Lead Opinion
delivered the opinion of the Court.
In this case we must determine whether certain provisions of the Agricultural Adjustment Act, 1933,
Title I of the statute is captioned “Agricultural Adjustment.” Section 1 recites that an economic emergency has arisen, due to disparity between the prices of agricultural and other commodities, with consequent destruction of farmers’ purchasing power and breakdown in orderly exchange, which, in turn, have affected transactions in agricultural commodities with a national public interest and burdened and obstructed the normal currents of commerce, calling for the enactment of legislation.
“To establish and maintain such balance between the production'and consumption of agricultural commodities, and such marketing conditions therefor, as will reestablish prices to farmers at a level that will give agricultural commodities2 a purchasing power with respect to articles that farmers buy, equivalent to the purchasing power of agricultural commodities in the base period.”’
The base period, in the case of cotton, and all other commodities except tobacco, is designated as that between-August, 1909, and July, 1914.
The further policies announced are an approach to the desired equality by gradual correction of present inequalities “at as rapid a rate as is deemed feasible in view of the current consumptive demand in domestic and foreign markets,” and the protection of consumers’ interest by readjusting farm production at such level as will not increase the percentage of the consumers’ retail expenditures for agricultural commodities or products derived therefrom, which is returned to the farmer, above the percentage returned to him in the base period.
Section 8 provides, amongst other things, that “In order to effectuate the declared nolicy,” the Secretary of Agriculture shall have power
“(1) To provide for reduction in the acreage or reduction in the production for market, or both, of any basic agricultural commodity, through agreements with producers or by other voluntary methods, and to provide for rental or benefit payments.in connection therewith or upon that part of the production of any basic agricultural commodity required for domestic consumption, in such amounts as the Secretary deems fair and reasonable, to
“(2) To enter into marketing agreements with processors, associations of producers, and others engaged in the handling, in the current of interstate or foreign commerce of any agricultural commodity or product thereof, after due notice and' opportunity for hearing to interested parties. . . .”
“(3) To issue licenses permitting processors, associations of producers, and others to engage in the handling, in the current of interstate or foreign commerce, of any agricultural commodity or product thereof, or any competing commodity or product thereof.”
It will be observed that the Secretary is not required, but is permitted, if, in his uncontrolled judgment, the policy of the act will so be promoted, to make agreements with individual farmers for á reduction of acreage or production upon such terms as he may think fair and reasonable. '
Section 9 (a) enacts:
“To obtain revenue for extraordinary expenses incurred by reason of the national economic emergency, there shall be levied processing taxes as hereinafter provided. When the Secretary of Agriculture determines that rental oi] benefit payments are to be made with respect to any basic agricultural commodity, he shall proclaim such determination, and a processing tax shall be in effect with respect to such commodity from the beginning of the marketing •year therefor next following the date of such proclamation. The processing tax shall be levied, assessed, and collected upon the first , domestic processing of the commodity, whether of domestic production or imported, and shall be'paid by'the processor. ,, .
The Secretary may from time to time, if he finds it necessary for the effectuation of the policy of the act, readjust thé amount of the exaction to meet the require
Section 9 (b) fixes the tax “at such rate as equals the difference between the current average farm price for the commodity and the fair exchange value,”’ with power in the Secretary, after investigation, notice, and hearing, to readjust the tax so as to prevent the accumulation of surplus stocks and depression of farm prices.
Section 9 (c) directs that the fair exchange value of a commodity shall be such a price as will give that commodity the same purchasing power with respect to. articles farmers buy as it had during the base period and that the fair exchange value and the current average farm price of a commodity shall be ascertained by the Secretary' from available statistics in his department.
Section 12 (a) appropriates $100,000,000 “to be available to the Secretary of Agriculture for administrative expenses under this title and for rental and benefit payments . . .”; and § 12 (b) appropriates the proceeds derived from all-taxes imposed under the act “ to be available to the Secretary of Agriculture for expansion of markets and removal of surplus agricultural products . . . administrative expenses, rental and benefit payments, and refunds on taxes.”
