fied dismissal and "separation wages": compulsory compensation insurance even where not required by State law: the prohibition of work of any kind without reservation or exception; the requirement that licenses be posted "in 10-point bold-faced type or larger" sec. 24).

11. The compulsory arbitration of disputes regarding "work assignment" (sec. 25).

12. A list of “fair trade practices" sec. 28.

The foregoing requirements, restrictions, and regulations are not intended to be an exhaustive list of those provisions of the bill to which violent objection may be made, but are merely random instances of requirements which on their face bear no reasonable relationship to the "public interest" which purports to be the basis of this bill. On the contrary, it is obvious that no attempt whatever seems to have been made to limit the proposed regulations within the field of the evils which are asserted to exist. The bill proposes a more complex and intricate framework of regulatory restrictions than was attempted or contemplated in any N. R. A. code with which we are familiar. The multifareous proposals of the Labor Advisory Board of the N. R. A., rejected time and again by responsible administrators and by industry after industry, now reappear in some instances with new language to cloak their legal nudity. It may be said with accuracy that the bill resembles a composite Code of Fair Competition, with the further thought that the "defunct chicken" is plumed with feathers borrowed from union agreements, the union proposals and the most arbitrary rules and regulations.

Second, the regulations are not only unrelated to the alleged evils, but they violate other provisions of the Constitution.

We have discussed above (par. II, p. 9; the legal limitation upon the right of the Federal Government to regulate production under the commerce clause. These considerations need not be restated here. Attention is again called to the Wolff Packing Co. case, and it should be pointed out that the court unanimously upheld the right of employer and employee to contract with respect to wages under the due process clause of the Constitution and that the court held void "that part of the Kansas Court of Industrial Reiations Act of 1920 which, with respect to such businesses as the production of food and clothing and of mining, required employers to pay wages fixed by an industrial court." See Willoughby, Constitution of the United States, second edition, vol. III, p. 1762.

The decision of the Supreme Court, in the Wolf Packing Co. case, clearly represents the only conclusion which could reasonably have been reached by the court in the light of the types of businesses which have been regulated under the "public interest" theory and (b) the form which such regulation has taken.

(a) The following types of industries have been regulated under the "public interest" theory: Canals, waterways, booms; bridges, and ferries; wharves, docks, elevators and stockyards: telephone, telegraph, electric, gas and oil lines; highways, railroads and the various forms of common carriers; inns, hotels; irrigation ditches, dams; toll mills grist mills and others; insurance companies.

Although the above may not be exhaustive, it is unquestionably comprehensive enough to be fairly considered to be broad enough to justify certain conclusions. A careful examination of the list reveals that, except in the case of insurance companies

› in that case

similar conclusions may be reached, "the power to regulate rates is exercised against a business which in every case used tangible property devoted to a public use." Mr. Justice Lamar, dissenting in German Alliance Insurance Co. v. Lewis (233 U. S. 389, at p. 423). Some of the foregoing businesses had monopolies, some franchises, most used public ways or employed property acquired by virtue of the power of eminent domain. With practically no exceptions, they have a direct relationship to the business or facilities of transportation or distribution.

It is hardly necessary to point out that in no case is the regulation of the above industries exercised by the Federal Government under any fancied "public interest", but all the above are instances of State regulation.

(b) Analysis shows that the States have confined the regulation of these industries to the field of rates and charges for the services and products covered. Departures from this general rule have been made. But such departures have been made within a very limited range and the Supreme Court of the United States has indicated the outermost limits of this range. The Court has said that a State may regulate more than rates, if there actually exists a "danger of monopoly" and a "disaster from stoppage." This rule is laid down in the Wolff Packing Co. case, where the court pointed out that regulation in this field had never extended to fixing wages except where the force of competition did not effectively operate. In the light of this explicit limitation, it is interesting to note the proposed findings of fact in the Ellenbogen bill. The bill purports to find that the effects upon interstate commerce

*

have been caused directly and primarily * by excessive competition in lowering such wage rates and other costs, by over-expansion and excessive capacity of the productive equipment in the industry. (sec. I a 4).

*

In other words, although the proponents of the bill seek to justify it on the theory that the industry is affected with the public interest, and it is clear that this theory cannot possibly survive without the existence of a practical monopoly to sustain even the least objectionable of the proposed regulations, the above quoted findings of fact themselves on their face indicate that no such practical monopoly exists but that the exact opposite is true. The bill, therefore, by its own terms, shows the absence of a basis jurisdictional requirement and legal prerequisite. And this may be carried one step further by pointing out that some of the regulations proposed in the bill, such as the power of the Textile Commission to curtail production and restrict operations, would tend to create a monopolistic condition. To put it another way, a result of the bill would be to create a situation which, under the legal theory upon which the bill itself is based, must exist before such a power can conceivably be vested or exercised. The proposed action is as far-fetched in principle as would be an endeavor by Congress to compel every manufacturer to ship a portion of his goods into other States and then to assert a right to regulate his business based upon the fact that some of his products are consumed outside the State of origin.

