1941: Law And Legislation

After Attack on Pearl Harbor.

War and preparation for war characterized the legislative activity of Congress and the administrative activity of the Federal Government during 1941. Before the treacherous Japanese attack on Pearl Harbor on Dec. 7, 1941, each major step in foreign policy and war preparation, such as, the revision of the Neutrality Act, the extension of military service for draftees and National Guardsmen, the Lease-Lend Act, was sharply debated. After Dec. 7, the American people closed their ranks. Doubts and hesitations vanished. The illusion of isolationism in a world at war disappeared under a rain of Japanese bombs. The comfortable notion that we were safe behind our ocean barriers went up with the smoke from Hickam Field. Now at last the American people clearly realized that it could not exist free and independent in a world dominated by aggressor nations. The response through its elected representatives in Congress was immediate and conclusive. The declaration of war against Japan was voted with only a single dissenting voice and against Germany and Italy without any dissent. All restrictions on the use of American soldiers on foreign shores were lifted, permitting the American Army to fight the enemy wherever he was encountered. A drastic mobilization of American manpower was made possible by the law requiring every male individual between the ages of 18 and 65 to register and making men between 20 and 45 eligible for combat duty. The period of enlistment of all men in the military service was frozen to cover the entire period of the war emergency and an additional six months thereafter. Broad war powers were given to the President. He was authorized to redistribute the functions of governmental agencies so that the war could be prosecuted more vigorously. He was given authority to speed up the procurement of war materials by empowering governmental agencies to enter into contracts without competitive bidding. Congress also re-enacted the provisions of the Trading with the Enemy Act of 1917 and gave the President the right to censor all forms of communication, direct and indirect.

Proclamation of Unlimited National Emergency.

This flurry of legislative activity after Pearl Harbor had been preceded by many momentous decisions by the President and Congress, which gradually prepared the country for war. On May 27, 1941, the President proclaimed an unlimited national emergency to supplant the limited national emergency which had been proclaimed at the outbreak of the War in 1939. The President's proclamation of May 27, 1941, stated that 'an unlimited national emergency confronts this country which requires that its military, naval, air and civilian defenses be put on the basis of readiness to repel any and all acts of aggression.' Evidently this warning of the President was not heeded at Pearl Harbor.

Lease-Lend Act.

Prior to the proclamation of the national emergency, Congress had taken a notable step forward in insuring the defeat of the Axis powers in the passage of the Lease-Lend Act. This Act made it possible for the President to authorize the Secretary of War or the Secretary of the Navy or the head of any other government department (1) to manufacture or otherwise procure defense articles for the government of any country whose defense the President deems vital to the defense of the United States; (2) to sell, transfer, exchange, lease, lend, or otherwise dispose of to such government any defense article; (3) to test, inspect, approve, repair, etc., any defense article for any such government; and (4) to communicate any defense information to such a government. The realities of the American position in a world at war were, however, still obscure to many Congressmen, for the Lease-Lend Act contained the provision that 'nothing in this Act shall be construed to authorize the convoying of vessels by naval vessels of the United States.'

The problem of bringing war materials and munitions of war to the countries fighting the Axis, was complicated by the Neutrality Act, which forbade the entry of American ships into combat areas. An opinion of the Attorney General interpreting the Neutrality Act made it possible to restrict its operations to England, Wales, Scotland and Northern Ireland, thus making American ships available for the transportation of war supplies to the crucial war fronts of the Middle and Far East. On Nov. 17, however, after considerable debate, those clauses of the Neutrality Act prohibiting American vessels from entering combat areas were repealed. The new statute also authorized the arming of U.S. merchant vessels. Thus our entire shipping could be mobilized in the attempt to keep our potential Allies supplied with the needed implements of war.

Since ships were vital in the war against the Axis, the President was granted power to 'purchase, requisition or charter' any foreign merchant vessel lying idle in the territorial waters of the United States, which is deemed necessary for national defense. Under this authority all of the Axis shipping lying in our harbors was taken over by the United States. Congress also voted $350,000,000 for an emergency ship construction fund, for the construction of seagoing cargo vessels, for the U.S. Maritime Commission. Provision was also made for a more effective use of existing vessels. The President was given authority to empower the Maritime Commission to issue warrants to U.S. vessels which would have the effect of granting them priorities in 'loading, discharging, lighterage, storage of cargoes, drydocking, overhauling and repair.' Thus the utilization of vessels for national defense activities could be facilitated over vessels engaged in ordinary commercial pursuits.

