Struggle over Power

A research project aimed at describing the struggle between the United States Congress and the United States Supreme Court during the midst of the Great Depression.

Political Science 310

Dr. Wesley Phelan

By

Adam

Howe

01/23/2011

The Underlying Effects of the Great Depression
	The onset of the Industrial Revolution brought new technology and prosperity to the United States. The invention of the automobile and kitchen appliances brought change in the way people travelled as well as the way the economy would begin to transform our nation. These technological advances allowed the common American citizen to have a better lifestyle. These advancements allowed citizens the opportunity to improve their lifestyles and economic well-being through buying items on credit. Another concept that vastly expanded the economy during this era came with citizens being able to purchase stocks on margin, which allowed ordinary individuals to try out the stock market. These practices were seen as necessary to expand the overall welfare of the country. The federal mismanagement of this economic expansion ultimately led to countless bank failures and the stock market crash of 1929. The depression that followed caused American citizens to lose confidence in the economy, which led to an overall decrease in spending and production. The manufacturing output a few years into the depression was nearly half of the production output before the onset of the depression. The unemployment rate during the middle of the depression reached almost 30% for the entire nation. 
The Preliminary Disputes Between Congress and The Supreme Court
	The background of the Supreme Court case N.L.R.B v. Jones & Laughlin Steel Corp. can be found in the relationship between Congress and the Supreme Court before the passage of the National Labor Relations Act of 1935. Within one-hundred days of taking office, President Franklin Delano Roosevelt spearheaded several bills through Congress that he thought would help stabilize our nation. The first act during this period was The Agricultural Adjustment Act of 1932, which provided federal subsidies for production quotas that were intended to stabilize the market. The Supreme Court 

