1941: United States

Economic Survey.

American economic life during 1941 was dominated by one great factor—the World War. By 1941 the program of all-out production for defense was well started and the nation was again experiencing an artificial prosperity based largely upon heavy Government expenditures for defense needs. By December this expenditure had reached a level of $72,000,000 a day and by that time the Reconstruction Finance Corporation had poured $851,000,000 into new plants and enterprises for defense. Although there were economic recessions in April and again in the late summer and early fall, industrial production for the year surpassed all records. By the Federal Reserve Board's index, it rose from 106 per cent of the 1935-1939 average in August 1939 to a maximum of 167 in November 1941. This was the highest figure on record, the Federal Reserve Board's index number for 1937 being 113 and for 1929 but 110. A similar picture for the 1941 advance is apparent from the index of business activities of The New York Times. Using 100 as the estimated normal, the combined index showed an advance from 121.0 for the week ending Dec. 21, 1940, to 133.5 for the week ending Dec. 20, 1941.

Illustrating the above figures concretely, the American steel industry produced 82,850,000 net tons of steel in 1941, surpassing all former records by substantial margins. This was 23.7 per cent over production in 1940 and 31.1 per cent over 1929. Increase in volume of business was quickly reflected in the railroads which carried 470,000,000,000 tons of freight, an increase of 5 per cent from the record year of 1929. Despite the war, which sharply curtailed exports, the oil industry enjoyed the largest sales volume in its history. Likewise, the textile industries, operating for about half of 1941 under some price control and constant threat of additional control, set new production records in each of their major branches. Even the automobile industry, where curtailment became necessary in order to shift to defense industry, manufactured 3,750,000 passenger cars, more than in any year except 1937. Although defense production received the most publicity, it actually amounted in 1941 to only 17 per cent of total production. It was, nevertheless, the driving force behind the business expansion. The aircraft industry with factories scattered from coast to coast, had orders amounting to $6,000,000,000, and the automotive industry, largely concentrated in the Middle West, had orders up to $5,000,000,000. Small business, it is true, was not getting its fair share of defense orders, but the war prosperity was well distributed geographically.

As industry speeded up there was a corresponding improvement in the condition of labor and a decline in unemployment. Employment payroll index reached 166.7 in October, compared with 116.2 a year before and 114.4 in 1929. Secretary of Labor Frances Perkins estimated that more than 4,500,000 workers received pay increases in the first eleven months of the year. Weekly factory payrolls in November were 42.2 per cent higher than in the corresponding month of 1940. Total civil non-agricultural employment in November was 40,693,000, an increase of 3,165,000 for the year, and more than 4,110,000 above the level of November 1929.

Increase in income, spread over millions of more workers, was quickly reflected in retail sales. Retail trade in 1941 shattered all previous records in both dollar volume and unit sales of merchandise. Total volume approached $54,000,000,000, a figure about 19 per cent larger than in 1940. The 1929 peak was $48,459,000,000. The increased retail trade was due not alone to the mounting defense expenditures (in excess of $1,750,000,000 a month as the year closed), but also to a certain amount of 'beat-the-tax buying,' and later, the buying of commodities for which a shortage was probable during the war. This retail buying reached its peak in August and then declined sharply until Christmas shopping and the coming of war temporarily pushed it up again. The greatest increases over 1940 were in jewelry, automobiles, furniture, including radios, and building materials. Although the Federal Government made some efforts to discourage installment buying, these efforts had little effect and the advance in retail sales was accompanied by, and aided by, the expansion of deferred paying. A record total of $6,800,000,000 for retail installment sales for the year was estimated by the Department of Commerce. This represents 12.5 per cent of all retail sales for the year and a 17.8 per cent increase in installment buying over 1940. About 90 per cent of the $6,800,000,000 installment volume in 1941 represented sales of consumers' durable goods, such as automobiles, refrigerators, ranges and other household commodities.