Section 15 (d) permits the Secretary, upon certain conditions, to impose compensating taxes on commodities in competition with those subject to the processing tax.
By § 16 a floor tax is imposed upon the sale, or other disposition of. any article processed wholly or in chief value from any commodity with respect to which a proc-. essing tax is to be levied in amount equivalent to that of the processing tax which would be payable with respect to the commodity from which the article is processed if the processing had occurred on the date when the processing tax becomes effective.
The United States presented a claim to the respondents as receivers of the Hoosac Mills Corporation for processing and floor taxes on cotton levied under §§ 9 and 16 of the act. The receivers recommended that the claim be disallowed. The District Court found the taxes valid and ordered them paid.
First. At the outset the United States contends' that the respondents have no standing to question the validity of the tax. The position is that the act is merely a revenue measure levying an excise upon the activity of processing cotton, — a proper subject for the imposition of such a tax, — the proceeds of which go into the federal treasury and thus become available for appropriation for any purpose. It is said that what the respondents are endeavoring to do is to challenge the intended use of the money pursuant to Congressional appropriation when, by confession, that money will have become the property of the Government and -the taxpayer will no longer have any interest in it. Massachusetts v. Mellon,
The tax can only be sustained by ignoring the avowed purpose and operation of the act, and holding it a measure merely laying an excise upon processors to raise revenue-for the support of government. Beyond cavil the sole object df the legislation is to restore the purchasing power of agricultural products to a parity with that -prevailing in an earlier day,' to take money from the processor and bestow it upon farmers
The tax plays an indispensable part in the plan of regulation. As stated by the Agricultural’ Adjustment Administrator, it is “ the heart of the law ”; a means of “ accomplishing one or both of two things intended to .help farmers attain parity prices and purchasing power.”
The statute not only avows an aim foreign to the procurement of revenue for the support of government, but by its operation shows the exaction laid upon processors to be the necessary means for the intended control of. agricultural production.
Various objections to the act were presented. In answering them the court said (p. 595):
“But the true answer to all these objections is that the power exercised in this instance is not the taxing power. The burden imposed on the ship owner by this statute is the mere incident of the regulation of commerce — of that branch of foreign commerce which is involved in immigration. ...”
“It is true not much is said about protecting the ship owner. But he is the man w;ho reaps the profit from the transaction, . . . The sum demanded of him is not, therefore, strictly speaking, a tax or duty within the meaning of the Constitution. The money thus raised, though paid . into the Treasury, is appropriated in advance to the uses of the statute, and does not go to the general support of the government.”
While there the exaction was sustained as an appropriate element in a plan within the power of Congress “to regulate commerce with foreign nations,” no question was made of the standing of the shipowner to raise the ques
It is inaccurate and misleading to speak of the exaction from processors prescribed by the challenged act as a tax, or to say that as a tax it is subject to no infirmity. A tax, in the general understanding of the term, and as used in the Constitution, signifies an exaction for the support of the Government. The word has never been thought to connote the expropriation of money from one group for the benefit of another. We may concede that the latter sort of imposition is constitutional when imposed to effectuate regulation of a matter in which both groups are interested and in respect of which there is a power of legislative regulation. But manifestly no justification for it can be found unless as an integral part of such regulation. The exaction cannot be wrested out of its setting, denominated an excise for raising revenue and legalized by ignoring its purpose as a mere instrumentality for bringing about a' desired end. To do this would be to shut our eyes to what all others than we can see and understand.
Child Labor Tax Case,
We conclude that the act is one regulating agricultural production; that the tax is a mere incident of such regulation and that the respondents have standing to challenge the legality of the exaction.
It does not follow that as the act is notan exertion of the taxing power and the exaction not a true tax, the statute is void or the exaction uncollectible. For, to paraphrase what was said in the Head Money Cases (supra), p. 596, if thisds an expedient regulation by Congress, of a subject within one of its granted powers, “ and the end to be attained is one falling within that power, the act is not void, because, within a loose and more extended sense than was used in the Constitution,” the exaction is called .a tax.
