Chapter 9: Affirming the New Deal

West Coast Hotel v. Parrish (1937)

The Great Depression that followed the Wall Street panic of November 1929 was an economic scourge of mammoth proportions. Its effects lingered for a decade and spread around the world. Unemployment soared to almost one-quarter of the American labor force in 1933, a twentieth century high. Between 1929 and 1932 more than five thousand banks closed their doors and the life savings of millions of Americans evaporated.

In 1932 the Democratic Presidential candidate Franklin D. Roosevelt swept to victory over the Republican incumbent, Herbert Hoover. FDR offered a middle-of-the-road approach to the depression through what he called a “New Deal for America.” This program embraced certain social-welfare assumptions, including the idea that government had a positive duty to provide a minimum floor for the well-being of its citizens. FDR enjoyed broad support from the Democratic Congress as well as from the business community, which realized that something had to be done to restore economic confidence. In an effort to do so, FDR created an alphabet soup of agencies. The President successfully urged Congress to pass legislation to create the Securities and Exchange Commission (SEC) to oversee Wall Street and the Tennessee Valley Authority (TVA) to promote economic development in the poverty-stricken Tennessee River Valley. He pushed Congress to pass the Glass-Steagall Act to guarantee bank deposits and the Agricultural Adjustment Act (AAA) to subsidize farmers and prop up commodity prices. The New Deal put people to work on public projects through the Works Progress Administration (WPA) and then provided unemployment insurance and old-age pensions through the Social Security Act (1935).

The most controversial New Deal measure was the National Industrial Recovery Act (NIRA). The act was intended to regulate vast areas of business and labor that had previously been left untouched. The NIRA not only broke down many of the traditional lines blocking government involvement in the economy, but it also shifted significant authority from Congress to the President and through him to a new administrative agency, the National Recovery Administration (NRA).

The New Dealers were pragmatic and determined to end the depression, but they were often impatient with prevailing constitutional rules. FDR, for example, ordered the committee charged with writing the NIRA to complete its work in one week. That impatience proved costly, as critics turned to the Supreme Court for assistance. The justices raised questions about it and other legislation that involved the scope of Presidential emergency powers, the delegation by Congress of its authority to administrative agencies, the breadth of the commerce clause, and the intervention by the national government in matters previously the domain of the states. The result was a collision between the Court—a majority of whose justices saw their responsibility as remaining faithful to the principle that government should have only a limited role in the economy—and the administration, which trumpeted constitutional innovation as the best way to address the plight of millions of Americans.

The make-up of the Court ensured a collision. Its conservative wing was composed of the Four Horsemen, sarcastically named by their New Deal critics after the Four Horsemen of the Apocalypse—war, famine, pestilence, and death—identified in chapter 6 of the Bible’s Book of Revelation. Justices Willis Van Devanter, James McReynolds, George Sutherland, and Pierce Butler consistently voted as a bloc against the New Deal. On the other wing were three generally liberal justices: Benjamin N. Cardozo, Louis D. Brandeis, and Harlan Fiske Stone, who supported the New Deal and also believed that judges should defer to the legislative branch. Between these two blocs were the swing votes of Chief Justice Charles Evans Hughes and Justice Owen J. Roberts.

So-called Little New Deals—legislation at the state level intended to offer economic relief—came before the Court for review. In New State Ice Company v. Liebman (1932), for example, they struck down an Oklahoma law that made the manufacture and sale of ice a public business susceptible to regulation by the state. The justices condemned the law as a state-sanctioned monopoly that interfered with the opportunity for new ice producers to enter the market. Four years later the justices, in a 5–4 decision, rejected a model New York state minimum wage law in Morehead v. New York ex rel. Tipaldo (1936). The phrase “ex rel.” is Latin for “on behalf of.” In this instance, the state of New York was acting on behalf of Tipaldo, a private citizen.

Even the liberal members of the Court were skeptical about the constitutional basis of the early New Deal measures. On so-called Black Monday, May 27, 1935, a unanimous Court struck down several key provisions of the New Deal recovery plan: Louisville Bank v. Radford threw out a mortgage relief act for farmers; Humphrey’s Executor v. United States limited the President’s powers to replace members of independent boards; and Schechter Poultry Company v. United States declared the NRA unconstitutional. The AAA was rejected, as well.

