said he, "in the extension of the penalizing features of the so-called tax when it loses its character as such and becomes a mere penalty with characteristics of regulation and punishment." (Bailey v. Drexel Furniture Co., 259 U. S. 20, 38; see also, Trusler v. Crooks, 269 U. S. 475.) Such was the case then before the Court. When the imposition is found to be a penalty, the Court must ascertain the authority of Congress to impose it as a feature, not of a tax law but of a regulation of the subject with respect to which the penalty is imposed.

The most recent decision of the Supreme Court to the same effect is the Butler case in which the Court held the Agricultural Adjustment Act unconstitutional. The heart of the decision is contained in the following significant sentence, and the sentence might figuratively be considred a sentence of death upon the bill now under consideration:

The expressions of the framers of the Constitution, the decisions of this Court interpreting that instrument, and the writings of great commentators will be searched in vain for any suggestion that there exists in the clause under discussion or elsewhere in the Constitution the authority whereby every provision and every fair implication from that instrument may be subverted, the independence of the individual States obliterated, and the United States converted into a central government exercising uncontrolled police power in every State of the Union, superseding all local control or regulation of the affairs or concerns of the States.

2. The proposed exclusion from the use of the mails of unlicensed textile products or of matter "pertaining to" such unlicensed products (sec. 12 of the bill) is invalid and unconstitutional.

Concededly, a new field of legislative coercion is sought to be opened up in this bill.

Apparently the precise question has never been presented to the Supreme Court as to how far Congress may go in excluding matter from the mail. It is difficult to preceive any fundamental distinction between this proposal and the proposal to prohibit the use of interstate instrumentalities to unlicensed textile products. Nevertheless, in view of the fact that different clauses of the Constitution are involved, and because of the novelty of the suggestion advanced by this bill, we believe the precise question should be analyzed here.

It may be repeated that no basic distinction is perceived between the foregoing types of extra-legal penalties and therefore we desire to stress the considerations advanced above as applicable to this situation.

The most illuminating decision upon the question of the right of Congress to regulate the use of the mails for what may fairly be called ulterior purposes is that of Justice Coleman in the case involving the Public Utility Holding Co. Act (in the matter of American States Public Service Co., opinion filed Nov. 7, 1935). That act seeks to deny the use of the mails to all persons embraced within its provisions, in respect of all other activities, as a penalty for noncompliance and as a means of compelling compliance. As Judge Coleman pointed out in his decision, the proposed exclusions there (and precisely the same may be said in this case) bears no relation necessarily to the use itself, but to the user, of the mails.

The Government, in contending for the validity of the Public Utility Holding Company Act, that the power of Congress over the mails is by the Constitution absolute and proprietary and that there can be no mail facilities except those created by Congress. The court's analysis of this contention is detailed, and we believe that a

summary of the salient features of Judge Coleman's opinion throws light upon the entire subject.

He points out that article I, section 8, clause 7 of the Constitution, grants to Congress the power "to establish post offices and post roads. Although in the early years of the Government the view was held that this power did not include the construction and operation of agencies for carrying and distributing the mails, the view finally was adopted that the creation and regulation of the entire postal system was the necessary intent of the constitutional grant. The result is that Congress may exclude articles dangerous to mail employees or injurious to other mail matter, and may prevent the fraudulent or immoral use of the mails. Likewise, privileges of second-class mail rates may be granted. It is clear, therefore, that Congress may exclude "offending things" from the mails.

These

Judge Coleman proceeds by indicating that the Supreme Court has upheld the right of Congress to exclude from the mails lottery tickets. and related matter, obscene, seditious and fraudulent matter. exclusions touch upon and relate to fraud, crime, and immorality. Judge Coleman asks whether there are no limitations, and proceeds by giving the following answer:

May such right be exercised arbitrarily, in derogation of rights guaranteed by other parts of the Constitution? May Congress in fact indirectly, through its postal power, interfere at will with constitutional guaranties, when such interferences would be prohibited if attempted directly? In spite of certain statements in some of the earlier decisions which, if isolated and considered apart from the precise facts and the ratio decidendi of the given case, may lend some little support to an affirmative answer to this question, we nevertheless believe that the law is otherwise. Obviously, the first amendment which guarantees freedom of speech and of the press, is not violated by exclusion from the mails of lottery tickets (Ex parte Jackson; In re Rapier, supra); nor of seditious matter (United States v. Burleson, supra); nor of publications which fail to furnish information relative to ownership and circulation (Lewis Publishing Co. v. Morgan, supra). Similarly, the guaranty of due process of law under the fifth amendment is not denied by excluding from the mails publications which do not comply with postal regulations requiring information as to ownership and circulation (Lewis Publishing Co. v. Morgan, supra); or seditious matter (United States v. Burleson, supra); or when letters sent for illegal purposes are seized and returned to the sender, under postal regulations; or where the Postmaster General, in the exercise of authority vested in him by Congress, determines, on the basis of substantial evidence, upon exclusion of certain matter after due notice, and after a hearing had been afforded (Public Clearing House v. Coyne, United States v. Burleson, supra).