There should be no misunderstanding as to the function of this court in such a case. It' is sometimes said that the court assumes a power to overrule or control the action of the people’s representatives. This is a misconception. The Constitution is the supreme law of the land ordained and established by the people. All legislation must conform to the principles it lays down. When an act of Congress is appropriately challenged in the courts as not conforming to the constitutional mandate the judicial branch of the Government has only one duty, — to lay the article of the Constitution which is invoked beside the statute which is challenged and to decide whether the latter squares with the former. All the court does, or can do, is to announce its considered judgmeñt upon the qües
The question is not what power the Federal Government ought to have but what powers in fact have been given by the .people. It hardly seems necessary to reiterate that ours is a dual form of government; that in every state there are two governments, — the state and the United States. Each State has all governmental powers save such as the people, by their Constitution, have conferred upon the United States, denied to the States, or reserved to themselves. The federal union is a government of delegated powers. It has only such as are expressly conferred upon it and such as are reasonably to be implied from those granted. In this respect we' differ radically from nations where all legislative power, without restriction or limitation, is vested in a parliament or other legislative body subject to no .restrictions except the discretion of its members.
Article I, § 8, of the Constitution vests sundry powers in the Congress. But two of its clauses have any bearing upon the validity of the statute under review.
The third clause endows the Congress with power “to regulate Commerce . . . among the several States.” Despite a reference in its first section to a burden upon, and an obstruction of the normal currents of commerce, the act' under review does not purport' to regulate transactions in interstate or foreign
The clause thought to authorize the legislation, — the first, — confers upon the Congress power “to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States. . . ” It is not contended that this provision grants power to regulate agricultural production upon the theory that such legislation would promote the general welfare. The Government concedes that the phrase “to provide for the general welfare” qualifies the power “to lay and collect taxes.” The view that the clause grants power to provide for the. general welfare, independently of the taxing power, has never been authoritatively accepted. Mr. Justice Story points out that if it were adopted “it is obvious that under color, of-the generality of the words, to ‘provide for the common defence and general welfare,? the government of the United States is, in reality, a government of general and unlimited powers, notwithstanding the subsequent enumeration of specific powers.”
Nevertheless the Government asserts that warrant is found in this clause for the adoption of the Agricultural Adjustment Act. The argument is that Congress may appropriate and authorize the spending of moneys for the “general welfare”; that the phrase should be liberally
The Congress is expressly empowered to lay taxes to provide for the general welfare. Funds in the Treasury as a result of taxation may be expended only through appropriation. (Art. I, § 9, cl. 7.) They can never accomplish the objects for which they were collected unless the power to appropriate is as broad as the power to tax. The necessary implication from the terms of the grant is that the public funds may be appropriated “ to provide for the general welfare of the United States.” These words cannot be meaningless, else they would not have been used. The conclusion must be that they were intended to limit and define the granted power to raise and to expend money. How shall they be construed to effectuate the intent of the instrument?
Since the foundation of the Nation sharp differences of opinion have persisted as to the true interpretation of the phrase. Madison asserted it amounted to no more than a reference to the other powers enumerated in the subsequent clauses of the same section; that, as the United States is a government of limited and enumerated powers, the grant of power to tax and spend for the general national welfare must be confined to the enumerated legislative fields committed to the Congress. In this view the phrase is mere tautology, for taxation and appropriation are or may be necessary incidents of the exercise of any of the enumerated legislative powers. Hamilton, on the other hand, maintained the clause confers a power separate and distinct from those later enumerated, is not restricted in meaning by the grant of them, and Congress consequently has a substantive power to tax and to ap
But the adoption of the broader construction leaves the power to spend subject to limitations.