Ships require a navy to protect them and appropriations in ever increasing amounts were forthcoming for the two-ocean navy which we need for our security. On May 24, for example, Congress authorized the Secretary of the Navy to construct 550,000 tons of auxiliary vessels of such size, style and design as he may consider best suited for purpose of national defense. More ships for the Navy requires more officers and men to man them. The need for officers was met in some degree by the law authorizing the President to cut the course of study at the Naval Academy from four to three years and to graduate classes which have finished this course of study. The need for men was met in part by a modification of the terms of naval enlistment.

Selective Service Act.

The Selective Service Act of 1940 provided the basic machinery for obtaining manpower for the Army. This statute was supplemented by the Presidential Proclamation of May 27, 1941, requiring all who had attained their twenty-first birthday between Oct. 16, 1940, and July 1, 1941, to register for military service. While requiring the younger men to register, Congress, apparently under the impression that the emergency was not too serious, deferred from military service all men who on July 1, 1941, became 28 years of age and who had not been inducted into the service. The Secretary of War was directed to take appropriate measures to release men over 28 who had been inducted through the operation of the Selective Service Act.

While permitting the release of older men in the service and their deferment from induction, Congress nevertheless, after considerable debate, authorized the extension of the period of training or service of National Guardsmen, selectees, etc., for another eighteen months. It also lifted all restrictions on the number of men who might be given a course of training at any one time.

Congress also made it possible to revitalize the leadership of the Army. It provided that during the time of national emergency the Secretary of War, may remove any officer from the active list of the regular Army. This removal must be recommended by a board of five general officers after the officer to be removed has had an opportunity to be heard. The objective of the Act was to enable the Secretary of War to increase the efficiency of the active list of Army officers by removing from such list those who were unable to endure the strain of military combat.

Production of War Supplies.

Congress has not only made it possible to mobilize the manpower of the nation but also its productive capacity, in the form of stocks of machinery, goods, equipment and materials. In a limited way this had already been accomplished by the Selective Service Act of 1940 and the Priorities Act of May 1941. But with the act to authorize the President 'to requisition property required for the defense of the United States,' the President was given a plenary power to commandeer any manufacturing facility or any stock of goods and materials needed for defense. This he may do when all other means of obtaining this property upon reasonable terms have been exhausted. Such property may be requisitioned upon payment of a fair and just compensation.

The most difficult problem before the country in 1941 was the change from a peacetime economy to an economy geared for the production of the engines and materials of war. The latter had to be turned out in such vast quantities that the United States would become the 'arsenal of democracy.' In order to harness the productive capacities of the country to this task, the President delegated all his powers over production for national defense to a new organization, the Office of Production Management, consisting of four members, a Director General, an Associate Director General, the Secretary of War, and the Secretary of the Navy. The OPM was assigned the following functions:

(a) Increase, accelerate and regulate the production and supply of materials and the provision and extension of plants for defense;

(b) Survey the requirements of the War and Navy Departments and foreign governments for materials, articles and equipment for defense;

(c) Advise with respect to plans and schedules of various departments and agencies for the purchase of equipment needed for defense;

(d) Plan and take all necessary steps to insure an adequate supply of raw materials essential to defense;

(e) Formulate plans for the mobilization of the productive facilities of the nation;

(f) Determine the adequacy of existing production facilities and plan the creation of new ones; and

(g) Determine priorities in the delivery of materials.

Priorities and Allocations.

It soon became evident that the factories of the nation and the supply of raw materials, could not satisfy both the normal civilian requirements for consumers' goods as well as the tremendous demands for the materiel of war. It became clear that in girding for war and in supplying our potential allies under the Lease-Lend Act, we could not go on with the policy of business as usual in civilian life. A brake upon civilian production and an apportionment and allocation of raw materials to the demands which were most pressing became necessary. Soon orders came through from the OPM and from its successor in this field, the Supply Priorities and Allocation Board (SPAB) to restrict the production of a wide variety of articles, such as, automobiles, mechanical refrigerators, washing machines, ironers, etc. Building projects were also restricted unless they were necessary for national defense or for the health and safety of the civilian population. The use of certain strategic raw materials, such as, rubber and raw silk, were prohibited entirely. In general the policy was laid down that 'defense orders for any material must be accepted and fulfilled in preference to any other contract or purchase orders.' They must be accepted even if they make impossible the fulfillment of non-defense orders.