Roosevelt won a landslide victory in 1936 over his Republican opponent, Alfred Landon, with a campaign in which he regularly attacked the Court. He began his second term by directly confronting the justices. Roosevelt was especially frustrated because during his first term no vacancies had occurred on the high bench. FDR’s supporters complained that the justices were too old and too out of touch with the times. The newspaper columnists Drew Pearson and Robert S. Allen in 1936 wrote an exposé of the Court, and the public fastened its title, The Nine Old Men, on the justices. The description was far from accurate; the oldest member of the Court, Louis D. Brandeis, was in fact a member of the Court’s liberal wing.

With his election triumph only months old, FDR on March 9, 1937, laid out his plans for the Court in one of his nationwide “Fireside Chats” on the radio. This talk was designed to garner public support for his Judiciary Reorganization Bill. FDR proposed to appoint one additional justice to the Court for every sitting justice over the age of seventy, up to a limit of six new justices. There were five justices over seventy and that meant the Court would grow immediately to fourteen. The plan also called for a significant increase in the number of federal circuit and district court judges.

The proposal ignited a storm of protest, even from commentators angry with the Court’s hostility to the New Deal. The President seemed to many Americans to place politics above the rule of law. Critics charged FDR with an ill-advised attack on a bedrock American institution, the Supreme Court, and dubbed the plan “court-packing,” a title that stuck to FDR’s proposal. The plan was entirely legal, as Congress has constitutional authority to change the size of the high court. Nonetheless, it focused intense scrutiny on the Court, appeared to be a direct threat to the independence of the justices, and raised the specter of a President seeking to usurp constitutional power. The measure also divided congressional Democrats, in part because FDR failed to reach out to them before announcing his plan.

Roosevelt cloaked his court-packing scheme in the rhetoric of judicial reform. More judges were required to clear the dockets of the lower federal courts, he explained. The argument met a cold response from the justices. The dockets of these courts had expanded dramatically in the twentieth century, but Chief Justice Charles Evans Hughes reminded Congress that putting more justices on the Court would only slow its work. In the final analysis, the President attempted to pull every possible lever to make his blatantly political proposal work. For example, Roosevelt and his attorney general, Homer Cummings, sought support from the labor unions by stressing that Democratic appointees to the lower courts would curtail the practice of federal judges issuing injunctions against workers engaged in strikes and lockouts.

The Judiciary Reorganization Bill, while probably doomed from the outset, suffered from some bad luck. Senator Joseph T. Robinson, of Arkansas, the Senate floor manager for the bill and a strong ally of the President, died during the summer while the measure was being debated. The Court itself also seemingly influenced the outcome; at least some historians believe that a few of the justices read and understood the 1936 election returns—FDR had the support of the American public.

It was in the context of this most aggressive attack on the Court in its history that the justices heard the case of West Coast Hotel v. Parrish (1937). Their decision in the case marked the beginning of the end of the era of economic substantive due process law. Scholars of the Court have described it as a “A Switch in Time That Saved Nine.” That is, the two swing votes on the Court, Hughes and Roberts, aligned themselves with the liberal wing to give a constitutional green light to the next generation of New Deal legislation. The most important “switch” was Roberts, who had voted with the majority in Morehead to strike down the New York State minimum wage law.

Elsie Parrish was a chambermaid at the Cascadian Hotel in Wenatchee, Washington, where she was paid twelve dollars for a forty-eight-hour week. Under a 1913 state minimum wage law she should have received $14.50. She sued the hotel in state court and won, but the hotel appealed. The case was argued two months before President Roosevelt announced his court-packing program and decided two weeks afterward.