As Story says:
“The Constitution was, from its very origin, contemplated to be the frame of a national government, of special and enumérated powers, and not of general and unlimited powers.”13
Again he says:
“A power to lay taxes for the common defence and general welfare of the United States is not in common sense a general power. It is limited to those objects. It cannot constitutionally transcend them.”14
That the qualifying phrase must be given' effect all advocates of broad construction admit. Hamilton, in his
As elsewhere throughout the Constitution the section in question lays down principles which control the use of the power, and does not attempt meticulous or detailed directions. Every presumption is to be indulged in favor of faithful compliance, by Congress with the mandates of the fundamental law. Courts are reluctant to adjudge any. statute in contravention of them. But, under our frame of government, no other place is provided where the citizen may be heard to urge that the law fails to conform to the limits set upon the use of a granted power. When such ^ contention comes here we naturally require a showing that by no reasonable possibility can the challenged legislation fall within the wide, range of discretion permitted to the Congress. How great is the extent of that range, when the subject is the promotion of the general welfare of the United States, we hardly need remark. But, despite the breadth of the legislative discretion, our duty to hear and to render judgment remains. If the statute plainly violates the stated principle, of the Constitution we must so declare.
From the accepted doctrine that the United States is a government of delegated powers, it follows that those not expressly granted, or reasonably to be implied from such as are conferred, are reserved to the states or to the people. To forestall any suggestion to the contrary, the Tenth Amendment was adopted.
It is an established principle that the attainment of a prohibited end may not be accomplished under the pretext of the exertion of powers which are granted.
“ 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 intrusted to the government; it would become the painful düty of this tribunal, should a case requiring such a de
“ Congress cannot, under the pretext of executing delegated power, pass laws for the accomplishment of objects not entrusted to the Federal Government. And we accept as- established doctrine that any provision of an act of Congress ostensibly enacted under powér granted by the Constitution, not naturally and reasonably adapted to the effective exercise of such power but solely to the achievement of something plainly within power reserved to the States, is invalid and cannot be enforced.” Linder v. United States,
These principles are as applicable to the power to lay taxes as to any other federal power. Said the court, in McCulloch v. Maryland, supra, 421:
“ Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the •constitution, are -constitutional.”
The power of taxation, which is expressly granted, may, of course, be adopted as a means to carry into operation another power also expressly granted. But resort to the taxing power to effectuate an end which is not legitimate, not within the scope of the Constitution, is obviously inadmissible.
“ Congress is not empowered to tax for those purposes which are within the exclusive province of the States.” Gibbons v. Ogden,
“There are, indeed, certain virtual limitations, arising from the principles of the Constitution itself. It would undoubtedly be an abuse of the [taxing] power if so exercised as to impair the separate existence and independent self-government of the States or ii exercised for ends
In the Child Labor Tax Case,
Third. If the taxing power may not be used as the instrument to enforce a regulation of matters of state concern with respect to which the Congress has no authority to interfere, may it, as in the present case, be employed to raise the money necessary to purchase a compliance which the Congress is powerless to command? The Government asserts that whatever might be said against the validity of the plan if compulsory, it is constitutionally sound because the end is accomplished by voluntary cooperation. There are two sufficient answers to the contention. The regulation is not in fact voluntary. The farmer, of course, may' refuse to comply, but the price of such refusal is the loss of benefits. The amount offered is intended to be sufficient to exert pressure on him to
In Frost Trucking Co. v. Railroad Comm’n,
“If so, constitutional guaranties, so carefully safeguarded against direct assault, are open to destruction by the indirect but no less effective process of requiring a surrender, which, though, in form voluntary, in fact lacks none of the elements of compulsion. Having regard to form alone, the act here is an offer to the private carrier of a privilege, which the state may grant or deny, upon a condition, which the carrier is free to accept or reject. In reality, the carrier is given no choice, except a choice between the rock and the whirlpool, — an option to forego a privilege which may be vital to his livelihood or submit to a requirement which may constitute an intolerable burden.” (p. 593.)
But if the plan were one for purely voluntary co-operation it would stand no better so far as federal power is' concerned. At best it is a scheme for purchasing with federal funds submission to federal regulation of a subject reserved to the states.
It is said that Congress has the undoubted right to appropriate money to executive officers for expenditure under contracts between the government and individuals; that much of the total expenditures is so made. But appropriations and expenditures under contracts for proper
We are referred to numerous types of federal appropriation which have been made in the past, and it is asserted no question has been raised as to their validity. We need not stop to examine or consider them. As was said in Massachusetts v. Mellon, supra (p. 487):
“. . . as an examination of the acts of Congress will disclose, a large number of statutes appropriating or involving the expenditure of moneys for non-federal purposes have been enacted and carried into effect.”