As the supply of consumers goods became more and more restricted and prices naturally began to rise, a clamor arose for a price control bill. No such bill passed during 1941, although it was considered by Congress. However, without waiting for legislation the President established the office of Price Administration and Civilian Supply by executive order. By the end of the year over sixty regulations were issued by the Price Control Administrator setting ceiling prices on specific commodities.

Installment Credits on Consumer Goods.

While businessmen were struggling with priorities control and the allocation of raw materials, the President took another important step to cut the consumption of consumer goods. Realizing that a large volume of consumer goods is bought on installments and that the production of these goods requires materials, skills and equipment needed for national defense, the President gave the Board of Governors of the Federal Reserve System the right to prescribe regulations with respect to extension of installment credit for the purchase of consumer goods. The regulations issued by the Federal Reserve Board of Governors required the registration of all persons engaged in the business of extending installment credit. It also prescribed certain specific limitations on installment credit with respect to the amount of the loan, amount of installment payments, minimum monthly payments, etc.

Economic Defense Board.

Modern warfare is waged not only with military weapons but also with the weapons of economics and business. This was recognized by the President when he created an Economic Defense Board, with the Vice-President as Chairman. The major function of this Board is to advise the President as to what defense measures must be taken in the field of economics and international economic activity. Realizing that the currency stabilization fund was a potent weapon of defense for the protection of the American dollar in a time of crisis, Congress extended the powers of the President over the Stabilization Fund and the gold content of the dollar for two years till June 30, 1943. A major economic step was taken against the Axis and its nationals when all their funds and credits on deposit in this country were frozen. All transfers of credit, money, gold or foreign exchange were prohibited to a large list of Axis countries, countries overrun by the Axis and the nationals of these countries. Since Axis stooges and Axis dominated corporations had been planted throughout South America, a blacklist was proclaimed against them. This had the effect of cutting off our exports to these individuals and corporations. Their funds and credits were also frozen. On the first blacklist there were 1,800 names. The Secretary of State was given power to add additional names to this list.

Strategic Materials.

Many of the vital raw materials from which war equipment is fashioned are not to be had within our borders. Stock piles of critical and strategic materials had therefore to be built up, if we were not to be caught short in our war effort. In order to facilitate the acquisition of these materials, Congress authorized the Federal Loan Administrator 'to create or organize a corporation with power to produce, acquire, carry, sell or otherwise deal in' critical or strategic materials as defined by the President. The Federal Loan Administrator was also given power to purchase and lease, lend, build and expand plants, purchase and produce equipment and supplies for the manufacture of strategic war materials.

War Appropriations.

As the crisis deepened and the country drifted closer to war, Congress appropriated money in ever increasing amounts to prepare our armed forces for the struggle, to furnish lease-lend aid to our potential allies and to provide the necessary facilities for the production of arms, airplanes, tanks and other military equipment. A rise in taxes to raise this money was inevitable, and it came with the Revenue Act of 1941. This Act brought a wide variety of increases in excise taxes, corporate and excess profits taxes, in surtaxes, gift and estate taxes, etc. New excise taxes were placed on such things as luggage, sporting goods, business machines, rubber articles, photographic apparatus, optical equipment, jewelry and furs. For the first time the Federal Government adopted a use tax on the use of automobiles. Income tax exemptions for both single and married people were drastically reduced. The Federal Revenue Act will bring the cost of the emergency and the war into every American home.

Other Congressional Legislation.