"Has exclusion from the mails ever been upheld by the Supreme Court where the matter excluded was not, in and of itself, either (1) offensive or harmful to the public generally, or (2) not in compliance with postal regulations reasonably calculated to aid in the efficient maintenance and conduct of the mail service? Our investigations disclose no such decision. But, it is said, the Supreme Court has never been called upon directly to decide the question of how far exclusion may go. True, but the decisions very definitely support the conclusion here reached, to wit, that the exclusion must rest directly upon a regulation of the mails, that is, of the use of the mails, of the thing mailed, and not upon a regulation of the user. In Lewis Publishing Co. v. Morgan, supra, the Court said (p. 313): 'That Congress in exerting its power concerning the mails has the comprehensive right to classify which it has exerted from the beginning and therefore may exercise its discretion for the purpose of furthering the public welfare as it understands it, we think it too clear for anything but statement; the exertion of the power of course, at all times and under all conditions being subject to the express or necessarily implied limitations of the Constitution.' In this case, the Government had contended that the postal power 'conveys an absolute right of legislative selection as to what shall be carried in the mails and which therefore is not in any wise subject to judicial control, even though in a given case it may be manifest that a particular exclusion is but arbitrary because resting on no dis

V. The bill as drafted contains many flaws and defects, the more glaring of which are summarized herein. Although some defects may be cured, the most outstanding objections are inherent in the bill itself and are not susceptible of correction.

(A) Perhaps the most obvious legal defects in the bill revolve about the proposed delegation of legislative powers to the Textile Commission. These proposals, of course, constitute defects which are not alone based upon faulty draftsmanship but are illegal and unsupportable in theory.

1. In section 18 of the bill it is proposed to grant to the commission the power to study classifications of occupations and wage differentials and

whenever the Commission shall find that differentials of wages above the minimum, as found by the commission to be equitable and proper, are not being maintained, or that competition in or directly affecting interstate commerce is tending to reduce such proper wage differentials above the minimum, and that collective bargaining has failed to correct such situation, it shall have power, after appropriate notice and hearing, to establish minimuin wages for various classifications of occupations.

The section contains certain so-called standards ostensibly for the guidance of the Commission in the establishment of classified minimum wages.

2. Section 21 of the bill would authorize the Commission to determine "specific operations and occupations which are hazardous in nature or dangerous to health", and after such determination the section places restrictions upon the right of employers to employ individuals under 18 years of age.

3. Section 24 (d) of the bill virtually grants to the Commission the power to legislate with respect to employers' liability or group accident insurance in the absence of a State law.

4. Section 26 of the bill would grant to the Commission the power to "prescribe reasonable limitations" upon productive operations.

The invalidity of the foregoing proposed delegation may best be summarized by quoting the words of Mr. Justice Cardozo concurring in the unanimous decision of the Supreme Court in the case of Schechter v. United States:

This court has held that delegation may be unlawful though the act to be performed is definite and single, if the necessity, time, and occasion of performance have been left in the end to the discretion of the delegate. Here, in the case before us, is an attempted delegation not confined to any single act nor to any class or group of acts identified or described by reference to a standard. Herein effect, is a roving commission to inquire into evils, and, upon discovery, correct them.

The provisions cited above in the proposed bill is nothing more than what Mr. Justice Cardozo designated "delegation running riot". Like the N. R. A. codes condemned by the Supreme Court, this bill is not

restricted to the elimination of business practices that would be characterized by general acceptation as oppressive or unfair. It is to include whatever ordinances may be desirable or helpful for the well being or prosperity of the industry affected. In that view, the function of its adoption is not merely negative, but positive; the planning of improvements as well as the extirpation of abuses. What is fair, as thus conceived, is not something to be contrasted with what is unfair or fraudulent or tricky. The extension becomes as wide as the field of industrial regulation. (Justice Cardozo in the case cited.)

It is submitted that this bill in no wise differs in principle or practice from the attempted regulations through codes, and, in fact, as we have pointed out above, embodies the features of codes multiplied by arbitrary shop rules and multifarious proposals which were not even acceptable to the National Recovery Administration.

(B) Some of the outstanding drafting defects and those most strikingly illegal are summarized below.