ruled this act unconstitutional on the grounds that it infringed on privacy property rights. The next bill spearheaded by Roosevelt was the National Industrial Recovery Act of 1933. This act provided guidelines for employees’ work-related standards as well as provisions for employees to organize collectively for union representation. The Supreme Court struck down the law in the case Schechter Poultry Corp. v. United States on the grounds that the provision that allowed the President to implement authority over employees work standards was an unconstitutional delegation of legislative authority. This ruling ultimately led to the election of 1936 in which President Roosevelt laid the foundation for his campaign for the presidency and Congress versus the Supreme Court. His election in 1936 was a landslide in the fact that the voters wished to see him pursue his legislations against the will of the court.
Historical Overview of Labor Relations in 1935 
	The Supreme Court struck down the National Industrial Recovery Act as unconstitutional in the case of Schechter Poultry Corporation v. United States (Cushman, 241.) The Court’s ruling caused the union membership within our nation to organize militantly, which these actions caused many cities to witness violent protests and failed takeovers by union employees. These responses caused Congress to quickly consider another statute which would provide remedy for employees who lost their bargaining power that they had before in the National Industrial Recovery Act. Congress did not take very long in expediting the passage a statute that would correct the flaws of the Recovery Act. The flaws of the Recovery Act provided the foundation for the Labor Disputes Bill and the National Labor Relations Act as well as motivation for Roosevelt and Congress to stand its ground with the court. President Roosevelt attempted to interfere with the court’s power in his court packing scheme, in which he asked Congress for the authority to place a new Supreme Court justice on the court for every justice who had reached the age of seventy but had declined to retire. President Roosevelt’s initial intent of his proposal may have seemed to target the efficiency of the court, but it ultimately was seen to attack the six justices who had struck down his New Deal proposals. Congress struck down his proposal on the grounds that the proposal’s passage would create a dangerous precedent that should never exist in our nation’s history.
Comparison and Contrast of the N.I.R.A of 1933 and the N.L.R.A of 1935
	The primary flaw of the National Industrial Recovery Act was that it allowed employees free collectively bargaining, but it did not prohibit employers from stepping in and affecting their employees’ choice of representation. The National Labor Relations Act corrected this flaw through Section 7 of the bill that gave employees the right to self-organize independently, to form, join, or provide assistance to labor organizations without any influence from their employer (Commager, 495.) This bill was found necessary immediately after the sponsors of the Recovery Act realized that the imminent future of our economy would depend on the federal oversight of labor relations as it pertains to its immediate impact on interstate commerce.
Thesis
	The issue of labor relations began with the National Industrial Recovery Act of 1933. The next legislation that dealt with labor relations was passed in 1934 as the Labor Disputes Bill. The reasoning behind the passage of the Labor Disputes Bill was to regulate collective bargaining as a mean to stabilize commerce within the nation.  The nature of labor relations at the time had not allowed employees to organize themselves into independent unions outside of the control of their employer. Employers were still capable of discriminating against their employees who were involved in union organizations outside of their scope. An employer could also terminate and/or blacklist a union employee as part of these unfair labor practices that were standard before the passage of this act. This bill was constructed written to give Congress power over labor relations as per the “commerce clause” (Cushman, 243.) The primary sponsor of the act, Senator Wagner of New York, introduced a bill before the Senate on March 5th, 1934. This new bill was written to correct the flaws and clarify the original meaning behind the Recovery Act. The Recovery Act was originally meant to provide steady employment and consistent wages to the working class. It did not allow for employees to organize within their ranks to negotiate better hours and/or wages. The Labor Disputes Bill set up a semi-permanent National Labor Relations Board, whose primary role was to regulate the law. This board was meant to be permanent so that all future labor relations would come under its scope. The board’s primary function was to use its authority to investigate potential violations of the act, order any violator to cease and desist their unfair labor practices, provide a safe foundation for employees to bargain collectively, and to act as an arbitrator for employees in labor disputes (Cushman, 493.) The bill provoked criticism from most of Congress due to its weaknesses. The bill also found favor with some members of Congress due to its provisions that regulate all facets of labor relations and its relation to commerce. The original bill was found to be inadequate by the new Congress and sought to write a new bill to replace it.  The 74th Congress debated the new bill throughout 1935 all until it was signed by President Roosevelt on July 8th, 1935. The act was challenged by the Jones & Laughlin Steel Corporation which claimed it was unconstitutional on the grounds that labor relations are not considered to have a direct affect on commerce and thus cannot be regulated via Congress’s power to regulate interstate commerce. The case went to the U.S. Circuit Court of Appeals for the Fifth District where the court held in favor of Jones & Laughlin on the grounds that Congress did not have the power to regulate labor relations as per the commerce clause, but did not hold in favor of the defendant in that the N.L.R.B’s actions against them were unconstitutional. The Supreme Court then granted certiorari in the case.  The case went before the Supreme Court on February 10th, 1937, and the court gave its decision on April 12th, 1937. The court reversed the circuit court’s decision with a 5-4 vote that Congress has power to regulate labor relations that significantly affect interstate commerce. Justice Hughes gave the majority opinion in this case and held that the Jones & Laughlin’s business transported many resources and labor across state lines and that labor relations had now come under Congress’s jurisdiction with the passage of this bill. The petitioner’s termination of several of its employees’ jobs would have caused immediate strife within the flow of interstate commerce. Justice McReynolds handed down the dissenting opinion in claiming that Congress’s commerce power should cover only aspects of business that has a direct effect on interstate commerce, as such that labor relations did not have an immediate impact on the business’s doings in interstate commerce.
