Freeman

ARTICLE

A Year That Will Live in Infamy

DECEMBER 01, 1984 by MILLER UPTON

Dr. Upton is formerly the President of Beloit College and long a Trustee of The Foundation for Economic Education.

      In our futile attempts to provide psychological freedom (freedom from fear, want, hunger, poverty, etc.) we have sacrificed our constitutional liberty (freedom from government). Because of the nature of the human condition, we will end up with neither psychological freedom nor constitutional liberty.

At a time when the economy of the United States is being strangled internally by excessive governmental expenditures and undermined internationally by comparatively low labor productivity, it is well to reflect upon the past to consider what, if anything, went wrong along the way.

While it might seem rash to suggest that any single event or point of time can be isolated as being causal in this regard, certainly objective review inevitably leads back to the Spring of 1937 when revolutionary[1] decisions were made by the Supreme Court of the United States. The principal decisions were those which established as constitutional on a 5-4 vote the Wagner National Labor Relations Act and the Social Security Act. Both had been passed by Congress and signed into law in 1935.

It is not the purpose of this article to re-argue the constitutional merits of these cases. While substantial opportunity exists for such, nothing would be gained other than intellectual calisthenics. The need is to be reflective, not argumentative; to focus prospectively rather than retrospectively. If indeed we are suffering deep wounds in our body politic as a result of these decisions, then rational behavior requires that we acknowledge the fact in order to save the patient rather than blindly defend the past and let the patient bleed to death.

A brief review of the events of that time is in order. Through 1936 the Court, usually by a 6-3 vote, was consistent in its opposition to President Roosevelt’s New Deal legislation on strict constitutional grounds. The parts of the Constitution involved were invariably the 5th, 10th and 14th amendments and the commerce clause. In the fall of 1936 Roosevelt was elected to a second term of office by the overwhelming vote of 523-8 electoral votes. Backed by this almost unprecedented popular support, he immediately turned his attention to dealing with that segment of government which was aborting his legislative efforts for reform—the Supreme Court. And on February 5, 1937, without prior divulgence to anyone other than his closest advisers, he presented his plan for legislation increasing the size of the Court. Based upon the terms of the bill proposed he could have appointed 6 new Justices.

The bill was never passed but its intent was achieved just the same. Within months Chief Justice Hughes and Justice Roberts revised their interpretation of the Constitution as it applied to the social and economic legislation coming forth from Congress. Reasoning on which bills were found unconstitutional only one year earlier was ignored or revised by these two Justices. Now instead of a 6-3 majority of a strict constructionist bias there was a 5-4 majority of a flexible accommodation bias. In a series of decisions beginning on April 12, 1937, the Wagner Act was upheld as constitutional. Likewise, in two separate decisions made on May 24, 1937, the Social Security Act was declared constitutional on the same 5-4 vote. Major reliance in the reasoning on this latter judgment was placed on the general welfare clause of the Constitution.[2]

Strict Construction vs. Liberal Accommodation

Just as it is not the intent here to reargue the cases from a legal or philosophical standpoint, so it is not the desire to get caught in the quagmire of dispute between the strict constructionist and liberal accommodation approaches to constitutional law. As Justice Cardozo says in rendering the opinion of the Court at the time:


Congress may spend money in aid of the “general welfare.” Constitution, Art. I, section 8; United States v. Butler, 297 U.S. 1, 65; Stewart Machine Co. v. Davis, supra.[3] There have been great statesmen in our history who have stood for other views. We will not resurrect the contest. It is now settled by decision. [Italics supplied.] United States v. Butler, supra. The conception of the spending power advocated by Hamilton and strongly reinforced by Story has prevailed over that of Madison, which has not been lacking in adherents . . . . Nor is the concept of the general welfare static. Needs that were narrow or parochial a century ago may be interwoven in our day with the welfare of the nation. What is critical or urgent changes with the times.[4]

In short, if Congress in sensing the social and political needs of the time decides certain legislation is called for as advancing the general welfare, it becomes, pari passu, constitutional.

The matter now is not whether such a liberal approach to constitutional law is right or wrong. “It is now settled by decision”! The concern at hand is to consider the consequences of such an approach. We have the benefit of 47 years of history to help us in our consideration.

In this connection, reference to a section of Justice McReynolds’ dissent to one of the Social Security cases is in order. He quotes at length from a veto message sent by President Franklin Pierce to the Senate on May 3, 1854.. The bill he vetoed was entitled “An act making a grant of public ]ands to the several states for the benefit of indigent insane persons.” The relevant section follows:

In my judgment you can not by tribute 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 abject 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.”[5](Italics supplied.)

Prophetic or merely ideologic? Was the decision rendering the Social Security Act constitutional “the beginning of the end,” or is this an inappropriate reference to an overly dramatic phrase used by a President in the distant past?

