterprise concept'' was sustained by the Court in Maryland v. Wirtz. 757 Justice Harlan, for a unanimous Court on this issue, found the extension entirely proper on the basis of two theories: one, a business' competitive position in commerce is determined in part by all its significant labor costs, and not just those costs attributable to its employees engaged in production in interstate commerce, and, two, labor peace and thus smooth functioning of interstate commerce was facilitated by the termination of substandard labor conditions affecting all employees and not just those actually engaged in interstate commerce. 758  

  Agricultural Marketing Agreement Act .--After its initial frustrations, Congress returned to the task of bolstering agriculture by passing the Agricultural Marketing Agreement Act of June 3, 1937, 759 authorizing the Secretary of Agriculture to fix the minimum prices of certain agricultural products, when the handling of such products occurs ''in the current of interstate or foreign commerce or . . . directly burdens, obstructs or affects interstate or foreign commerce in such commodity or product thereof.'' In United States v. Wrightwood Dairy Co., 760 the Court sustained an order of the Secretary of Agriculture fixing the minimum prices to be paid to producers of milk in the Chicago ''marketing area.'' The dairy company demurred to the regulation on the ground it applied to milk produced and sold intrastate. Sustaining the order, the Court said: ''Congress plainly has power to regulate the price of milk distributed through the medium of interstate commerce . . . and it possesses every power needed to make that regulation effective. The commerce power is not confined in its exercise to the regulation of commerce among the States. It extends to those activities intrastate which so affect interstate commerce, or the exertion of the power of Congress over it, as to make regulation of them appropriate means to the attainment of a legitimate end, the effective execution of the granted power to regulate interstate commerce. The power of Congress over interstate commerce is plenary and complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution. . . . It follows that no form of State activity can constitutionally thwart the regulatory power granted by the commerce clause to Congress. Hence the reach of that power extends to those intrastate activities which in a substantial way interfere with or obstruct the exercise of the granted power.'' 761  

In Wickard v. Filburn, 762 a still deeper penetration by Congress into the field of production was sustained. As amended by the act of 1941, the Agricultural Adjustment Act of 1938, 763 regulated production even when not intended for commerce but wholly for consumption on the producer's farm. Sustaining this extension of the act, the Court pointed out that the effect of the statute was to support the market. ''It can hardly be denied that a factor of such volume and variability as home-consumed wheat would have a substantial influence on price and market conditions. This may arise because being in marketable condition such wheat overhangs the market and, if induced by rising prices, tends to flow into the market and check price increases. But if we assume that it is never marketed, it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market. Home-grown wheat in this sense competes with wheat in commerce. The stimulation of commerce is a use of the regulatory function quite as definitely as prohibitions or restrictions thereon. This record leaves us in no doubt that Congress may properly have considered that wheat consumed on the farm grown, if wholly outside the scheme of regulation, would have a substantial effect in defeating and obstructing its purpose to stimulate trade therein at increased prices.'' 764 And it elsewhere stated: ''Questions of the power of Congress are not to be decided by reference to any formula which would give controlling force to nomenclature such as 'production' and 'indirect' and foreclose consideration of the actual effects of the activity in question upon interstate commerce. . . . The Court's recognition of the relevance of the economic effects in the application of the Commerce Clause . . . has made the mechanical application of legal formulas no longer feasible.'' 765  

Footnotes

[Footnote 698] 26 Stat. 209 (1890); 15 U.S.C. Sec. Sec. 1-7.

[Footnote 699]   156 U.S. 1 (1895).

[Footnote 700] Id., 13.

[Footnote 701] Id., 13-16.

[Footnote 702] Id., 17. The doctrine of the case boiled down to the proposition that commerce was transportation only, a doctrine that Justice Harlan undertook to refute in his notable dissenting opinion. ''Interstate commerce does not, therefore, consist in transportation simply. It includes the purchase and sale of articles that are intended to be transported from one State to another--every species of commercial intercourse among the States and with foreign nations'' Id., 22. ''Any combination, therefore, that disturbs or unreasonably obstructs freedom in buying and selling articles manufactured to be sold to persons in other States or to be carried to other States--a freedom that cannot exist if the right to buy and sell is fettered by unlawful restraints that crush out competition--affects, not incidentally, but directly, the people of all the States; and the remedy for such an evil is found only in the exercise of powers confided to a government which, this court has said, was the government of all, exercising powers delegated by all, representing all, acting for all. McCulloch v. Maryland, 4 Wheat. 316, 405,'' Id., 33.

