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					Session 20

Wednesday, 27 October 2010

The Laissez Faire Decisions (review)

        Form corporation
        Labor or work
        Putting it in shipment
        After it arrives (the job is done)

Substantive due process


   1.    Allgeyer v. LA (1897)
   2.    US v. Adair (1908)
   3.    Coppage v. KA (1915)
   4.    Lochner v. NY (1905)
   5.    Muller v. Oregon
   6.    Bunting v. Oregon (1917)
   7.    Adkins v. Children’s Hospital (1923)
   8.    Moorehead v. NY (1936)

Lochner vs. NY:

        1905, T. Roosevelt
        NY passed a new law regulating bakers in 1895
        Maximum hours (labor reform law)
        Boss Bakers, White Lung (breathing in flour), etc.

Rule of law?

This is a policing power given to the states (tenth amendment).


        Unconstitutional
        Violated the Due Process Clause of the constitution
        Freedom of Contract
        States can’t regulate the economy either

Dissent: Holmes

       “This case is decided upon an economic theory, which a large part of the
country does not entertain. If it were a question whether I agreed with that theory I
should desire to study it further and long before making up my mind…But a
constitution is not intended to embody a particular economic theory, whether of
paternalism or …laissez fair. It is made for people of fundamentally differing views,
and the accident of our finding certain opinions natural and familiar or novel and
even shocking ought not to conclude our judgment upon the question whether
statutes embodying them conflict with the Constitution of the United States.”

> The constitution doesn’t tell us how to play capitalism.

        “General propositions do not decide concrete cases. The decision will depend
on a judgment or intuition more subtle than any articulate major premise…Every
opinion tends to become a law. I think that the work “liberty” in the 14 th 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 has a first installment
of a general regulation of the hours of work.”

      Ideology, not for judges
      Law= the order of its time
      Law= hegemony?

Other things states cannot do:

      Minimum wage
      Prevent advertising or marketing of products
      Pass Labor laws (laws allowing unions)
      Caveat: the states did get the right to do some things; overtime hours

Roaring 20s

      Great economy
      Tremendous lift in standards of living (appliances: washers, dryers, radios,
       automobiles, etc.)
      National consumer culture (national advertising, national markets)
      Herbert Hoover is president (business man reputation)
      Hoover elected in land slide in 1928
      Stock market crashes in 1929, the economy crashes with it
      Hoover’s prescription: don’t worry; it will take care of itself

Statistics: Great Depression and New Deal

      Stock market lost 90% of its value
      Industrial production fell more than 50%
      15 million workers lost their job (1/3 of the workforce)
      Stock prices fell 75%
      Corporate profits in the red
      GNP dropped 1/3
      Hooverville: shack cities developed
      Reporter quote: “the hungry, falling upon heaps of refuse and digging it with
       sticks and hands.”


      The capitalist system “broke”
      This was not just a “recession”
      The banking system collapsed

F. D. Roosevelt

      Activist government
      New government programs
      Most productive first 100 days in history
      FDIC law passes within 24 hours

For the government to be government in this age, it had to behave differently.

How did FDR change American politics?

      Laissez faire out
      Democrats in

The philosophy of the New Deal

      New constitutional bargain
      Let’s let the Federal government lead in policy matters (government takes
       care of big problems, ex. Hurricane, disease)
      No longer have “horse and buggy” commerce clause
      Let’s have the president captain the government
      Second Republic?

Government’s new role in capitalism:

      Three party transaction: buyers, sellers, and government
      Ideology legacy: capitalism is government’s business

Four Horseman

      Biblical term
      Reference to the end to the world in Revelation
      Refers to the laissez faire justices obstruction of the New Deal
       1. Willis Van Devanter (Wyoming Republican)
       2. James Clark McReynolds (TN Democrat)
       3. George Sutherland (Utah Republican)
       4. Pierce Butler (Minnesota Democrat)
      Hoover also inherits: Holmes, Brandeis, Stone (left) Taft, Sanford (right)
      Hoover picks: Cardozo (replaces Holmes), Roberts (replaces Taft), Hughes
       (replaces Sanford)
      Roosevelt will inherit this court
      Three Musketeers vs. Four Horseman

Black Monday (1935)

      Supreme court struck down 8/10 major pieces of new deal legislation
      Mortgage relief for farmers, limited power to the president, NIRA is
       unconstitutional, program for overproduction of oil, taxing and spending
      Other decisions crippling the new deal; most were 5/4
      Atkins v. Children’s Hospital: minimum wage for women and children, struck
       down (5-4 decision)
      Moorehead v. NY (1936), another 5/4 decision, minimum wage case

Exclusive Power over DC

   1. Congress has complete authority over DC. Not limited government.
   2. Substantive due process case

Roosevelt’s Solution

      1936 election, Roosevelt is running against Ralph Landon
      Gov. of Kansas and the only Rep. governor returned to office in 1934
      Even Landon supported federal programs for welfare benefits, social
       security, and hours and wage laws
      Even GOP platform is supporting government programs

The GOP and Progressivism

        The GOP platform also committed the party to press for state laws that set
maximum and minimum wages for women. Landon said that if this could not be
accomplished by the states, the he would be support to a constitutional amendment
giving them power. (Progressivism is taking over)

      Business culture against Roosevelt, yet he wins easily (rich cant control

   Court Packing Plan

      Replace one judge for each sitting judge who fail to retire within 6 months of
       their 70th birthday
      No more than 2 judges can be added to each circuit court, and no more than 6
       to the supreme court
      6 justices over 70, all of the horseman
      Expanded the court
      Markets the plan by claiming that the work is too strenuous these days for
       the older people (the feeble and aged)
      Opposition begins to amount to the plan, old congressmen don’t like this
               “The court is fully abreast of its work with no congestion of cases
               upon our calendar.” –Hughes

The Marketing of the Plan

      FDR takes to the airwaves (fireside chat)
      He changes his message!
          o It’s not age that is the problem; it is that the court is acting as a super
          o The problem is ideological activism
          o We need more liberal judges!

A Court with Progressives?

        FDR made clear his intention “to create a liberal minded judiciary of young
men who understood that modern facts and circumstances under which average
men have to live and work. If the appointment of such justices can be called “packing
the court” then I say that the vast majority of the American people favor doing just
that thing now.”

The Pending Showdown?

      Polls temporarily shifted in his favor, barely
      The plan was still unpopular after April
      Two cases were pending during all of this
          o NLRB
          o West Coast Hotel (On March 29, 1937, the court issued a decision in
               West Coast Hotel three weeks after FDR’s appeal for public support

Carter vs. Carter Coal (1936)

      Bituminous Coal Conservation Act (1935)
      Federal commission to regulate the coal industry
      Goal: a fair price, wages, and good business practices
      Using the taxing power to enforce it, not the commerce power
      Taxed 15% of the value of their production
      90% rebate if adhering to the industry code
      “theoretically voluntary”
      Carter is a stockholder who brought an action to keep the company from
       paying the tax for non-compliance
   Holding: can’t do this, production is local

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