Pandora’s Box

It needs to be noted here that the issue is not the need and validity of compulsory pension and unemployment insurance programs but rather the appropriateness of Congress assuming unto itself responsibility for such. If “the beginning of the end” seems somewhat too extreme, maybe a better metaphor would be the proverbial opening of Pandora’s box.

Who is prepared to deny at this point of time that there seems to be no limit to the legislation that can emanate from Congress under the general welfare pretext? We have direct federal aid to education. We have Medicare and Medicaid. We have food stamps. We have control over agricultural production. We have subsidies for not producing. There is a continuing threat to regulate baseball and other professional sports. And so it goes ad infinitum. Thousands of such bills are introduced into Congress each term.

A consequence of such runaway legislation at the national level has been uncontrolled expenditures and financial commitments leading to technical bankruptcy. Actual bankruptcy has been avoided only by debasing the currency through continual expansion of the money supply. When the power to create money is combined with unrestrained power to spend and political incentive to do so, the inevitable result is fiscal irresponsibility and fiscal disaster. Such is our current state.

In point of fact the federal system of government envisioned by our forefathers and incorporated into the Constitution has been left behind. We now operate on the basis of a strong, highly centralized national government. National legislation is passed constantly without reference to constitutional authority and without fear of being challenged on constitutional grounds. Members of Congress compete with one another for legislative credits; they are under continuing pressure to initiate legislation that will redound to their political benefit. State govern ments are for the most part merely historic vestiges of the original federal structure. The extent of their authority is hostage to the national government, not the Constitution.

The 10th amendment is no longer invoked. The states even suckle un-ashamedly at the national teat, ignoring the fact that both of these governments secure their resources from the same individual citizen. Ask any citizen which is the higher level of government and the answer 99 per cent of the time will be, “The national government, of course.”[6] In recent years the national government alone has consumed up to 24 per cent of the gross national product.[7]

Impact of the Wagner Act

The specific impact of the decisions establishing the Wagner Act as constitutional was also pervasive. The guiding principle of equality under the law was set aside; a political and social end was again given precedence over the law. The national government took sides in a domestic struggle, and serious consequences have resulted.

The industrial unions soon became the prime example of an unregulated monopoly. An industrial trade association is deemed subject to the Sherman Anti-Trust law but an industrial labor union is not. There is no justification in law or economics for such favored treatment. Collective bargaining by labor on a company-wide basis can be defended on the grounds of economic theory and practice, but industry-wide domination by a union organization cannot be. The economic base of labor within such union-dominated industries has been eroded over time by union monopoly power. This fact has been shielded from view because of the secular inflation produced by the policy of ongoing deficit financing practiced by the national government over the last 50 years,[8]

Management has been prone to grant demands for higher and higher wages and benefits knowing that it could pass these increased costs on in ever higher prices. Real profits gave way to monetary profits. We began living in a world of accounting make-believe. The result has been wage and benefit increases without reference to productivity increases. The day of reckoning came when international competition within the heavily unionized industries became real and domestic inflation was suddenly brought under control. Now members of the labor forces of these industries have come to realize, as did the railroads and other temporal monopolies before them, the limited benefit over time of any monopoly privilege.

But these direct results of the Supreme Court decisions in the Spring of 1937, important as they may be, are probably less significant than the indirect impact over time on our overall governmental structure. That established by our forebears was a federal system held in balance by strict provisions of a Constitution. Their objective was to create a federal government out of the 13 independent and sovereign states in order to provide for a common defense, a common citizenship, a common currency and a common commerce among the several states unrestrained by interstate barriers. At the same time, having experienced firsthand the threat to individual liberty of a highly centralized, overarching, authoritarian national government and being acquainted with the historical record to this effect, they limited the authority of the newly-created federal government and provided in the first ten amendments to the Constitution specific safeguards to individual freedom.

Undermining the Constitution

Regardless of the professed merits of the liberal accommodation approach to the interpretation of the Constitution, it seems clear that the full acceptance of this doctrine by the ruling majority of the Court in 1937 has resulted in greatly, if not totally, undermining the original governmental structure of the United States. As Mason states:

After 1937 the Justices were somewhat less concerned than formerly to avoid any action that might remove the protective coloration disguising their power. President Taft feared, as we have seen, that reversal of the income tax decision by an ordinary act of Congress might impair the Court’s prestige and jeopardize judicial magic. Taft successfully advocated the amending process as the appropriate way out, thus delaying the income tax for nearly twenty years. In 1937, however, without resort to the formal amending process, without a single change in judicial personnel, the Justices had suddenly amended the Constitution. “In politics,” Jackson commented, “the blackrobed reactionary Justices had won over the master liberal politician of our day. In law the President defeated the recalcitrant Justices in their own Court.” Thus Roosevelt’s major premise, that the judicial function in the constitutional field is inevitably political, was confirmed by the Court itself.[9]