Body Statement
 	The timing of the passage of the Labor Disputes Bill saw the United States making a steady recovery from the onset of the depression. This result was evident in that the commerce of this time was gradually taking steps back to its pre-depression levels. The months preceding the final passage of this bill saw numerous changes in the amount of stocks’ dividend payments as a result of the increase in commerce. Senator Wagner specifically worded the first section of the act to state that any interference of an employer into an employee’s collective bargaining will impair the flow of commerce (Commager, 494.) Wagner specifically noted midway through section one of the act that history and experience have shown our nation that the right of the employee in any context to bargain independently and collectively provides a safe foundation that prevents the economy from becoming impaired. The bill provided for the creation of the National Labor Relations Board, which was charged with the oversight of the bill as well the ability to investigate any potential violations of this act. The board also had the ability to safeguard the right of employees to bargain collectively and independently, as well as the arbitrary power to mediate labor disputes. Wagner believed that the regulations put forth in this act as well as the board’s creation would aid in stabilizing the nation’s economy as labor relations would now come under the scope of the federal government.
 The Congressional reasoning for the act provided stable labor relations for the nation, but the criticisms of the act were found to provide federal oversight for contractual agreements. This bill was referred to the Senate’s Committee on Education and Labor, which then concluded the authors of the bill had not intended for that. The committee members also critiqued the bill in arguing that it defined labor relations in an unclear manner that would promote ‘fraud, deceit, or oppression’ (National Labor Relations Board, 40.) Some critics of the bill foresaw that none of the provisions of the act had the ability to impair employees from a strike as their only form of redress against their employers. After Senator Wagner spoke to the Senate’s Committee on Education and Labor, he made a statement that dispelled this claim as irrelevant, as he said “On the contrary, nothing would do more to alienate employee cooperation and to promote unrest than a law which did not make it clear that employees could refrain from working if that should become their only redress” (N.L.R.B., 41.) The last criticism of the bill can be seen as an influence from employees’ abilities to organize outside the scope of their employers’ “would prevent any friendly labor relations between employers and their employees as the employer would have no say in the rules or policies of their employees’ union organization”. Many critics in Congress of the bill filed petitions with Congress on behalf of their constituents disputing the law. Most of the opposing legislators were influenced by industries that opposed the passage of the bill in that it would prohibit many of the unfair labor practices that the constituents desired to keep in their businesses. Several individuals were brought before the Committee on Education and Labor to testify against the bill. Mr. James A. Emery testified on behalf of the National Association of Manufacturers. His organization represented many state-led organizations that provided a safeguard for manufacturing executives. Mr. Emery claimed in his testimonial to the committee that employers had already provided adequate labor relations to their employees, and that this bill’s passage would allow for an “abnormal conduct by external groups to be encouraged” (National Labor Relations Board, 375.) Emery responded to interrogation from the committee by attacking the bill as a violation of elementary principles of justice and fair play. Emery made a comparison at the end of his statement of a riot that had occurred in New York in the early 1920’s and that the same would occur if this bill were to be passed. The bill’s passage would allow for employees to engage in unlawful acts similar to that of the New York incident, and that employers would be forced to recognize them as employees. The advocates for the bill found favor in the bill’s provisions that clearly outlined the unfair labor practices that section seven of the National Industrial Recovery Act failed to accomplish. The Wagner Act provided for the federal regulation of those unfair labor practices by clearly outlining in a federal statute that those unfair labor practices were no longer permitted within our nation. The act gave the National Labor Relations Board the ability to oversee the proper implementation of the bill as well as investigate any violations of the act and provide arbitration for labor disputes. Many advocates, such as Senator Perkins, found favor with the bill in that its importance had not been seen in the Senate for quite some time. He believed that the creation of the board seemed to be a very important step forward in that it improved life and democracy within our nation, as the bill eliminated the disparity between employee’s rights to negotiate their work conditions (National Labor Relations Board, 48.) Many supporters of Perkins view found it necessary to advocate for the judicial process to allow employees some newfound capabilities which they had previously not possessed. A large majority of the Congressional advocates filed petitions in Congress urging favorable consideration of the bill on behalf of many labor organizations. The Senate soon found that the original legislation proposed by Senator Wagner was controversial in nature. The Senate abandoned the measure on June 13th, 1934. 
Senator Robinson introduced Senate Joint Resolution 143 before the Senate on June 15th 1934. Senator Robinson requested that the joint resolution be referred to the Senate Committee on Education and Labor. Senator Walsh suggested effectuating a few of the policies of the Recovery Act as amendments into the National Labor Relations Act. The amendments proposed to effectuate portions of the Recovery Act into sections one and three of the new join resolution. The amendments were debated within the committee and were then inserted into the joint resolution. The House concurrently approved of the amendments. The joint resolution was signed by both chambers on June 18th, 1934. The joint resolution was presented and signed by President Roosevelt on the same day. 