As the opinion points out, such expenditures have not been challenged because no remedy was open for testing their’ constitutionality in the courts.
We are not here concerned with a conditional appropriation of money, nor with a provision that if certain conditions are not complied with the appropriation shall no longer be available. By the Agricultural Adjustment Act the amount of the tax is appropriated to be expended only in payment under contracts whereby the parties bind themselves to regulation by the Federal Government. There is an obvious difference between a statute stating the conditions upon which moneys shall be expended and one effective only upon assumption of a contractual obligation to submit to a regulation which otherwise could not be enforced. Many examples pointing the distinction might be cited. We are referred to appropriations in aid
But it is said that there is a wide difference in another respect, between compulsory regulation of the local affairs of a state’s citizens and the mere making of a'contract relating to their conduct; that, if any state objects, it may declare the contract void and thus prevent those under the state’s jurisdiction from complying with its terms. The argument is plainly fallacious. The United States can make the contract only if the federal power to tax and to appropriate reaches the subject matter of the contract. If this does reach the subject matter, its exertion cannot be displaced by state action. To say otherwise is to deny the supremacy of the laws of the United States; to make them subordinate to those of a State. This would reverse the cardinal principle embodied in the Constitution and substitute one which declares that Congress may only effectively legislate as to matters within federal competence when the States do not dissent.
Congress has no power to enforce its commands on the farmer to the ends sought by the Agricultural Adjustment Act. It must follow that it may not indirectly accomplish those ends by taxing and spending to purchase compliance. The Constitution and the entire plan of our government negative any such use of the power to tax and to spend as the act undertakes to authorize. It does not help to declare that local conditions throughout the nation have created a situation of national concern; for this
If the act before us is a proper exercise of the federal taxing power, evidently the regulation of all industry throughout the United States may be accomplished by similar exercises of the same power. It would be possible to exact money from one branch of an industry and pay it to another branch in every field of activity which lies within the province of the states. The mere threat of such a procedure might well induce the surrender of rights and the compliance with federal regulation as the price of continuance in business. A few instances will illustrate the thought.
Let us suppose Congress should determine that the farmer, the miner or some other producer of raw. materials is receiving too much for his products, with consequent depression of the processing industry and idleness of its employes. Though, by confession, there is no power vested in Congress to compel by statute a lowering of the prices of the raw material, the same result might be accomplished, if the questioned act be valid, by taxing the producer upon his output and appropriating the proceeds to the processors, either with or without conditions imposed as the consideration for payment of the subsidy.
We have held in Schechter Poultry Corp. v. United States,
Should Congress ascertain that sugar refiners are not receiving .a fair profit, and that this is detrimental to the entire industry, and in turn has its repercussions in trade and commerce generally, it might, in analogy to the present law, impose an excise of two cents a pound on every sale of the commodity and pass the funds collected to such refiners, and such only, as will agree to maintain a certain price.
Assume that too many shoes are. being manufactured throughout the nation; that the market is saturated, the price depressed, the factories running half-time, the employes suffering. Upon the principle of the statute in ■question Congress might authorize the Secretary of Commerce to enter into contracts with shoe -manufacturers providing that each shall reduce his output and that the United States will pay him a fixed sum proportioned to' such reduction, the money to make the payments to be raised by a tax on ,all retail shoe dealers or their customers.
Suppose that there are too many garment workers in the large cities; - that this results in dislocation of the economic balance. Upon the principle contended for an excise might be laid on the manufacture of all garments manufactured and the proceeds paid to those manufacturers who agree to remove their plants to cities having not more than a hundred thousand population. Thus, through the asserted power of taxation, the federal government, against the will of individual states, might completely redistribute the industrial population.
A possible result of sustaining the claimed federal power would be that every business group which thought itself under-privileged might demand that a tax be laid on its vendors or vendees, the proceeds to be appropriated to the redress of its deficiency of income.