By 1937, the Court had more than thirty years of experience with laws protecting women in industry. In 1908, in Muller v. Oregon, the Court upheld a ten-hour workday law for women workers while simultaneously affirming the precedent of liberty to contract for men established in Lochner v. New York (1903). In 1917, in Bunting v. Oregon, the justices approved a ten-hour law for both men and women without ever mentioning Lochner. In 1923, in Adkins v. Children’s Hospital, however, the Court resurrected the precedent set in Lochner and struck down a federal minimum wage law for women working in the District of Columbia. The majority in this 5–3 case (Brandeis recused himself because his daughter worked for the District’s minimum wage board) insisted that workers should be free to find the best employment terms. In 1936, the Court relied on the Adkins precedent to overturn the New York State minimum wage law in Morehead. In the words of Justice Pierce Butler, one of the Four Horsemen, the “State is without power by any form of legislation to prohibit, change, or nullify contracts between employers and adult women workers as to the amount of wages to be paid.”

The decision in Morehead, with its strident and uncompromising tone in the midst of the Great Depression, was one of the Court’s biggest mistakes. The building of a majority, however, depended especially on the vote of Justice Roberts. In this instance Roberts sided with his conservative colleagues, providing the fifth vote to reject the minimum wage legislation. Speculation was that he would do the same in West Coast Hotel. As it turned out, he did not.

The underlying constitutional issues in the case cut to the core of the New Deal: the power of legislators to pass measures designed to cushion the blow delivered by the depression. The legal counsel for the hotel company believed he and his client were on safe ground in attacking Washington State’s 1913 minimum wage law. First, it had been passed well before the depression even began and therefore could not be justified as “emergency” legislation designed to deal with a broken economy. Second, the controlling precedent was Adkins v. Children’s Hospital (1923), in which the justices had struck down a 1918 minimum wage law for women working in the District of Columbia. The Washington State statute was unconstitutional, counsel argued, because it set up one standard—that wages must be sufficient to provide for adult women workers’ needs—but it did not require that the wage have any reasonable relationship to the value of the worker’s services.

Counsel for Parrish argued that the timing of the passage of the law was irrelevant. If it was important in 1913, then surely it was even more important in the midst of the depression. The only issue was whether the 1913 act was a reasonable exercise of the state’s police powers over health, safety, morals, and welfare. The Constitution did not prohibit any state from regulating such matters. The Court, Parrish’s counsel noted, had previously upheld similar legislation in Nebbia v. New York (1934) by a vote of 5–4. In that case, Justice Roberts had voted with the majority and proclaimed that legislators could act as long as they did so with the goal of promoting the public welfare. Parrish’s counsel drew on Roberts’s arguments to remind the other justices that they should defer to legislators, as they and not judges were best positioned to determine what matters of public welfare required attention. In passing the minimum wage law, the Washington legislature had considered appropriately the needs of the people of the state.

Parrish’s counsel also suggested that the Court’s long-standing commitment to the rule of reason should be set aside in this case. That rule provided that the justices could overturn legislative acts that interfered with economic activity as unwise or unreasonable, highly subjective standards and ones that gave the justices broad powers to second-guess legislative actions. What was reasonable was largely in the minds of the justices. Parrish’s counsel argued against these subjective standards of judicial oversight and for recognition of two obvious realities. First, the Constitution granted the state of Washington the power to enact minimum wage laws through the police powers. And, second, the law had received the approval of the state’s highest court. The justices of the U.S. Supreme Court should defer to the decisions of state court judges, especially as they had never reversed any state supreme court decision that upheld a local minimum wage regulation.

Chief Justice Charles Evans Hughes wrote the majority opinion for a badly divided Court. It was said that no one ever slapped Charles Evans Hughes on his back and called him “Charlie.” He was stern, hardworking, religious, and noted more for his intelligence than his conviviality. He had a photographic memory that intimidated his colleagues. Yet he was generous, kind, and forbearing in an institution in which egos typically came in only one size: extra large.