[Footnote 703]   175 U.S. 211 (1899).

[Footnote 704]   196 U.S. 375 (1905). The Sherman Act was applied to break up combinations of interstate carriers in United States v. Trans- Missouri Freight Assn., 166 U.S. 290 (1897); United States v. Joint- Traffic Association, 171 U.S. 505 (1898); and Northern Securities Co. v. United States, 193 U.S. 197 (1904).

[Footnote 705] Swift and Co. v. United States, 196 U.S. 375, 396 (1905).

[Footnote 706] Id., 398-399.

[Footnote 707] Id., 399-401.

[Footnote 708] Id., 400.

[Footnote 709] Loewe v. Lawlor (The Danbury Hatters Case), 208 U.S. 274 (1908); Duplex Printing Press Co. v. Deering, 254 U.S. 443 (1921); Coronado Co. v. United Mine Workers, 268 U.S. 295 (1925); United States v. Bruins, 272 U.S. 549 (1926); Bedford Co. v. Stone Cutters Assn., 274 U.S. 37 (1927); Local 167 v. United States, 291 U.S. 293 (1934); Allen Bradley Co. v. Union, 325 U.S. 797 (1945); United States v. Employing Plasterers Assn., 347 U.S. 186 (1954); United States v. Green, 350 U.S. 415 (1956); Callanan v. United States, 364 U.S. 587 (1961).

[Footnote 710] 42 Stat. 159, 7 U.S.C. Sec. Sec. 171-183, 191-195, 201-203.

[Footnote 711] 42 Stat. 998 (1922), 7 U.S.C. Sec. Sec. 1-9, 10a-17.

[Footnote 712]   258 U.S. 495 (1922).

[Footnote 713] Id., 514.

[Footnote 714] Id., 515-516. See also Lemke v. Farmers' Grain Co., 258 U.S. 50 (1922); Minnesota v. Blasius, 290 U.S. 1 (1933).

[Footnote 715]   262 U.S. 1 (1923).

[Footnote 716] Id., 35.

[Footnote 717] Id., 40.

[Footnote 718] Id., 37, quoting Stafford v. Wallace, 258 U.S. 495, 521 (1922).

[Footnote 719] 48 Stat. 881, 15 U.S.C. Sec. 77b et seq.

[Footnote 720] 49 Stat. 803, 15 U.S.C. Sec. Sec. 79-79z-6.

[Footnote 721] Electric Bond Co. v. SEC, 303 U.S. 419 (1938); North American Co. v. SEC, 327 U.S. 686 (1946); American Power Co., v. SEC, 329 U.S. 90 (1946).

[Footnote 722] Appalachian Coals v. United States, 288 U.S. 344, 372 (1933).

[Footnote 723] 48 Stat. 195.

[Footnote 724]   295 U.S. 495 (1935).

[Footnote 725] Id., 548. See also id., 546.

[Footnote 726] In United States v. Sullivan, 332 U.S. 689 (1948), the Court interpreted the Federal Food, Drug, and Cosmetics Act of 1938 as applying to the sale by a retailer of drugs purchased from his wholesaler within the State nine months after their interstate shipment had been completed. The Court, speaking by Justice Black, cited United States v. Walsh, 331 U.S. 432 (1947); Wickard v. Filburn, 317 U.S. 111 (1942); United States v. Wrightwood Dairy Co., 315 U.S. 110 (1942); United States v. Darby, 312 U.S. 100 (1941). Justice Frankfurter dissented on the basis of FTC v. Bunte Bros., 312 U.S. 349 (1941). It is apparent that the Schechter case has been thoroughly repudiated so far as the distinction between ''direct'' and ''indirect'' effects is concerned. Cf. Perez v. United States, 402 U.S. 146 (1971). See also McDermott v. Wisconsin, 228 U.S. 115 (1913), which preceded the Schechter decision by more than two decades.

[Footnote 727] 48 Stat. 31 (1933).