Not only labor but also capital profited from the defense boom. Industry in 1941 reached the highest operating rate in history. Increased taxes and higher operating expenses, however, kept profits lower than they otherwise would have been. Nevertheless, this net income enjoyed by almost every major industry exceeded that of 1940. During the first nine months of the year 379 principal companies showed total net earnings of $1,390,973,076, representing a 24 per cent increase over a similar period for 1940. Total dividend disbursements increased but not proportionately to earnings. They were higher during the first nine months of 1941 than for the same period in 1940, but not so large as in 1937. Contrary to the general impression, the defense industries did not show the gain in earnings of some other industries. The first ten industries in percentage of increase in earnings for the first nine months of 1941 over a similar period in 1940 were: apparel (85 per cent gain), coal (82), razors, etc. (78), retail (78), furnishings (70), metals (68), aircraft (62), home appliances (54), amusements (54), office equipment (53).

Banking shared with industry in increased activity. Bank clearings in the principal cities of the country for the last week of 1941 showed a 20.9 rise over the similar period for 1940. The total for the last week of 1941 was $6,966,169,000. Large increases in commercial and other loans were also characteristic of 1941. The regular reporting member banks of the Federal Reserve System in 101 leading cities reported a rise for the year of over $2,000,000,000. Moreover, the net increase in holdings of Government securities of all classifications for these banks was considerably greater. Statements of most banks after the end of the year also showed increased deposits. In the words of one banking expert, 'the United States is facing shortages of everything but money.' Year-end statements of leading banks also revealed small increases in profits.

On May 1, 1941, the United States Treasury began an intensive program of defense borrowing by placing on the market Defense Savings Bonds and Stamps. The sale during the initial month was $350,000,500. It was less in succeeding months until December when purchases advanced to over $500,000,000. Total sales for the first eight months (May 1 to the end of the year) were somewhat over $2,500,000,000. This was far less than the Government had hoped to obtain, but, with the coming of war, purchases during 1942 were expected to be much higher.

Unlike the First World War, the stock market during the Second World War showed little response to increase in business activity and increase in profits. Business on the New York Stock Exchange continued its downward course during 1941. There were no signs of life until well along in November and the volume of the year was the smallest in twenty-three years. Seat prices fell to the lowest since the Spanish-American War. Turnover of stocks for 1941 dropped to 170,603,671 shares, the lowest yearly total since 1918. The 1941 total compares with 207,599,749 in 1940. December was the largest month of the year with a turnover of 36,390,493. Prices for the year as a whole likewise showed a substantial decline. The New York Times average for 50 stocks (25 rails and 25 industrials) declined from 94.60 on Jan. 1 to 76.31 on Dec. 27. The general tendency showed a decline from Jan. 11 until the middle of February, little change from then until the end of May, an advance until the end of July and a decline until just before the end of the year. The lack of stock market response to increased business activity and profits was generally interpreted as a result of years of discouraging experiences which had made the public market-shy of the stock exchange and a widely-held belief that heavy taxation and price-ceilings would prevent the large profits made during the First World War. In the face of the decline in stock activity, trading in bonds on the Exchange in 1941 improved to $2,111,805,000, the largest for any year since 1937, and comparing with a total of $1,669,438,000 par value in 1940.

Although the cost of living was a matter of primary interest to the average consumer, the Administration found it impossible during 1941 to secure legislation from Congress to provide for adequate price control. This was due chiefly to the 'farm bloc' who were reluctant to halt the advancing prices of agricultural commodities and who demanded that a ceiling on agricultural prices should be accompanied by a ceiling on wages. The latter was opposed by both the Administration and labor. The President under his emergency powers established an Office of Price Administration under Leon Henderson, but this office operated under the handicap of inadequate power. Mr. Henderson pointed out frequently to Congress the increase in prices and estimated that a continued advance would probably add at least $50,000,000,000 to the cost of carrying on the war.