Preoccupation with the emergency and the war was not the sole legislative activity of Congress. Congress as usual passed a wide variety of legislation on matters that had nothing to do with the international crisis. Outstanding among such bills and indicative of the fact that Congress was not losing sight of the general welfare in the preoccupation with grave problems of foreign policy and preparation for war is the bill enlarging the activities of the Federal Bureau of Mines. This bill authorized the Federal Bureau of Mines to make inspections of coal mines throughout the country at periodic intervals, in conjunction with state authorities, to make recommendations concerning specific conditions found in these mines and to publicize its findings. The report accompanying the bill pointed out that there had been 1,420 fatalities in 1940 in connection with the mining of coal, that there were no common safety standards among the various states for the mines and that the Federal Bureau lacked authority to make inspections and publicize its findings. The new law, by giving the inspectional staff of the Federal Bureau of Mines the right to enter mines, make inspections and formulate uniform standards of safety and occupational conditions and publicize findings will undoubtedly help to control the incidence of accidents and occupational disease in the very hazardous industry of coal mining.

Bankruptcy Laws.

Considerable progress was made in 1941 by two committees appointed by the Attorney General in preparing the way for legislation of far-reaching importance. The first of these is the Attorney General's Committee on Bankruptcy Administration, whose report recommended significant changes in the administration of the bankruptcy laws. The report pointed to the almost complete lack of supervision over the work of the 450 predominantly part time bankruptcy referees who are paid through fees, the failure to check their reports adequately, the marked variations in bankruptcy practice between the various district courts and the improper fiscal practices which have added to the expense of bankruptcy administration. The Committee therefore recommended the creation in the administrative offices of the U.S. Courts of a Division of Bankruptcy headed by a chief, with a general supervising and co-ordinating function in the field of bankruptcy administration. This recommendation was approved at a meeting of the Judicial Conference of Senior Circuit Judges and steps have already been taken to set up this agency. The Committee also recommended the appointment of a number of full time referees who were to be paid specific salaries instead of being reimbursed by fees and who would have a specific tenure. Legislation to effectuate this recommendation is presently before Congress.

Federal Administrative Agencies.

The second report concerned itself with the procedures and procedural practices of the large number of Federal administrative agencies that have grown up in recent years and the general methods provided for the judicial review of their decisions. In making its report the Committee examined the organization, procedure and practices of a wide variety of Federal agencies. Its report is directed in the main at three phases of the administrative process: (1) the exercise of the power by the agency to adjudicate in individual cases, (2) the scope of review of administrative action by the courts, (3) the exercise by the agencies of the delegated power to legislate through the formulation of rules and regulations. In general, the Committee found room for improvement in each one of these stages of the administrative process. In an effort to effectuate improvements the Committee drafted a bill which had four major objectives: (1) to create an office of Federal Administrative Procedure whose function is to study and co-ordinate administrative procedures and stimulate practical improvements, (2) improve the rule-making process by emphasizing the importance of outside participation prior to the issuance of rules and by permitting outside persons to petition for rules and amendments, (3) improve the process of formal adjudication by providing a better quality of 'hearing commissioner' who will be assured tenure, an adequate salary and full power to control and conduct hearings, (4) in order to impart certainty to the administrative process and to aid citizens who are seeking an authoritative statement of their rights and duties, the bill proposes to authorize agencies to issue binding declarations. The importance of this whole problem of the organization, practice and procedure of administrative agencies is attested to by the fact that Congress has before it three bills covering the above subject matter. In view of the importance of the problem and the great public interest which it has aroused, it is likely that some legislation directed toward the reform of administrative methods and procedures may be forthcoming in 1942.

Outstanding Supreme Court Decisions.

Some far reaching decisions in the field of labor relations were handed down by the Supreme Court in 1941. The case of U.S. v. F. W. Darby Lumber Co. (61 Sup. Ct. 451) raised the question of the constitutionality of the Fair Labor Standards Act. This statute set up a comprehensive legislative scheme for preventing the shipment in interstate commerce of products produced in the United States under labor conditions as respects wages and hours which failed to conform to standards set up by the Act. The Darby Lumber Co. was charged with shipping lumber in interstate commerce and paying its workmen less than the prescribed minimum wages set forth in the act (25 cents per hour) and working them more than the prescribed number of hours without payment of overtime. The Federal District Court quashed the indictment and denied the power of Congress to prohibit shipment in interstate commerce of lumber produced under the proscribed sub-standard labor conditions. In favor of the District Court's position denying the constitutionality of the Fair Labor Standards Act was the leading case of Hammer v. Dagenhart (247 U.S. 251) decided by the Supreme Court in 1918 and which held that Congress had no power to prohibit a shipment in interstate commerce of articles made by child labor. If Congress could not prevent the products of child labor from entering the stream of interstate commerce then it certainly could not bar from interstate commerce the products of adult labor manufactured under sub-standard conditions. The Supreme Court however overruled the case of Hammer v. Dagenhart and upheld the constitutionality of the Fair Labor Standards Act. 'We conclude,' stated the Court, 'that the prohibition of the shipment interstate of goods produced under the forbidden sub-standard labor conditions is within the constitutional authority of Congress.'*