IV. The control of production is sought to be achieved by the imposition of restrictions on the use of the mails and the right of citizens to do business with the Government as a proprietor, despite

the fact that such restrictions are bad in policy and legally invalid when used in these ways for these purposes.

The unusual penalties sought to be imposed for noncompliance with the bill amounts to an implied admission that what is attempted is beyond the power of the Federal Government. The proposed imposition of extra-legal penalties is nothing else than a suggestion that Congress should, "under the pretext of executing its powers, pass laws for the accomplishment of objects not entrusted to the Government" (McCulloch v. Maryland, 4 Wheat. 406); a suggestion to embark upon a course which has been condemned by the United States Supreme Court from the time of Chief Justice Marshall to the decision in the A. A. A. case.

The imposition of extra-legal penalties is unsound in policy. It is pertinent to quote from the report of the committee on relation of government to industry of the National Association of Manufacturers, which report was adopted by the 1935 Congress of American Industry: Your committee has noted with especial concern the various proposals in pending statutes to enforce Federal regulations of local matters by denying to violators or those who will not comply the right to engage in interstate commerce or to use the mais We recognize fully that Congress has the power and the duty of adopting all necessary regulations of interstate commerce and of the postal service. No person has a right to use the mails to defraud or to accomplish other improper purposes, nor to slip in commerce things which are in their very nature contraband, or deleterious, or harmful to the commerce of which they are a part. The primary function of Congress, however, in its power to regulate con.merce is to protect commerce and not to prohibit it. The type of enforcement now so frequently proposed is obviously predicated on the theory that the right to engage in interstate commerce and the right to use the mails are not fundamental rights of the individual person but are simply privileges to be conferred or withheld by Congress. This is not true either in fact or in law. The right to engage in commerce, as the Supreme Court has often pointed out, antèdated the Constitution and was secured by that instrument. The power of Congress is confined to the regulation of that commerce, which of course includes affirmative measures designed to foster or promote commerce, but it does not extend to regulation of the right to engage in commerce as a matter of privilege or penalty. We are firmly of the opinion that any regulatory legislation passed by Congress, whether based upon the commerce power or any other power, should be accompanied only by the traditional and well understood types of penalties, namely, fines or imprisonments, or, in proper cases, the right of the executive departments to secure injunctions in proper proceedings. This principle of enforcement of Federal statutes by executive application of penalties deprives the accused of his legal rights prior to his conviction through judicial procedure a deprivation which violates every principle of American jurisprudence.

It will be noted that the foregoing condemns the imposition of extra-legal penalties on two grounds: First, that such action is unsound in policy; second, that such action is illegal. We are at this point considering the first of these two propositions.

It is submitted that any attempt on the part of the Government to exercise such "asserted power" to accomplish what the Supreme Court has termed "prohibited ends," is unsound in policy (United States v.

Butler, opinion of Jan. 6, 1936) (A. A. A. decision). Not only does it involve a submersion of the Constitution but it lessens respect for law. Evasion by the legislature of normal legal procedure tends directly to bring about evasion on the part of those embraced within the scope of such legislation. It cannot reasonably be expected that laws which depend for their enforcement upon an abuse of power and a suspension of usual legal processes, will be welcomed, even by those most sympathetic with their ultimate purposes.

Furthermore, the line once crossed and the boundaries once broken, the trespass will inevitably become more extreme. It is possible to trace an evolution in recent legislation, stemming from cautious ramblings to outright invasions. There is no perceptible distinction in policy between the present proposal and the previous attempt on the part of Congress to exercise control in forbidden territories by abortive use of the taxing power and of the right to regulate commerce, of which the clearest examples are the A. A. A. and the child-labor legislation, the legal phases of which are discussed below.

B. The penalties are illegal and unconstitutional:

1. The proposed exclusion of unlicensed and unlabeled textile products from interstate commerce is so clearly condemned by the decision of the Supreme Court that there would seem to be no need for an extended discussion of this phase of the legislation. Reference may be made to the controlling case (Hammer v. Daggenhart, 247 U. S. 251). The Court said (pp. 273-276):

It is further contended that the authority of Congress may be exerted to control interstate commerce in the shipment of child-made goods because of the effect of the circulation of such goods in other States where the evil of this class of labor has been recognized by local legislation, and the right to thus employ child labor has been more rigorously restrained than in the State of production. In other words, that the unfair competition, thus engendered, may be controlled by closing the channels of interstate commerce to manufacturers in those States where the local laws do not meet what Congress deems to be the more just standard of other States.