Until recently no suggestion of the existence of any such power in the- Federal Government has been advanced. 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.
Hamilton himself, the leading advocate of broad interpretation of the power to tax and to appropriate for the general welfare, never suggested that any power granted by the Constitution could be used for the destruction of local self-government in the states. Story countenances no such doctrine. It seems never to have occurred to them, or to those who have agreed with them, that the general welfare of the United States, (which has aptly been termed “ an indestructible Union, composed of indestructible States,”) might be served by obliterating the constituent members of the Union. But to this fatal conclu
Since, as we have pointed out, there was no power in the Congress to impose the contested exaction, it could not lawfully-ratify or confirm what an executive officer had done in that regard. Consequently the Act of 1935 does not affect the rights of the parties.
The judgment is
Affirmed.
Notes
May 12, 1933, c. 25, 48 Stat. 31.
Section 11 denominates wheat, cotton, field com, hogs, rice, tobacco, and milk and its products, “basic agricultural commodities,” to which the act is to apply. Others have been added by later legislation.
Franklin Process Co. v. Hoosac Mills Corp.,
Butler v. United States, 78 F. (2d) 1.
49 Stat. 750, c. 641.
U. S. Department of Agriculture, Achieving A Balanced Agriculture, p. 38: “Farmers should not forget that all the processing tax money ends up in their own pockets. Even in those cases where they pay part of the tax, they get it all back. Every dollar collected in processing taxes goes to the farmer in benefit payments.”
. U. S. Dept, of Agriculture, The Processing Tax, p. 1: “Proceeds of processing taxes are passed to fanners as benefit payments.”
U. S. Department of Agriculture, Agricultural Adjustment, p. 9.
Other questions were presented and argued by counsel, but we do not consider or decide them. The respondents insist that the act in numerous respects delegates legislative power to the executive contrary to the principles announced in Panama Refining Co. v. Ryan,
Compare Adkins v. Children’s Hospital,
The enactment of protective tariff laws has its basis in the power to regulate foreign commerce. See Board of Trustees of the University of Illinois v. United States,
Story, Commentaries on the Constitution of the United States, 5th ed., Yol. I, § 907.
Loc. cit. Chapter XIV, passim,.
Loc. cit. § 909.
Loc. cit. § 922.
Works, Vol. Ill, p. 250.
Richardson, Messages and Papers of the Presidents, Vol. II, p. 167.
Loc. cit. p. 673.
The Tenth Amendment declares: “The powers not delegated to the United States .by the Constitution, nor prohibited by it to the States, are reserved to the States respectively or to the people.”
U. S. Dept. of Agriculture, Agricultural Adjustment, p. 9. “ Experience of cooperative associations and other groups has shown that without such Government support, the efforts of the farmers to band together to control the amount of their product sent to market are nearly always brought to nothing. Almost always, under such circumstances, there has been a noneooperating minority, which, refusing to go along with the- rest, has stayed on the outside and tried to benefit from the sacrifices the majority has made. ... It is to keep this noncooperating minority in line, or at. least prevent it from doing harm to the majority, that the power of the Government has been marshaled behind the adjustment programs.”
Dissenting Opinion
dissenting.
I think the judgment should be reversed.
The present stress of widely held and strongly expressed differences of opinion of the wisdom of the Agricultural Adjustment Act makes it important, in the interest of clear thinking and sound result, to emphasize at the outset certain propositions which should have controlling influence in determining the validity of the Act. They are:
1. The power of courts to- declare a statute unconstitutional is subject to two guiding -principles of decision which ought never to be absent from judicial consciousness. One is that courts are concerned only with the power to' enact statutes,' not with their wisdom. The other is that while unconstitutional exercise of power
2. The constitutional power of Congress to levy an excise tax upon the processing of agricultural products is not questioned. The present levy is held invalid, not for any want of power in Congress to lay such a tax to defray public expenditures, including those for the general welfare, but because the use to which its proceeds are put is disapproved.