Looked at coldly and not sentimentally the truth is that we have a written Constitution but not constitutional law. We have gone so far in giving it flexibility in interpretation consistent with the political, social and economic pressures of the time that it no longer retains any temper of its own. Constitutionality is based upon the dominant ideology of the sitting Court as well as the prevailing orthodoxy. It is well-established that lawyers cannot with any degree of confidence counsel their clients as to what the law is as it relates to the Constitution. One who is able to sense and prognosticate the general political climate is more successful in this regard. The Court has reversed itself so often and over such short time spans that legal precedent provides little reliable support. Cardozo himself states in the opinion of the Court establishing the Social Security Act constitutional: “Florida v. Mellon, 273 U.S. 12 supplies us with a precedent, if precedent be needed.”[10] (Italics supplied.)

Respect for Prior Rulings

It is being neither cynical nor facetious to state that the oath of of-rice should be to the decisions of the Court and not to the Constitution itself. The fact is that the Supreme Court is supreme in determining the political course of our country and not merely an impartial interpreter of the Constitution. If prior decisions serve the reasoning of a simple majority of the Court at any one time, well and good; if not, then recourse will be found elsewhere, including something so vague as the general welfare clause. If this general reference in the preamble of the Constitution and Article I, Section 8 can be given precedence over all other provisions, then the amendments and other specific declarations in the final test come to nothing. Legislation is deemed constitutional or not according to the dominant bias of each sitting Justice and the social and political pressures that exist at the time. Ours is thus in unvarnished truth a government of men and not of law. That is why control over appointments to the Supreme Court is so crucial.

It probably was always highly unrealistic to assume that a document created at one instant of time and adopted by individuals living in that era could ever serve as an external discipline to subsequent generations. Constitutional government in the strictest sense of the word can never exist, for popular demand, if strong enough politically, will always find justification and means for circumventing the existing constitutional restraints. In a government of the people, by the people and for the people there can never be any restraint to concerted popular will. That is why we are governed at the present time by organized groups, albeit minority groups, for only through organization can our pressure be felt.

Under such circumstances we can only hope that, in the main, political statemanship will somehow win out over political demagoguery. But human history offers no encouragement in this regard. Even within democracies naked political power has too often won out over individual rights and social justice. Concern is focused not on what is best for the nation as a whole but on what is best for one’s own special interest. The Constitution under the equal protection clause could have been relied upon to protect us all from such favored treatment of some, but its application has been spotty. The Justices are subjected tothe same political pressures as the legislating politicians themselves. And their own biases may or may not offer protection against such pressure.

Basic Freedoms Denied

The preferred freedom doctrine might take exception to this dire analysis. Granted great license may have been taken in the interpretation of the 5th, 10th and 14th Amendments and the commerce clause, so long as we protect the 1st Amendment and our political freedom we have no cause for concern. Such a sanguine attitude, however, flies in the face of experience, both recent and past. The Supreme Court has at times ruled as constitutional legislation which violated freedom of speech, freedom of assembly, freedom of conscience and banned citizens with a particular ethnic heritage to concentration camps without due process of law. Granted these cases were usually considered during emotionally charged times when the national security was deemed threatened and were later reversed, still they serve to support the thesis that the decisions of the Supreme Court are less an objective interpretation of the Constitution and more a subjective reaction to prevailing social and political pressure. The point also remains that the crucial decisions so made in the Spring of 1937 have not been reversed, and because of the permanently changed nature of our governmental structure since then there is little chance of such ever happening.

A case can also be made that without any threat to national security the religious liberty promised by the 1st amendment has been impinged upon and continues to be impinged upon. One has to be very loose in the interpretation of this part of the 1st amendment to find support for any vague separation of Church and State. It provides clearly that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” There can be little doubt when one studies the history leading up to the writing of the Constitution that the whole intent was to make sure the federal government did not get involved in any way with religious matters and to leave such concerns entirely to individual conscience and action.

But by trying to develop from this clear statement some ambiguous doctrine of separation of Church and State, the Supreme Court has violated the intent rather than furthered it. If the Amish want to live their religion in a given way, including educating their children the way they want, the 1st amendment is intended to allow them do so. Any state compulsory education law that conflicts with this point of view is in clear conflict with religious freedom. Compulsory education (or preferably, schooling) is given a higher priority than religious freedom. Similarly, local citizens acting democratically on the basis of majority rule should be free to have their schools include religious instruction and prayer.

We already teach Nietzsche, Adam Smith, Goethe, Marx, Shakespeare, Newton, Einstein and a whole host of major and minor thinkers; why not Jesus, Mohammed and Moses? There are atheistic proponents as well as theistic proponents, and to side with one is clearly to side against the other. The national government and Supreme Court must remain neutral in such theological conflicts if religious freedom is to be preserved.