At the start of 1941 the wholesale price index of the Bureau of Labor Statistics was up less than 7 per cent from the level of August 1939, while the cost of living showed a rise of only 2 per cent. The real advance began in March 1941. Year-end figures showed a rise of 18 per cent in the last year in wholesale prices and an advance of 26 per cent over pre-war levels. Living costs, as measured by the Bureau of Labor Statistics at the end of 1941 stood at 12 per cent higher than when the war began. By far the greatest rise was in farm prices. The index of wholesale farm prices rose 39 per cent in 1941 and was 59 per cent above the pre-war level. In contrast to this the index of all prices other than farm prices rose only 14 per cent during the year and 20 per cent since the war began. Primarily the rise in prices was due to increased buying power on the part of consumers and a decreased supply in many cases of consumers' goods. The approach of the Administration to this problem was twofold: (1) to remove the increased buying power of consumers by heavy taxation, and (2) to establish an effective system of price control. Both methods were in use by the end of 1941, but were still in a formative stage. A price control bill was being formulated by Congress at the opening of the new year and heavier taxes were also expected. (See also articles on BUSINESS; CONSERVATION; INCOME, NATIONAL; and WORLD ECONOMICS.)

SEVENTY-SEVENTH CONGRESS

The first session of the Seventy-Seventh Congress ended on Jan. 2, 1942. Its business was concerned mainly with national defense, taxation and appropriations and included declarations of war against Japan, Germany and Italy, and wide expansion of the President's emergency powers. Among these powers were authority to use American land and naval forces in any part of the world, lend-lease legislation with vast appropriations for aid to enemies of the Axis, authority to arm merchant vessels and other revisions of the Neutrality Act, increase in the public debt limit from $49,000,000,000 to $65,000,000,000, continuation for two years until June 30, 1943, of the power to alter the gold content of the dollar and a Defense Revenue Act to add an estimated $3,553,400,000 to the tax revenues. Total appropriations granted by the session amounted in round figures to $58,000,000,000 of which $50,000,000,000 represented defense commitments. Other important legislation included increase in the borrowing power of the Reconstruction Finance Corporation, property-seizure and priority laws, measures against sabotage and provisions for defense highways, housing and community facilities. Legislation concerning which there had been much discussion but as yet no final action included the problems of price control, strikes and a new tax bill to raise additional defense revenue.

National Defense.

Although few pieces of legislation passed by the first session of the Seventy-Seventh Congress did not bear some relation to national defense, it may be possible to summarize some of the principal acts bearing particularly on this problem. The Military Service Extension Act (approved Aug. 18) authorized the President to extend for such periods as seemed necessary, but not for more than 18 months, persons in training under the Draft Act, members and units of reserve personnel or any other members of the Army subject to active training or service. The Act also increased the pay of all enlisted men $10 a month for all time served beyond one year. The vote was carried in the House by the narrow margin of 203 to 202. This close vote was due in part to isolationist sentiment but chiefly to political opposition to the Administration. Shortly after war was declared the Draft Act of 1942 (approved Dec. 20, 1941) amended the Selective Service Act of 1940 by extending the requirements for registration of men to include all those from 18 to 64 years inclusive and the liability for service in the land or naval forces of all men from 20 to 44 inclusive. A joint resolution (approved Dec. 13) had already removed the restriction in the Selective Service Act of 1940 as to the use of troops outside the Western Hemisphere. It also extended the period of service to not later than six months after the termination of the emergency.

The Lease-Lend Act (March 11) and the Defense Aid Supplemental Act (March 27), which implemented the first-named Act by an appropriation of $7,000,000,000, are discussed under the section FOREIGN AFFAIRS. So also is the item of $5,985,000,000 for an extension of lease-lend funds, a part of the Second Supplemental Defense Appropriation Act (Oct. 28), appropriating $6,161,467,229. Mention is also made there of the Neutrality Act Amendment (approved Nov. 17).