[Footnote 728] United States v. Butler, 297 U.S. 1, 63 -64, 68 (1936).

[Footnote 729] 49 Stat. 991 (1935).

[Footnote 730] Carter v. Carter Coal Co., 298 U.S. 238 (1936).

[Footnote 731] Id., 308-309.

[Footnote 732] 48 Stat. 1283 (1934).

[Footnote 733]   295 U.S. 330 (1935).

[Footnote 734] Id., 374.

[Footnote 735] Id., 379, 384.

[Footnote 736]   326 U.S. 446 (1946). Indeed, in a case decided in June, 1948, Justice Rutledge, speaking for a majority of the Court, listed the Alton case as one ''foredoomed to reversal,'' though the formal reversal has never taken place. See Mandeville Island Farms v. American Crystal Sugar Co., 334 U.S. 219, 230 (1948). Cf. Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 19 (1976).

[Footnote 737]   301 U.S. 1 (1937). A major political event had intervened between this decision and those described in the preceding pages. President Roosevelt, angered at the Court's invalidation of much of his depression program, proposed a ''reorganization'' of the Court by which he would have been enabled to name one new Justice for each Justice on the Court who was more than 70 years old, in the name of ''judicial efficiency.'' The plan was defeated in the Senate, in part, perhaps, because in such cases as Jones & Laughlin a Court majority began to demonstrate sufficient ''judicial efficiency.'' See Leuchtenberg, The Origins of Franklin D. Roosevelt's ''Court-Packing'' Plan, 1966 Sup. Ct. Rev. 347 (P. Kurland ed.); Mason, Harlan Fiske Stone and FDR's Court Plan,'' 61 Yale L. J. 791 (1952); 2 M. Pusey, Charles Evans Hughes (Cambridge: 1951), 759-765.

[Footnote 738] 49 Stat. 449, as amended, 29 U.S.C. Sec. 151 et seq.

[Footnote 739] The NLRA was enacted not only against the backdrop of depression, although obviously it went far beyond being a mere antidepression measure, but Congress could as well look to its experience in railway labor legislation. In 1898, Congress passed the Erdman Act, 30 Stat. 424, which attempted to influence the unionization of railroad workers and facilitate negotiations with employers through mediation. The statute fell largely into disuse because the railroads refused to mediate. Additionally, in Adair v. United States, 208 U.S. 161 (1908), the Court struck down a section of the law outlawing ''yellow-dog contracts,'' by which employers exacted promises of workers to quit or not to join unions as a condition of employment. The Court held the section not to be a regulation of commerce, there being no connection between an employee's membership in a union and the carrying on of interstate commerce. Cf. Coppage v. Kansas, 236 U.S. 1 (1915).

[Footnote 740] NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 38 , 41-42 (1937).

[Footnote 741] NLRB v. Fruehauf Trailer Co., 301 U.S. 49 (1937); NLRB v. Friedman-Harry Marks Clothing Co., 301 U.S. 58 (1937).

[Footnote 742] NLRB v. Fainblatt, 306 U.S. 601, 606 (1939).

[Footnote 743] Howell Chevrolet Co. v. NLRB, 346 U.S. 482 (1953).

[Footnote 744] Journeymen Plumbers' Union v. County of Door, 359 U.S. 354 (1959).

[Footnote 745] NLRB v. Reliance Fuel Oil Co., 371 U.S. 224 (1963).

[Footnote 746] Id., 226. See also Guss v. Utah Labor Board, 353 U.S. 1, 3 (1957); NLRB v. Fainblatt, 306 U.S. 601, 607 (1939).

[Footnote 747] NLRB v. Reliance Fuel Oil Co., 371 U.S. 224, 225 n. 2 (1963); Liner v. Jafco, 375 U.S. 301, 303 n. 2 (1964).

[Footnote 748] 52 Stat. 1060, as amended, 63 Stat. 910 (1949). The 1949 amendment substituted the phrase ''in any process or occupation directly essential to the production thereof in any State'' for the original phrase ''in any process or occupation necessary to the production thereof in any State.'' In Mitchell v. H. B. Zachry Co., 362 U.S. 310, 317 (1960), the Court noted that the change ''manifests the view of Congress that on occasion courts . . . had found activities to be covered, which . . . [Congress now] deemed too remote from commerce or too incidental to it.'' The 1961 amendments to the Act, 75 Stat. 65, departed from previous practices of extending coverage to employees individually connected to interstate commerce to cover all employees of any ''enterprise'' engaged in commerce or production of commerce; thus, there was an expansion of employees covered but not, of course, of employers, 29 U.S.C. Sec. 201 et seq. See 29 U.S.C. Sec. Sec. 203(r), 203(s), 206(a), 207(a).