The grant of power to Congress over the subject of interstate commerce was to enable it to regulate such commerce and not to give it authority to control the States in their exercise of the police power over local trade and manufacture. The grant of authority over a purely Federal matter was not intended to destroy the local power always existing and carefully reserved to the States in the tenth amendment to the Constitution.

In our view the necessary effect of this act is, by means of a prohibition against the movement in interstate commerce of ordinary commercial commodities, to regulate the hours of labor of children in factories and mines within the States, a purely State authority. Thus the act in a twofold sense is repugnant to the Constitution. It not only transcends the authority delegated to Congress over commerce but also exerts a power as to a purely local matter to which the Federal authority does not extend. The far-reaching result of upholding the act cannot be more plainly indicated than by pointing out that if Congress can thus regulate matters entrusted to local authority by prohibition of the movement of commodities in interstate commerce, all freedom of commerce will be at an end, and the power of the States over local matters may be eliminated, and thus our system of government be practically destroyed.

The application of this decision to the present bill can best be illustrated by the language of Coleman, J., in his opinion upon the Public Utility Holding Company Act of 1935 (in the matter of American States Public Service Co., opinion of Nov. 7, 1935.) In this decision Judge Coleman reviews the cases in which Congress has properly regulated interstate commerce by exercising the power to prohibit the movement of persons or things in interstate commerce. After listing such regulation Judge Coleman concludes:

But it is to be noted that in sl of these cases the power of exclusion by Congress was upheld because the excision was addressed direct to the transportation of harmful persons or things: that is, to the harmful use of the instrumentalities of interstate ecommerce, punite health, safety, and morals being involved. The law that was upheid in each of these cases did not provide that the shipper of the harmful thing should be denied the right to use the faces of commerce, except for the harm purpose.

The illegality of the proposed action is also made apparent by consideration of analogous attempts on the part of the Federal Government to use the taxing power. An earlier attempt of this sort is found in the child labor tax legislation, which the Supreme Court held invalid, in the case of Bailey v. Drexel Furniture Co. 239 U. S. 20), The Court, in condemning the attempt on the part of Congress "to break down all constitutional limitation of the powers of Congress and completely wipe out the sovereignty of the States," said as follows:

The analogy of the Dagenhart case is clear. The congressional power over interstate commerce is, within its proper scope, just as complete and unlimited as the congressional power to tax, and the legislative motive in its exercise is just as free from judicial suspicion and inquiry. Yet when Congress threatened to stop interstate commerce in ordinary and necessary commodities, urobjectionable as subjects of transportation, and to deny the same to the people of a State in order to coerce them into compliance with Congress regation of State concerns, the court said this was in fact regulation of interstate commerce but rather that of State concerns and was invalid. So here the so-called tax is a penalty to coerce people of a State to act as Congress wishes them to act in respect of a matter complete the business of the State government under the Federal Constitution. This case requires as did the Dagenhart case the application of the principle announced by Chief Justice Marshall in McCulloch v. Maryland 4 Whest, 316, 433), in a much quoted passage: "Should Congress, in the execution of its powers, adopt measures which are prohibited by the Constitution; or should Congress, under the pretext of executing its powers, pass laws for the accomplishment of objects not entrusted to the Government; it would become the painful duty of this tribunal, should a case requiring such a decision come before it to say, that such an act was not the law of the land.”

Mr. Chief Justice Hughes, in his book "The Supreme Court of the United States", published in 1927 before his return to the bench, comments on the decision in the Child-Labor Tar case as follows:

The Court has gone very far in this view in sustaining the exercise of the Federal taxing power. But it is obvious that it might go so far that Congress under the guise of the taxing power could destroy all the reserved rights of the States. As Chief Justice Taft said in the recent Child Labor case with respect to the presumption of validity appearing on the face of the statute: "Grant the validity of this law, and all that Congress would need to do, hereafter, in seeking to take over to its control any one of the great number of subjects of public interest, jurisdiction of which the States have never parted with, and which are reserved to them by the tenth amendment, would be to enact a detailed measure of complete regulation of the subject and enforce it by a so-called tax upon departures from it. To give such magic to the word 'tax' would be to break down all constitutional limitation of the powers of Congress and completely wipe out the sovereignty of the States." The Chief Justice then drew the distinction between a tax and a penalty and while pointing out that taxes are occasionally imposed in the discretion of the legislature on proper subjects with the primary motive of obtaining revenue from them and with the incidental motive of discouraging them by making their continuance onerous, such taxes do not lose their character as taxes because of the incidental motive. "But there comes a time.