The appropriations of approximately $50,000,000,000 for direct defense were scattered through 21 bills. The Navy Shipbuilding Facilities Act (Jan. 31) authorized $315,000,000 for facilities at either private or government naval establishments for building or equipping naval vessels. The Army Clothing Equipment Act (Feb. 13) appropriated an additional $175,000,000 for clothing equipment for the fiscal year ending June 30, 1941. The Fourth Supplemental National Defense Act (March 17) authorized $1,376,464,602 for deficiency and supplemental needs to June 30, 1941, divided between the Army and Navy in approximately equal amounts. The Navy Public Works Act (March 23) authorized $100,502,883 to expand or improve existing naval bases and stations. The Second Navy Public Works Act (March 23) provided for increased facilities of various kinds, particularly in American overseas possessions, and for our facilities in the British acquired bases in the West Indies. The Defense Aid Supplemental Appropriation Act (March 27) granted $7,000,000,000 for lease-lend. The Fifth Supplemental National Defense Appropriation Act (April 5) provided for $4,393,221,174, over half of which was to go for bombers and airplanes. A Defense Housing Act (April 29) added $150,000,000 to an earlier act of Oct. 14, 1940 for low-cost defense houses, family units not to cost over $3,500. The Naval Appropriations Act (May 6) carried $3,415,521,750 for the maintenance and increase of the Navy. The Navy Auxiliary Vessel Act (May 24) authorized $300,000,000 to convert 58 vessels totaling 500,000 tons, into auxiliary vessels for the Navy. The Defense Public Works Act (June 28) authorized $150,000,000 to acquire and equip public works made necessary for the defense program. The largest single appropriation of $10,384,821,624 was made in the Military Establishment Appropriation Act (June 30) for the support of the Army until June 30, 1942. The Second Deficiency Appropriation Act (July 3) carried $1,041,444,529 for many purposes but chiefly defense. Another Naval Facilities Act (July 29) authorized $585,000,000 and a Third Navy Public Works Act (Aug. 21) another $244,929,800. The third largest appropriation was made in the First Supplemental Defense Appropriation Act, 1942 (Aug. 25, 1941) of $7,586,896,948, chiefly for the Army, the Navy and the Maritime Commission for national defense for the year ending June 30, 1942. The Second Supplemental Defense Act, 1942 (Oct 28, 1941) carried $6,161,467,229, of which $5,985,000,000 was an addition to the lease-lend appropriation. The second largest appropriation of the session was $9,283,037,005, in the Third Supplemental National Defense Act, 1942 (Dec. 17, 1941). Other defense appropriations included the Defense Highway Act (Nov. 19) for $150,000,000 for access roads to military reservations; the Navy Local Defense Ship Act (Nov. 21) for the construction, acquisition or conversion of 400 light draft vessels for local defense, and the Third Defense Emergency Appropriation Act (Dec. 23), of $550,000,000, of which $300,000,000 went to the Federal Works Agency for defense housing.

In addition to the Draft Acts and the many appropriation acts there was legislation which increased the number of appointments to the Naval Academy, established a coast guard auxiliary and reserve, extended the powers of the President to give priorities to contracts for materials destined to the lease-lend countries, and empowered the Secretary of War to remove from the active list inefficient officers. The Property Requisitioning Act (Oct. 16) empowered the President to requisition materials needed for the national emergency when other means failed.

Agriculture.

The Agricultural Appropriation Act (July 1) carried appropriations for the Department of Agriculture of $1,060,500,063 of which $212,000,000 was to make parity payments to producers of wheat, cotton, corn, rice and tobacco. The Corn and Wheat Marketing Quota Act (May 26) established as farm marketing quotas for wheat and corn the actual production of the acreage planted, less the normal or actual production (whichever is smaller) of the acreage in excess of the allotment granted. For 1941-42 and subsequent marketing years, the penalty on cotton and rice marketed in excess of quotas would be raised to 50 per cent of the basic rate of loan to cooperators, and the loan rate to cooperators for the 1941 crop of cotton, corn, wheat, rice and tobacco would be 85 per cent of the parity price for the year. The Steagall Commodity Credit Act (July 1) extended for two years, to June 30, 1943, the life of the Commodity Credit Corporation, and the Sugar Quota Act (Dec. 26) extended for an additional three years, until Dec. 31, 1944, the quota system set up by the Sugar Act of 1937. The Parity Act (Dec. 26) extended to Jan. 1, 1947, the period under which the Secretary of Agriculture might carry out the purposes of the Soil Conservation and Allotment Act.

Aliens.

Two pieces of legislation were passed respecting aliens. The Alien Visa Act (June 20) provided that whenever any diplomatic or consular officer believed that any alien sought to enter the United States for the purpose of engaging in activities dangerous to the public safety of this country, he should refuse to issue immigration or passport visas. Such action, however, must be referred to the Secretary of State for appropriate action. The Defense Entry and Departure Act (June 1) amended the act of May 22, 1918, to give the President power during the emergency to prescribe rules and regulations governing the entry and departure from the United States of all persons.