Monopoly Privilege

The unavoidable fact of the matter is that compulsory state education with a prescribed curriculum and proscribed instruction is not only anathema to religious freedom but exists as a constant threat to individual freedom in general. How is a central government better able to control the culture, thinking and attitudes of the populace? So long as the individual states engage in such compulsion there is no threat to the Constitution, only to individual freedom. But when the national government aids or abets such government education it then violates constitutional authority. Monopoly privilege, however established and maintained, is antithetical to individual freedom.

One is led inevitably to the conclusion that the doctrine of preferred freedoms is false. Its logic suggests a hierarchy of separate and distinct freedoms. But if this is so then which prevails supreme—political freedom, press freedom, economic freedom, freedom of speech, freedom of assembly? If press freedom be subordinate to political freedom, how long would the political freedom last? Or if political freedom be subordinate to press freedom, how long would a free press survive? If the doctrine suggests that the 1st amendment is the only one that must be held inviolable, then why have we in effect rewritten the section dealing with religion? And where does this leave political freedom? And where in history has it ever been shown that political free dom can survive over time without economic freedom?

The record for those who would be intellectually open is clear: individual freedom is indivisible. When lost in one area—political, economic, press, speech, assembly, religion—it eventually is lost in all areas. It may take time, possibly a matter of generations and even centuries, but it will occur. The willingness to deny freedom anywhere for cause other than criminal behavior represents an attitude which, if not reversed, becomes pervasive.

This is what the creators of our Constitution knew from personal experience and the lessons of history. That is why the Bill of Rights was included as the first ten amendments—supposedly our living civil liberties. A highly centralized national government has always been the greatest threat to liberty, thus a decentralized federal system was created and reinforced by the 10th amendment. But, as we have been told, those who refuse to learn from history are doomed to repeat it.

The Fatal Thrust

Evidence of such return to the divine right of government concept in place of the sovereignty of the people was beginning to show prior to the Spring of 1937, but the action of the President and the Supreme Court at that time provided the final fatal thrust. Maybe the human psyche by nature requires dependence upon an authority figure. Maybe there is just no way for the people to protect themselves against the abuse of political power even when institutional restraints are available for their use in this regard. Or maybe the populace at large can never be educated fully and deeply enough to govern themselves impartially and with equal justice to all.

The evidence in our own history for state governments themselves to strike at individual freedom is fearful evidence of this latter condition. The role of the national government in such cases in its true role as a federal government is to discourage such state legislation—to the point of amending the Constitution when necessary. The 14th amendment is a prime example of such. The federal government must never arrogate such power unto itself, however, for then the evil of centralized authority is compounded in the cause of doing good. A federal government thus becomes a national government with supreme authority in all matters. President Pierce’s veto message quoted earlier is well recalled.

On December 7, 1941, a day that will live in infamy, the United States as a sovereign power was brutally (but not mortally!) attacked by an external sovereign power. Four and a half years earlier, in the Spring of 1937, a year that will live in infamy, the constitutional, federal system of government of the United States was mortally wounded by its own institutions of government. It has been gradually bleeding to death ever since. National bankruptcy, born of fiscal profligacy conceived in political promiscuity and avoided only by debasing the currency through continuing monetary inflation; declining labor productivity and economic deterioration in world competition; gradual erosion of our constitutional liberty—these are our legacies of the time. Impartial analysis and reason admits no other conclusion. []


1.   No less an authority than Mason makes frequent reference to the “revolutionary” aspect of the 1937 decisions. The Supreme Court from Taft to Warren, Alpheus Thomas Mason, Louisiana University Press, 1958. See in particular; pp. 134 & 135.

2.   It is worth noting that President Roosevelt is quoted as saying: “It would be a little naive to refuse to recognize some connections between these 1937 decisions and the Supreme Court fight.” (Mason, ibid, p. 102)

3.   It is important to recognize for the thrust of this paper the full nature of the cases which Cardozo cites as precedent here. United States v. Butler was decided only the preceding year in finding on a 6-3 vote that the Agricultural Adjustment Act was unconstitutional. Stewart Machine Co. v. Davis was the other case challenging the Social Security Act and though ar guments were heard one month earlier than Helvering, both were decided on the same date.

4.   Helvering, Commissioner of Internal Revenue, et al. v. Davis, 301 U.S. 640-1. (1936)

5.   Stewart Machine Co. v. Davis, 301 U.S. 606. et. al. (1936)

6.   In a true federal system of government, which the United States was intended to be, there is no hierarchy of governments but rather different governments to which separate responsibility and authority is assigned by the people.

7.   982 Economic Report of the President.

8.   The national government has balanced its budget only 8 times since 1932 and only once in the past 25 years.

9.   Mason, op. cit.; pp. 113 & 114.

10.   Stewart Machine Co. v. Davis, 301 U.S. 591. (1936)

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