The 74th Congress met the follow year to discuss the nature of labor relations as well as the joint resolution that was passed during the previous Congress. Senator Wagner presented a new bill before the Senate on February 21st, 1935, while making a statement that his new bill would correct any misconceptions associated with the bill from the previous Congress. The bill was then referred to the Committee on Education and Labor. The same bill was introduced before the House on February 26th, 1935, by Representative Kennedy. The House referred the bill to the Committee on Labor. The Senate committee hearings were held between the periods of March 11th-April 2nd 1935. The Senate proceeded to note the flaws of the Labor Disputes Bill as well as to clarify its corrections in the new bill proposed by Senator Wagner in the 74th Congress. The House committee heard a speech from Senator Wagner on the nature and necessity of his new bill shortly afterwards. The House committee listened to a statement from Representative Connery on March 29th, 1935 that sent shockwaves throughout the committee and the house. The original bill proposed by the House in the 74th Congress was tabled and was replaced by the Connery bill, which was proposed on May 9th 1935. The Senate committee reported back the bill to the full Senate on May 7th, 1935, with a few minor amendments that changed the jurisdiction of how labor disputes would be handled. The full Senate began debates on the bill on May 15th, 1935, to consider the bill. The Senate passed the bill on May 16th, 1935, with the amendments as proposed by the committee. The House received news that the Senate had passed the bill and was requested to concur with the Senate bill. The Senate’s bill received support the following day from Congressmen Truax and Eagle. The House sent the bill to the Committee on Labor shortly afterwards, where the bill came out of committee with amendments. The House committee proposed as per section three of the Senate bill that the National Labor Relations Board come under the leadership of the Department of Labor (National Labor Relations Board, 2946.) The amended bill received opposition from Congressmen Blanton and Connery. Congressman Blanton stated that no “legislator should ever be coerced by threats from people in pertinence to pending legislation” (National Labor Relations Board, 2991.) The bill was recommitted to the Committee on Labor on June 5th, 1935. The committee proposed several amendments to the bill that gave employees more power and bargaining in the legislation. The amended bill was sent back to the floor, where it was referred to the Rules Committee. Congressman Connery proposed to the floor to give the bill privileged status and limit its debate. His request was denied due to several objections. The Committee on Labor reported in full back to the full House to request that the bill pass. The House passed their amended bill on June 19th, 1935, and requested the Senate concur with their amended bill. The Senate leadership disagreed with the House version of the bill and requested a conference committee to reconcile the bill. The House and Senate both receded some of their amendments to reconcile the bill between the chambers. The House voted and accepted the reconciled version on June 27th, 1935, as well as the Senate adopted the bill on July 1st, 1935. The bill was presented to President Roosevelt on July 3rd, 1935. He signed it into law on July 8th, 1935.
The initial court challenge of the National Labor Relations Act is found in the case N.L.R.B v. Jones & Laughlin Steel Corp., which was presented to the United States Fifth Circuit Court of Appeals for original jurisdiction. The initial charges were brought forth by the Beaver Valley Lodge No. 200 under the leadership of the National Labor Relations Board. The petitioner charged that the respondent had violated several provisions of the bill. The board found their reasoning within sections 7, 8, and 10(a), importuning that the respondent had violated section 7 by prohibiting its employees from their right to independently self-organize. The board held that Jones & Laughlin Steel Corp. had violated section 8 through its discrimination of its own employees as well as using coercion or unlawful influence to hinder its employees from union membership. The board used section 10(a) to argue its power to regulate any form of labor relations that affects commerce (National Labor Relations Board v. Jones & Laughlin Steel Corp., 419.) The case was challenged by the Board as per section 10(e) of the National Labor Relations Act, which permits the board to petition any circuit court of appeals when the question of a violation occurs (National Labor Relations Board v. Jones Laughlin Steel Corp., 8088.) The board ordered the respondent to cease all unfair labor practices as well as provide remedy for its practices. The respondent failed to comply with the board’s order. The board then brought the case before the Fifth District Court of the United States Circuit Court of Appeals heard the case on original jurisdiction. The circuit court held in favor of the respondent in their claim that Congress did not have the power to regulate labor relations in its vested powers under the commerce clause. The circuit court did not hold that the National Labor Relation’s Board order was unconstitutional in its findings. The National Labor Relations Board then asked the Supreme Court to grant certiorari to its case. The case was granted writ of certiorari by the Supreme Court on November 9th, 1936.
	The case was argued before the Supreme Court on February 10-11th, 1937. The petitioner argued before the court that Jones & Laughlin Steel Corp. had engaged in unlawful and unfair labor practices that affected commerce as outlined in the National Labor Relations Act of 1935. The board sustained its power under section 10(a) of the bill and ordered the respondent to cease and desist all of its unfair labor practices as well as to provide remedy for their practices. The respondent failed to comply with the board’s order. The respondent argued before the court that the act was indeed a regulation of labor relations and not of interstate commerce, that the act’s application can have no bearing on the respondent’s practices as they are not subject to regulation by the federal government, and that the provisions of the act violates Section II of Article III and the 5th and 7th Amendments of the United States Constitution (National Labor Relations Board v. Jones Laughlin Steel Corp., 301 U.S. 1.)
The evidence presented in the respondent’s argument was then presented to the court. The respondent is based in Pittsburgh and Aliquippa, Pennsylvania. Their business brought in raw materials as far as Michigan and Minnesota. The respondent manufactures and distributes a wide line of steel throughout the country. The respondent owned nearly nineteen subsidiaries which allowed their enterprise to be entirely integrated. Jones & Laughlin transported raw materials from its various subsidies across state lines with the assistance of its employee’s labor. The respondent owns several steamships and railroads that are used to transport raw or manufactured materials across the nation. The board concluded that all of these operations are a part of a largely-integrated company. The board stated that Jones & Laughlin employed thousands of workers throughout its highly-integrated enterprise at every stage of its operation. Jones & Laughlin claims that its plant where the violations allegedly took place was not involved in the stream of materials crossing state lines. The plant located at Aliquippa was involved in the finished product and thus had no relation to commerce crossing state lines. The board concluded that all factual evidence within this case pointed toward the respondent’s actions at its base plant, which was the subject of the complaints. The discharged employees were very active in labor organization. Many of them were leaders or officers in the labor union representing the respondent’s employees. Jones & Laughlin argued that the actions of the board were supposedly hostile towards their business. They failed to show evidence to refute any evidence that their actions would disprove any discrimination or coercion in their employees’ labor organization. The board’s evidence was upheld as factual in stating that the respondent’s actions were entirely based upon its employee’s union membership. 