Housing.

Several acts were passed enlarging Government interest in the housing problem. The Defense Housing Insurance Act (March 28) amended the National Housing Act to create a Defense Housing Insurance Act with appropriations of not more than $10,000,000 from the RFC and with mortgages limited to a scale running from $4,000 for one-family to $10,500 for four-family houses. The National Housing Act Amendment (June 28) continued for two years until July 1, 1943, authority of the Federal Housing Administrator to insure banks or mortgage companies making modernization loans and increasing the aggregate insurance from $100,000,000 to $165,000,000. The limit on mortgage insurance was increased from $4,000,000,000 to $5,000,000,000 as was also the limit on the modernization loans. The Defense Housing Insurance Act (Sept. 2) increased from $100,000,000 to $300,000,000 the aggregate amount of mortgages which may be insured under authority of the National Housing Act in areas where an acute shortage of housing existed.

Maritime.

The Emergency Cargo-Ship Construction Act (Feb. 6) appropriated $313,500,000 for the Maritime Commission to provide cargo ships essential to the commerce and defense of the United States. The Bland Ship Requisitioning Act (June 6) authorized the President until June 30, 1942, to take over, by purchase or requisition, any foreign vessel lying idle within the United States, including the Philippines and Canal Zone, deemed necessary to the national defense. The Merchant Ship Priorities Act (July 14) provided that up to June 30, 1943, the President in the interest of national defense might authorize the Maritime Commission to issue warrants evidencing priority rights in favor of certain vessels.

Public Debt and Taxation.

The Public Debt Act of 1941 (Feb. 19) increased the public debt limit from $45,000,000,000 to $65,000,000,000. The Revenue Act of 1941 (Sept. 20) imposed new or heavier taxes to raise an additional $3,553,400,000 annually. Personal exemptions from income taxes were reduced from $2,000 to $1,500 in the case of married persons and heads of families and from $800 to $750 for single persons. Surtax rates were increased, the 10 per cent defense tax was made permanent and an integrated surtax schedule was provided which included a defense tax on the total individual income tax. The rates range from 6 per cent on the first $2000 of surtax net income to 77 per cent on the portion of the net income in excess of $5,000,000. The normal tax rate of 4 per cent was retained. Tax schedules were simplified for persons having a gross income of $3,000 or less. On corporation incomes the defense tax was made permanent, a surtax was made applicable to all corporations, while increases were made in the rates of the excess profits tax and reductions in the invested capital credit. Rates were increased on estate and gift taxes and the defense tax made permanent. Taxes on distilled liquors and wines were increased, but not on beer. Under this act taxes were placed on all admissions except for children under 12 where the admission charge is less than 10 cents. Cabaret taxes were increased and many increases were made in excise taxes. A committee was established to study all expenditures of the Federal Government with a view to recommending the elimination or reduction of all such expenditures deemed to be nonessential.

Budgetary.

In addition to the appropriation bills already mentioned and dealing specifically with defense, the chief budgetary acts of the year follow: The Urgent Deficiency Appropriation Act (March 1) made additional appropriations of $393,687,775 for the fiscal year 1941, the chief item being $375,000,000 to continue relief and work relief under the Works Projects Administration. The First Deficiency Appropriation Act (April 1) was for $191,528,544 of which $75,000,000 was for national defense housing. The Independent Offices Appropriation Act (April 5) carried $1,414,636,838, of which $608,693,000 was for the Veterans Administration. Other important items included $160,000,000 for the ship construction fund of the Maritime Commission and $79,800,000 for the TVA. The War Department Civil Functions Act (May 28) granted $228,601,828 for the civil functions carried on by the War Department, the largest items being $73,000,000 for flood control and $52,395,326 for the Panama Canal. Another Urgent Deficiency Appropriation Act (May 24) carried $173,749,630 of which $150,000,000 was for national defense housing. The Treasury and Post Office Appropriation Act (May 31) appropriated $1,147,624,284 of which $304,320,185 was for the Treasury and $843,294,199 for the Post Office. The State-Commerce-Justice Appropriation Act (June 28) carried $279,142,477 for the work of these three departments. The Interior Appropriation Act (June 28) carried $188,325,923 for the Department of the Interior. The three chief items were $86,318,600 for the Bureau of Reclamation; $34,750,000 for the Central Valley project and $33,961,105 for the Bureau of Indian affairs. The Labor Department—Federal Security Agency Supply Act (July 1) was for $1,189,298,500 of which $24,487,820 was for the Department of Labor and $1,011,815,200 for the Federal Security Agency. The principal items were $441,755,000 for the Social Security Board; $246,960,000 for the Civilian Conservation Corps and $151,667,000 for the National Youth Administration. The Emergency Relief Appropriation Act (July 1) carried $910,905,000 for work relief and relief for the fiscal year ending June 30, 1942.