[Footnote 749] United States v. Darby, 312 U.S. 100, 115 (1941).

[Footnote 750] Id., 113, 114, 118.

[Footnote 751] Id., 123-124.

[Footnote 752] E.g., Kirschbaum v. Walling, 316 U.S. 517 (1942) (operating and maintenance employees of building, part of which was rented to business producing goods for interstate commerce); Walton v. Southern Package Corp., 320 U.S. 540 (1944) (night watchman in a plant the substantial portion of the production of which was shipped in interstate commerce); Armour & Co. v. Wantock, 323 U.S. 126 (1944) (employees on stand-by auxiliary fire-fighting service of an employer engaged in interstate commerce); Borden Co. v. Borella, 325 U.S. 679 (1945) (maintenance employees in building housing company's central offices where management was located though the production of interstate commerce was elsewhere); Martino v. Michigan Window Cleaning Co., 327 U.S. 173 (1946) (employees of a window-cleaning company the principal business of which was performed on windows of industrial plants producing goods for interstate commerce); Mitchell v. Lublin, McGaughy & Associates, 358 U.S. 207 (1959) (nonprofessional employees of architectural firm working on plans for construction of air bases, bus terminals, and radio facilities).

[Footnote 753] Cf. Mitchell v. H. B. Zachry Co., 362 U.S. 310, 316 -318 (1960).

[Footnote 754] 75 Stat. 65.

[Footnote 755] 80 Stat. 830.

[Footnote 756] 29 U.S.C. Sec. Sec. 203(r), 203(s).

[Footnote 757]   392 U.S. 183 (1968).

[Footnote 758] Another aspect of this case was overruled in National League of Cities v. Usery, 426 U.S. 833 (1976), which itself was overruled in Garcia v. San Antonio Metropolitan Transit Auth., 469 U.S. 528 (1985).

[Footnote 759] 50 Stat. 246, 7 U.S.C. Sec. 601 et seq.

[Footnote 760]   315 U.S. 110 (1942). The Court had previously upheld other legislation that regulated agricultural production through limitations on sales in or affecting interstate commerce. Currin v. Wallace, 306 U.S. 1 (1939); Mulford v. Smith, 307 U.S. 38 (1939).

[Footnote 761] Id., 315 U.S., 118-119.

[Footnote 762]   317 U.S. 111 (1942).

[Footnote 763] 52 Stat. 31, 7 U.S.C. Sec. Sec. 612c, 1281-1282 et seq.

[Footnote 764] Id., 317 U.S., 128-129.

[Footnote 765] Id., 120-124. In United States v. Rock Royal Co-operative, 307 U.S. 533 (1939), the Court sustained an order under the Agricultural Marketing Agreement Act of 1937, 50 Stat. 246, regulating the price of milk in certain instances. Said Justice Reed for the majority of the Court: ''The challenge is to the regulation 'of the price to be paid upon the sale by a dairy farmer who delivers his milk to some country plant.' It is urged that the sale, a local transaction, is fully completed before any interstate commerce begins and that the attempt to fix the price or other elements of that incident violates the Tenth Amendment. But where commodities are bought for use beyond State lines, the sale is a part of interstate commerce. We have likewise held that where sales for interstate transportation were commingled with intrastate transactions, the existence of the local activity did not interfere with the federal power to regulate inspection of the whole. Activities conducted within State lines do not by this fact alone escape the sweep of the Commerce Clause. Interstate commerce may be dependent upon them. Power to establish quotas for interstate marketing gives power to name quotas for that which is to be left within the State of production. Where local and foreign milk alike are drawn into a general plan for protecting the interstate commerce in the commodity from the interferences, burdens and obstructions, arising from excessive surplus and the social and sanitary evils of low values, the power of the Congress extends also to the local sales.'' Id., 568-569.


 

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