	Justice Hughes delivered the majority opinion in this case. He scoped the act and stated that the act is not an attempt to directly regulate industry, but to regulate actions that have an adverse effect on industry. He concluded that the authority of the National Labor Relations Board in regards to the National Labor Relations Act was clearly within constitutional authority (JUDICIARY.) He cited this power within section 10(a) of the act which gives the board the power to prevent any business from engaging in any unfair labor practices that affect commerce. The Justice goes as far as defining ‘commerce’ as trade, traffic, commerce, transportation, or communication amongst the nation. The majority concluded without question that the commerce to be regulated by the act is indeed a form of interstate or foreign commerce. This form of commerce could be construed as such that would burden or obstruct the free flow of commerce. Justice Hughes then states within the second part of the opinion that the unfair labor practices as outlined in section eight are obstruction to employees’ fundamental rights to proper work conditions (National Labor Relations Board v. Jones & Laughlin Steel Corp., No. 301.) Employees under this act have a clear constitutional right to self-organize without employer interference as a mean to negotiate better pay and work conditions. The third scope of Hughes opinion went against the respondent’s claims that its stages of the enterprise was not subject to federal regulation. The majority opinion disagreed with this claim in stating that the various stages of the respondent’s enterprise did constitute a ‘free flow of commerce’, and thus was regulated by the federal government. The fourth statement in the majority opinion states that the effects of the unfair labor practices of the respondent would obstruct the flow of commerce within its industry. The obstruction of its own industry would also put a strain on the flow of commerce in other industries that are dependent on the manufactured goods produced by the respondent. Justice Hughes concludes this statement by ruling that self-organization has always been necessary for industrial peace. The inability of employees to self-organize independently has always been a cause for industrial strife in all forms of commerce. The last claim within the majority opinion cites the due process clause of the constitution and its relation to the right of employees to collectively bargain to redress grievances and to promote better work conditions. The act does not require or compel contractual agreements between employees and their employer, but rather the act provides that employees have a method of addressing their employer for better working conditions. The act provides a rigid procedure that employees must conform to when addressing the board to investigate a violation of the act. The respondent claims that this procedure could constitute ‘fraud’ if an employee decides to redress grievances improperly with his/her employer. The board claimed that the procedural section of the act is far too rigid so that any intent of fraud or deceit would never occur. The procedural section of the act provided that if such a violation were to occur that employees affected by the violation would have the right to reinstatement and payment of lost wages. The respondent claimed this section of the act to be unconstitutional on the grounds of a violation of the Seventh Amendment in stating that the reinstatement of employees and payment of lost wages would require a trial by jury as per the Seventh Amendment. The majority claimed that the case was not a case of common law but rather one of statutory law. The respondent’s claim to the Seventh Amendment lacks any merit in this proceeding. The majority reversed and remanded that the respondent follow the board’s order.  The majority side of the case voted consisted of five votes.
	The dissenting opinion was given by Justice McReynolds. The dissenting opinion claimed that the limit on Congressional power over commerce should have a direct impact on materialistic commerce, and not that of labor relations that do not have any direct impact on commerce. The act provides the board’s authority over large and small business enterprises that indeed differ in their contributions to the flow of commerce. The dissenting side of the case vote consisted of four votes. 
	This Supreme Court case is often overlooked by historians in the sense that it does not receive much historical publicity for what it accomplished. The history of the United States preceding this case involved a much heated debate involving the issue of what form of commerce that Congress can regulate. The onset of the Industrial Revolution brought commerce into a new era in which goods were manufactured at a faster pace and of a better quality. The latter portion of the nineteenth century brought forth the railroad that spread from coast-to-coast and allowed commerce to travel across state lines. The beginning of the twentieth century brought forth the invention of the automobile and many kitchen appliances. These new inventions required raw material to be imported from various locations within the United States as well as labor being used to transport these raw materials. The United States experienced prosperity after the First World War in which American citizens were capable of expanding their lifestyles to match that of the wealthy elite. The effects of this rapid expansion of the economy led to the Great Depression. The Great Depression caused the United States and the rest of the world to fall into a downward economic spiral. The United States attempted to pass several bills that would attempt to revive the economy. Most of these bills were struck down by the Supreme Court as unconstitutional for a variety of reasons. The election of 1936 provided the platform for the solution to this struggle of power between the legislative and executive branches versus the judicial branch. The election results proved that the citizens of the United States strongly believed in the legislative and executive branches of the United States. The passage of the National Labor Relations Act provided for stable labor relations before and after the act was challenged in the courts. The Supreme Court finally ruled with a vote of 5-4 in favor of the National Labor Relations Act that the act was constitutional and that any form of commerce whatsoever is now considered interstate, and thus could be regulated by Congress.