Reconstruction Finance Corporation.

The powers and operations of the RFC were extended during 1941. The RFC Corporation Act (June 10) provided that the lending authority of the Disaster Loan Corporation should be extended and continued, to expire on Jan. 22, 1947, and that the Electric Home and Farm Authority, which was to have expired on June 30, 1941, should be continued until Jan. 22, 1947. It increased the note issue power of the RFC by $1,500,000,000 and it also provided that the RFC might make loans to foreign governments or their agents when requested by the Federal Loan Administrator with the approval of the President. The act also allowed the RFC, upon request of the Federal Loan Administrator and approval of the President and until July 1, 1943, to organize corporations to produce, manufacture and deal in war materials. The RFC Lending Authority Act (Oct. 23) increased by $1,500,000,000 the amount of notes, bonds, debentures and other such obligations the RFC is authorized to issue and have outstanding at any one time.

Pan-American.

In the sphere of Latin American relations Congress passed two acts. The Monroe Doctrine Act (April 10) provides that the United States would not recognize any transfer and would not acquiesce in any attempt to transfer, any geographic region of this hemisphere from one non-American power to another non-American power; and that if such transfer or attempt to transfer should appear likely, the United States shall, in addition to other measures, immediately consult with other American republics to determine upon the steps which should be taken to safeguard their common interests. The Inter-American Coffee Agreement Act (April 11) provides that on and after entry into force of the Inter-American Coffee Agreement of Nov. 28, 1940, as proclaimed by the President, and during the continuation in force of the obligations of the United States thereunder, no coffee imported from any foreign country may be entered for consumption except as provided in the treaty.

Miscellaneous.

Although there was much talk in Congress during the latter part of the year of legislation to restrict strikes and such a bill actually went through the Flouse, there was virtually no labor legislation of any importance during the year. Congress in the Maritime Labor Board Act (June 23) continued for one year the Maritime Labor Board created in 1936 but permits the Board to act as mediator only in disputes wherein its services are requested. The Bituminous Coal Act (April 11) extended the provisions of the Bituminous Coal Act of 1937 for two years to April 26, 1943. It also reestablished a Consumers' Counsel Division to protect consumers' interests. The Office of Government Reports Act (June 9) authorized the appropriation annually to the Office of Government Reports in the Executive Office of the President of an amount not exceeding $1,500,000 to provide a central clearing house through which individual citizens, organizations and governmental bodies may transmit information and complaints and receive advice and information. It was also to collect information, keep the President currently informed of the opinions of the nation and assist the President in dealing with special problems. The Petroleum Pipe Line Act (July 30) provided that whenever the President feels that the construction of any pipe line for the transportation or distribution of petroleum or petroleum products in interstate commerce is necessary for the national defense, he shall make such finding public by proclamation. If construction is done by private individuals rather than by the Federal Government the right of eminent domain may be conferred upon such person in order to acquire necessary land. The Rivers and Harbors Act (Aug. 18) authorized $290,000,000 for the construction of public works on rivers and harbors for flood control. The chief items were $36,608,000 for the lower Mississippi; $26,847,500 for the White River Basin; $31,238,000 for the Arkansas River Basin and $45,174,000 for the Ohio River Basin. The National Defense Patents Act (Aug. 21) undertook in the national interest to prevent the publication of patents. The President finally gave up his idea of advancing the date of Thanksgiving when he signed the Thanksgiving Day Act (Dec. 26) which provides that the fourth Thursday of November in each year be known as Thanksgiving Day and made a legal holiday. The Taylor TVA Act (July 16) appropriated an additional $40,000,000 for the TVA to erect two more hydroelectric projects and two additional storage projects on the Hiwassee River and its tributaries.