3. As the present depressed state of agriculture is nation wide in its extent and effects, there is no basis for-saying that the expenditure of public money in aid of fanners is not within the specifically granted power of Congress to levy taxes to “provide for the . . . general welfare.” The opinion of the Court does not declare otherwise.
4. No question of a variable .tax fixed from timé to time by fiat of the Secretary of Agriculture, or of unauthorized delegation of legislative power, is now presented. The schedule of rates imposed by the Secretary in accordance with the original command of Congress has since been specifically adopted and confirmed by Act of Congress, which has declared that it- shall bé the lawful tax. Act of August 24, 1-935, 49 Stat. 750. That is the tax which the government now seeks to collect. Any defects there may have been in the manner of laying the tax by the-Secretary have now been removed by the exercise of the power of Congress to pass a curative statute validating an intended, though defective, tax. United States v. Heinssen & Co.,
It is with these preliminary and hardly controverted matters in mind that we should direct our-attention to the pivot on which the decision of the Court is made to turn. It is that a levy unquestionably within the taxing power of Congress may be treated as invalid because it is a step in a plan to regulate agricultural production and is thus a forbidden infringement of state power. The levy is not any the less an exercise of taxing power because it is intended to defray an expenditure for the general welfare rather than for some other support of government. Nor is the levy and collection of the tax pointed to as effecting the regulation. While all federal taxes inevitably have some influence on the internal economy of the states,' it is not contended that the levy of a processing tax upon manufacturers using agricultural products as raw material' has any perceptible regulatory effect upon either their production or manufacture. The tax is unlike the penalties which were held invalid in the Child Labor Tax Case,
The method may be simply stated. Out of the available fund payments are made to such farmers as are willing to curtail their productive acreage, who in fact do so and who in advance have filed their written undertaking to do so with the Secretary of Agriculture. In saying that this method of spending public moneys is an invasion of the reserved powers of the states, the Court does not assert
Of the assertion that the payments to farmers are coercive, it is enough to say that no such contention is pressed by the taxpayer, and no such consequences were to be anticipated or appear to have resulted from the administration of the Act. The suggestion of coercion finds no support in the record or in any data showing the actual operation of the Act. Threat of loss, not hope of gain, is the essence of economic coercion. Members of a long depressed industry have undoubtedly been tempted to curtail acreage by the hope of resulting better prices and by the proffered opportunity to obtain .needed ready money. But there is nothing, to indicate that those who accepted benefits were impelled by fear of lower prices if they did not accept, or that at any stage in the operation
It is significant that in the congressional hearings on the bill that became the Bankhead Act, 48 Stat. 598, as amended by Act of June 20, 1934, 48 Stat. 1184, which imposes a tax of 50% on all cotton produced in excess of limits prescribed by the Secretary of Agriculture, there was abundant testimony that the restriction of cotton production attempted by the Agricultural Adjustment Act could not be secured without the coercive provisions of the Bankhead Act. See Hearing before Committee on Agriculture, U. S. Senate, on S. 1974, 73rd Cong., 2nd Sess.; Hearing before Committee on Agriculture, U. S. House of Representatives, on H. R. 8402, 73rd Cong., 2nd Sess. The Senate and House (Committees g0 reported, Senate Report No. 283, 73rd Cong., 2nd Sess., p. 3; House Report No. 867, 73rd- Cong., 2nd Sess., p. 3. Thé Report of the Department of Agriculture on the administration of the Agricultural Adjustment Act (February 15, 1934 to December 31, 1934), p. 50, points out that the Bank-head Act was passed in response to a strong sentiment in. favor of mandatory production control “ that would prevent noncooperating farmers from increasing their own plantings in order to capitalize upon the price advances that had resulted from the reductions made by contract
•It is upon the contention that state power is infringed by purchased regulation of agricultural production that chief reliance is placed. It is insisted that, while the Constitution gives to Congress, in specific and unambiguous terms, the power to tax and spend, the power is subject to limitations which do not find their origin in any express provision of the Constitution and tq which other expressly delegated powers are not subject.
