BUTLER, UNITED STATES v. 297 U.S. 1 (1936)

In this historic and monumentally inept opinion, the Supreme Court ruled that the United States has no power to regulate the agrarian sector of the economy. The agricultural adjustment act of 1933 (AAA) sought to increase the purchasing power and living standards of farmers by subsidizing the curtailment of farm production and thus boosting farm prices. Congress raised the money for the subsidies by levying an excise tax on the primary processors of each crop, in this case a cotton mill, which passed on to the consumer the cost of the tax. AAA was the agricultural equivalent of a protective tariff. By a vote of 6–3 the Court held, in an opinion by Justice owen roberts, that the statute unconstitutionally invaded the powers reserved to the states by the tenth amendment."It is a statutory plan," Roberts declared, "to regulate and control agricultural production, a matter beyond the powers delegated to the federal government. The tax, the appropriation of the funds raised, and the direction for their disbursement, are but parts of the plan. They are but means to an unconstitutional end." Roberts reached his doctrine of dual federalism by simplistic mechanical jurisprudence. He sought to match the statute with the Constitution and, finding that they did not square, seriously limited the taxing and spending power.

Roberts did not question the power of Congress to levy an excise tax on the processing of agricultural products; he also conceded that "the power of Congress to authorize expenditures of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution." He did not even deny that aiding the agrarian sector of the economy benefited the general welfare, in accord with the first clause of Article I, section 8; rather he reasoned that the Court did not need to decide whether an appropriation in aid of agriculture fell within the clause. He simply found that the Constitution did not vest in the government a power to regulate agricultural production. He ruled, too, that the tax was not really a tax, because Congress had not levied it for the benefit of the government; it expropriated money from processors to give to farmers. The tax power cannot, Roberts declared, be used as an instrument to enforce a regulation of matters belonging to the exclusive realm of the states, nor can the tax power be used to coerce a compliance which Congress has no power to command.

Despite Roberts's insistence on calling the crop curtailment program "coercive," it was in fact voluntary; a minority of farmers elected not to restrict production, foregoing subsidies. But Roberts added that even a voluntary plan would be unconstitutional as a "federal regulation of a subject reserved to the states." He added: "It does not help to declare that local conditions throughout the nation have created a situation of national concern; for that is but to say that whenever there is a widespread similarity of local conditions, Congress may ignore constitutional limitations upon its own powers and usurp those reserved to the states."

Justice harlan fiske stone, joined by Justices louis d. brandeis and benjamin n. cardozo, wrote a scathing, imperishable dissent, one of the most famous in the Court's history. Strongly defending the constitutionality of the AAA on the basis of the power to tax and spend, Stone lambasted Roberts's opinion as hardly rising "to the dignity of an argument" and as a "tortured construction of the Constitution." Stone's opinion confirmed President franklin d. roosevelt's belief that it was the Court, not the Constitution, that stood in the way of recovery. The AAA decision helped provoke the constitutional crisis of 1937.

Leonard W. Levy
(1986)

Bibliography

Hart, Henry M. 1936 Processing Taxes and Protective Tariffs. Harvard Law Review 49:610–618.

Murphy, Paul L. 1955 The New Deal Agricultural Program and the Constitution. Agricultural History 29:160–169.