THE SUPREME COURT

When the Supreme Court ended on June 2 its first term for 1941, it had disposed of 972 cases, 37 more than in the preceding term. Of these 286 were settled by decisions and the remainder by action on petitions for review of lower court actions. During the year important personnel changes occurred. On Feb. 1, Associate Justice James Clark McReynolds retired. He was almost 79 and had been in the court for 26 years. An arch-foe of the New Deal, which he believed had destroyed the Constitution ('The Constitution is gone'), he had dissented 68 times from October 1937 to the time of retirement. Illness, in fact, had prevented important active participation in the work of the court for over a year. On June 2, Chief Justice Hughes announced his retirement as of July 1, stating his reasons to be 'considerations of health and age." He was 79 years of age. On July 12 the President nominated Associate Justice Harlan Fiske Stone, New York Republican, to be Chief Justice. Known as a moderate liberal, Stone had served on the Supreme Court since his nomination by President Coolidge in 1925. He was 68 years of age. Also nominated were Senator James Francis Byrnes, Democrat, of South Carolina, to be Associate Justice to replace McReynolds and Attorney General Robert Houghwout Jackson, New York Democrat, to take the seat left vacant by the elevation of Stone. In keeping with Senatorial courtesy, the Senate unanimously confirmed the appointment of Byrnes on the day of his nomination. Stone's appointment was unanimously confirmed on June 27 and that of Jackson on July 7 by a voice vote despite the opposition of Senator Tydings. Jackson was succeeded by Solicitor General Francis Biddle who became Attorney General on Sept. 5.

The most important Supreme Court cases of the year had to do with the problems of labor, civil liberties, trusts and taxation.

Labor.

On Jan. 6, the Supreme Court upheld the National Labor Relations Board in three rulings. The first had to do with the H. J. Heine Company Case, where the company was required to sign a written agreement with a union after both sides had arrived at an oral understanding. Said the Court through Justice Stone: 'The freedom of the employer to make an agreement relates to its terms in matters of substance and not, once it is reached, to its expression in a signed contract, the absence of which, as experience has shown, tends to frustrate the end sought by the requirement for collective bargaining.

'Petitioners' refusal to sign was a refusal to bargain collectively and an unfair labor practice defined by Sec. 8 (5) of the National Labor Relations Act.'

The Link-Belt Case involved the refusal of the Seventh Circuit Court to enforce an NLRB order to disband a company-dominated union in a Chicago factory. In a unanimous decision written by Justice Douglas (Justice McReynolds not participating) the Court said 'we are of the opinion that the Court of Appeals in reaching that conclusion substituted its judgment on disputed facts for the board's judgment—a power which has been denied it by Congress.

'Congress entrusted the board, not the courts, with the power to draw inferences from the facts. The board, like other expert agencies dealing with specialized fields, has the function of appraising conflicting and circumstantial evidence and the weight and credulity of testimony.'

The third ruling of the NLRB upheld was one which had decided that an oil company had violated the Wagner Act when it refused to grant passes to board their tankers to agents of the National Maritime Union (C. I. O.) desiring to organize seamen.

Two important labor decisions were handed down on Feb. 3. The first concerned the constitutionality of the Wage and Hour Law, the last of the major New Deal statutes to face legal challenge. This case involved the F. W. Darby Lumber Company of Statesboro, Ga., indicted for failure to pay the required 25 cent minimum hourly wage and time and a half for overtime and other violations of the act. In a unanimous decision Justice Stone commented that while manufacture was not of itself interstate commerce, the shipment of manufactured goods in interstate commerce 'is such commerce.' He added that the prohibition of such commerce by Congress was 'indubitably' a regulation of commerce. 'The power to regulate commerce,' he insisted, 'is the power to prescribe the rule by which commerce is governed. It extends not only to those regulations which aid, foster and protect the commerce, but embraces those which prohibit it.... The power of Congress over interstate commerce is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution.' This decision overruled the famous case of Hammer v. Dagenhart of 1918 which had held that a child labor law was invalid.