The key support for Hughes’s 5 to 4 majority came from Justice Roberts, who shifted to the liberal side, as he had done in Nebbia. The Court upheld the Washington State law and overturned Adkins v. Children’s Hospital. Hughes’s opinion affirmed the principle that the Constitution forbade deprivation of liberty to contract if done without due process of law, but confirmed that the legislature has broad scope to restrain or regulate this liberty. Legislation such as the law passed in Washington was constitutional when it was adopted for the protection of the community. In dealing with the relationship of employer and employee, the legislature had to have wide discretion, including responsibility to insure that conditions of work were wholesome and free from oppression. The state, Hughes concluded, had a special interest in protecting women against employment contracts that through poor working conditions, long hours, or scant wages could undermine their health. Because the health of women was tied closely to preserving “the strength and vigor of the race,” the state had to protect women from being exploited by unscrupulous employers. The Washington minimum wage law was not an act of arbitrary discrimination because it did not extend to men; instead, as had been true in Muller v. Oregon (1908), it was a realistic response to the vulnerable condition of women. Hughes also observed that the unparalleled demands for relief that arose during the Great Depression remained and that the states had, through their police powers, the authority to address its consequences.

Justice George Sutherland wrote for the dissenting Four Horsemen. Sutherland was born in England but raised in Utah, where he practiced law and achieved a measure of Republican political prominence. He offered his vote and voice in support of substantive due process, liberty to contract, and continuing judicial barriers to state government regulation and control. From Sutherland’s perspective, Washington State had unreasonably violated the holding in Adkins. Women and men, he insisted, were equals, and legislation should not treat them differently. The setting of a minimum wage for women was an arbitrary form of discrimination prohibited by the due process clause of the Fourteenth Amendment.

West Coast Hotel heralded greater Supreme Court deference to state economic regulation. It also forged a strange ideological partnership; the Four Horsemen and feminists formed an awkward alliance. Because the minimum wage for women rested on a theory of women’s inequality, and because labor restrictions based on gender interfered with women’s employment opportunities, many feminists denounced Hughes’s opinion and opposed minimum wage laws for women in general.

The decision helped close the door on FDR’s court-packing plan because a majority of the justices signaled that they were moving toward supporting New Deal economic measures. That signal became even more clear two weeks later when the justices, in NLRB v. Jones & Laughlin Steel Corporation, upheld one of the most important and radical pieces of New Deal legislation, the National Labor Relations Act, also known as the Wagner Act. That measure, passed in 1935, guaranteed workers’ right to organize unions and prohibited employers from dismissing them for doing so. Once again the justices split 5 to 4, with the Four Horsemen in the minority. By upholding the legislation, the Court made it clear that it would no longer block congressional efforts to regulate the national economy.

The Court proceeded to affirm other key elements of FDR’s program. On May 24, 1937, in Steward Machine Company v. Davis, the justices upheld the Social Security Act, a landmark law that established mechanisms to provide for unemployment compensation and old-age benefits. The unemployment provision meant that workers thrown out of their jobs would receive a basic level of support until they could find new work. The old-age benefit meant that for the first time, the national government would provide a limited financial safety net through pensions to workers beyond a certain age. The West Coast Hotel and Jones & Laughlin decisions also provided legal support for another piece of New Deal legislation, the Fair Labor Standards Act of 1938, which the Court upheld in United States v. Darby Lumber Company. This law provided for the setting of federal minimum wages and maximum hours for all employees in industries whose products were shipped through interstate commerce.

Although the justices did not formally abandon substantive due process in economic regulatory cases, there was no doubt that they had retreated from the business of trying to regulate business. Between 1937 and 1980, the Supreme Court cited West Coast Hotel and Jones & Laughlin some forty-one times, a fair indication of the importance of the cases in affirming the new administrative and social welfare state wrought by the New Deal.

The impact of the Court’s decisions in West Coast Hotel and Jones & Laughlin was far reaching. With these new precedents in place, the Court upheld virtually every federal and state regulation of business for the next half century. By indicating that they would no longer use liberty to contract and substantive due process as a basis to interfere with economic legislation, the justices were able to turn their attention to civil liberties and civil rights, issues that dominated the post–World War II Court. In the conservative glow of the 1990s the Court did begin to question whether Congress was too actively engaged in regulating the economy, but the New Deal precedents retain great importance.

In the end, the Court emerged from FDR’s attack stronger than ever. The American people concluded that law and politics should be separated, and that while the justices might not be above politics, they served the nation best when they acted as if they were.