References 
Commager, H. S. (1958). Documents of American History (6th ed.). New York: Appleton-Century-Crofts Inc. 
Cushman, R. F. (1975). Cases in Constitutional Law (4th ed.). New Jersey: Prentice Hall.
JUDICIARY: Four 5-4; One 9-0. (1937, April 19). Time, 24(16). Retrieved from http://www.time.com///​,16641,19370419,00.html
National Labor Relations Board. (1985). Congressional Hearings. In Legislative History of The National Labor Relations Act of 1935 (Vol. I). Washington D.C: United States Government Printing Office.
National Labor Relations Board. (1985). Congressional Hearings. In Legislative History of The National Labor Relations Act of 1935 (Vol. II). Washington D.C: United States Government Printing Office.
National Labor Relations Board v. Jones & Laughlin Steel Corp., No. 8088, slip op. at 679 (5th Cir. July 15, 1936) (5th Dist. U.S).
National Labor Relations Board v. Jones & Laughlin Steel Corp., No. 419, LEXIS, slip op. (Apr. 12, 1937) (LexisNexis).
National Labor Relations Board v. Jones & Laughlin Steel Corp., No. 301 U.S. 1, slip op. (Apr. 12, 1937), http://caselaw.lp.findlaw.com/-bin/​getcase.pl?court=us&vol=301&invol=1.

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