1. Section 3 (B) (5) defines employees to include "any individual whose work has ceased as a consequence of, or in connection with any current labor dispute." If this is read in connection with section 16, it follows that striking employees, irrespective of the cause of the strike, must be paid the specified wages during the strike.

2. Section 8 (b) empowers the proposed Commission "to investigate from time to time the organization, business, conduct practices, and management of any person engaged in the textile industry." Not only is this broad power granted without reservation or judicial. recourse, but if read in conjunction with section 36 (c) of the act, any person who shall "resist, prevent, impede, or interfere with any member of the Commission or any of its agents or agencies in the performance of duties pursuant to this act" may be punished by a fine of $1,000 and imprisonment of 1 year. This provision thus applied clearly contravenes the fourth amendment to the Constitution of the United States.

3. Section 9 (a) renders it unlawful, subject to the enormous penalties imposed by section 36 (a), for any individual to buy, deliver, receive or possess unlicensed textile products. This provision transcends any legislation with which we are familiar, and is more drastic in scope than the most extreme legislation under the eighteenth amendment to the Constitution.

4. Section 9 (b) imposes liability and responsibility upon a person who "holds control through stock ownership of or over another person engaged in interstate commerce." The traditional legal principles applicable to the corporate set-up are thereby swept away, and all distinctions removed between stockholders and those responsible for the operation of corporations.

5. Section 10 refers to textile products "not eligible for entrance into interstate commerce." The act nowhere specifies what products are thus "eligible", and the section has apparently no meaning whatever unless it is intended to refer to products manufactured and consumed entirely within one State. But this situation is apparently envisaged in section 2 of the bill.

6. Section 12 applies by its terms even where textile products are not "eligible" for licenses, and would foreclose the use of the mails to every textile producer whose products were sold only within the State of origin.

7. Section 13 (b) prohibits Government contracts, loans, or grants "with or to any person engaged wholly or partially in the textiles industry who is not licensed by the Commission." It should be noted that all and any contracts, loans or grants are foreclosed to such persons, irrespective of the subject matter. An unlicensed person in the textile industry could not, under this section, make a Government contract for the sale of automobiles or printing, nor obtain a loan for the development of a mine.

8. Section 13 (d) requires that banks must agree, as a condition of a Government loan, "that it will not enter into any financial transaction with any person engaged wholly or partially in the textile industry who is not licensed by the Commission." Note that here again there is no limitation upon the scope of the provision. An unlicensed textile producer is excommunicated from credit facilities of any kind for whatever purpose.

9. Section 15, insofar as it requires the agreement in writing of licenses as a condition precedent to the effectiveness of such license, is inconsistent with section 29 (a) which gives to the Commission the power to issue "general licenses."

10. Section 23 permits the filing with the Commission "by either party of agreements between any license and any bona-fide organization of his employees," and provides that such agreements "become binding and enforceable in the same manner as if originally contained in the license." Passing over the flagrant illegality of legislative power here contemplated, it should be noted that the agreements would bind only the employer, inasmuch as the license runs only to the employer.

11. Section 24 (b) would require prior notice of 1 week before discharging or laying off any regular employee in addition to the uncertainty as to who is considered to have been "regularly employed", no exceptions are made for such eventualities as forced lay-offs due to break-downs, accidents, and so forth.

12. Section 24 (d) purports to delegate to the Commission power to prescribe forms of employers' liability or group accident insurance "in the absence of a State law." This is so clearly beyond the scope of Federal power that we call attention to it on the assumption that it has been included in the bill through inadvertence.

13. Section 27 provides that if any licensee "operates his productive machinery upon a schedule of three shifts," he shall pay "to all his employees" a weekly bonus equal to 5 percent of their wages. This would require a licensee desiring to operate a "bottle neck" department or machine on a three-shift basis to pay a weekly 5 percent bonus to all his employees.

14. Section 32 purports to compel governmental departments and agencies to comply with an order of the Commission revoking a license, "until such order has been modified or set aside by a court of competent jurisdiction." Thereby a licensee is deprived of judicial review before the imposition of a penalty.

The foregoing does not purport to be an exhaustive list of the more glaring defects and the more extreme provisions of the bill. It is respectfully submitted that the summary will serve to prove that the bill in its present form is not capable of enforcement wholly apart from its clear unconstitutionality.

CONCLUSION

The objections to the bill may be summarized by again pointing out that the bill contains the worst features of at least four unconstitutional statutes:

1. The N. I. R. A.: Because it seeks to regulate production and the incidents thereof (Schechter case.)

2. The A. A. A.: Because it seeks to coerce compliance by withholding governmental benefits from noncompliers (Butler case).