The Constitution requires that public funds shall be spent for a defined purpose, the promotion of the general welfare. Their expenditure usually involves payment on terms which will insure use by the selected recipients within the limits of the constitutional purpose. Expenditures would fail of their purpose and thus lose their constitutional ■ sanction if . the terms of payment were not such that by their influence on the action of the recipients the permitted end would be attained. The power of Congress to spend is inseparable from persuasion to action over which Congress has no legislative control. Congress may not command that the science of agriculture be taught in state universities. But if it would aid the teaching of that science by grants to state institutions, it is appropriate, if not necessary, that the grant be on the condition, incorporated in the Morrill Act, 12 Stab 503, 26 Stab 417, that it be used for the intended purpose. Similarly it would seem to be compliance with the Constitution, not violation of it, for the government to take and the university to-give a contract that the grant would be so used. It makes no dif
These effects upon individual' action, which are but incidents of the authorized expenditure of government •money, are pronounced to be themselves a limitation upon the granted power, and so the time-honored principle of constitutional interpretation that thp granted power includes all those which are incident to it is reversed. “Let the end be legitimate,” said the great Chief Justice, “let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are constitutional.” McCulloch v. Maryland,
Congress, through the Interstate Commerce Commission has set aside intrastate railroad rates. It has made and destroyed. intrastate industries by raising or lowering tariffs. These results are said to be permissible because they are incidents of the commerce power and the power to levy duties on imports. See Minnesota Rate Cases,
Such a limitation is contradictory and destructive of the power to appropriate for the public welfare, and is incapable of practical application. The spending power of Congress is in addition to the legislative power and not subordinate to it. This independent grant of the power of the purse, and its very nature, involving in its exercise the duty to insure expenditure within the granted power, presuppose freedom of selection among divers ends and aims, and the capacity to impose such conditions as will render the choice effective. It is a contradiction in terms to say that there is power to spend for the national welfare, while rejecting any power to impose conditions reasonably adapted to the attainment of the end which alone would justify the expenditure!
The limitation now sanctioned must lead to absurd consequences. The government may give seeds to farmers, but may not condition the gift upon their being planted in places where they are most needed or even planted at all. The government may give money to the unemployed, but may not ask that those-who get it shall give labor in return, or even use it to support their families. It may give money to sufferers from earthquake, fire, tornado, pestilence or flood, but may not impose conditions — health precautions designed to prevent the spread of disease, or induce the movement of population to safer or more sanitary areas. AÜ that, because it is purchased regulation infringing state powers, must be left for the states, who are unable or unwilling to supply the necessary relief. The government may spend its money for vocational rehabilitation, 48 Stat. 389, but it may not, with the consent , of all concerned, supervise the process which it undertakes to aid. It may spend its money for the suppression of the boll’ weevil, but may
That the governmental power of the purse is a great one is not now for the first time announced. Every student of the history of government and economics is aware of its magnitude and of its existence in every civilized government. Both were well understood by the framers of the Constitution 'when they sanctioned the grant of the spending power to the.federal-government, and both were recognized by Hamilton and Story, whose views, of' the
The suggestion that it must now be curtailed by judicial fiat because it may be abused by unwise use hardly rises. to the dignity of argument. So- may judicial power be abused. “The power to tax is the power to destroy,” but we do not, for that reason, doubt its existence, or hold that its efficacy is to be restricted by its incidental or collateral effects upon the states. See Veazie Bank v. Fenno,
A tortured construction of the Constitution is not to be justified by recourse to extreme examples of reckless congressional spending which might occur if courts could not prevent — expenditures which, even if they could be thought to effect any national purpose, would be possible only by action of a legislature lost to all sense of public responsibility. Such suppositions are addressed to the mind accustomed to believe that it is the business of courts to sit in judgment on the wisdom of ^legislative action. Courts are not the only agency of government that must be assumed to have capacity to govern. Congress and the courts both unhappily may falter or be mistaken in the performance.of their constitutional duty. But interpretation of our great charter of government which proceeds, on any assumption that the responsibility for the preservation of our institutions is the exclusive
Whether coercion was the sole or the dominant purpose of the Bankhead Act, or whether the act was designed also for revenue or other legitimate ends, there is no occasion to consider now.