* Another attack on the right of Congress to prescribe standards of wages and hours for manufacturers making articles for sale in interstate commerce was made in the case of Opp Cotton Mills Inc. v. Administrator of Wage and Hour Division (61 Sup. Ct. 528). It was claimed there that the Fair Labor Act was unconstitutional because it is 'an unconstitutional delegation of the legislative power of Congress.' This contention was overruled by the Sup. Ct.

One of the acute problems in the field of labor relations is the extent of the right of labor to picket employers and bring its grievances to the attention of the general public. Legislation to contain or curb picketing and requests for judicial intervention in labor disputes to bar picketing through injunction are continually before the courts. In Thornhill v. Alabama (310 U.S. 88) decided last year, the Supreme Court took the position that peaceful picketing per se could not be prohibited because it was a violation of the constitutional rights of freedom of speech and of the press. The doctrines of this case were reaffirmed in A.F. of L. v. Swing (312 U.S. 321). There an Illinois Court had entered a permanent injunction restraining picketing in a labor dispute and recited in its decree, 'under the law of this state, peaceful picketing or peaceful persuasion are unlawful when conducted by strangers to the employer (i.e., where there is not a proximate relation of employees and employer).' Such a bar upon free communication, stated the Court, 'is inconsistent with the guarantee of freedom of speech.'

In the case of Milk Wagon Union v. Meadowmoor Dairies (312 U.S. 287) however, more than peaceful picketing was involved. Windows of dairies were smashed, stench bombs were thrown and trucks were wrecked. An injunction restraining all picketing and not merely violent acts of picketing was upheld by the highest court of Illinois. Did this type of an injunction violate the constitutional guarantees of freedom of speech, was the question before the Supreme Court. Since the picketing in this case was, as the Court put it, 'enmeshed with contemporaneously violent conduct,' the Supreme Court upheld this injunction and found that it did not violate the constitutional guarantees. A strong dissenting opinion by Mr. Justice Black concluded, however, that neither the findings nor the evidence showed such an imminent, clear and present danger as to justify an abridgement of the rights of freedom of speech and of the press.

The case of Phelps Dodge Corp. v. NLRB (313 U.S. 177) raised the question as to whether an employer subject to the National Labor Relations Act could refuse to hire employees solely because of their affiliations with a labor union. The controversy in this case rose out of a strike at the corporation's mine. When the strike was concluded, the corporation refused employment to a number of men, most of whom had been strikers, because of their affiliations with the labor union. The Supreme Court held that the corporation could not do this. It pointed out that workers can no longer be dismissed from their employment because of union affiliations. The national interest in industrial peace would be just as much affected by discrimination against union activity, when men are hired. The Court also decided that where the miner had been wrongfully refused employment and had not obtained substantially equivalent employment, the NLRB could require the corporation to re-employ him. Even if substantially equivalent employment had been obtained by men who had suffered from discrimination, the Board could order employment by the corporation 'if it finds that to do so would effectuate the policies of the [National Labor Relations] Act.'

In the case of U.S. v. Hatcheson (312 U.S. 219) two unions had a dispute as to which should do the work in connection with the installation of certain machinery of a manufacturer who shipped his goods in interstate commerce. As a result of the dispute, one of the unions called a strike against the manufacturer and distributed a request through circular letters and otherwise that members of the union and their friends refrain from buying the manufacturer's products. These activities on behalf of the union caused the indictment of four officials of the union for a combination and conspiracy in restraint of trade in violation of the Sherman Act. The court decided that this indictment could not be sustained. The Sherman Act read together with the Clayton Act and the Norris-LaGuardia Act made legal the conduct which was sought to be restrained by the criminal prosecution in this case. Mr. Justice Roberts in a strong dissenting opinion, however, pointed out that what was involved was a secondary boycott affecting interstate commerce and that such boycotts had been held to be illegal by the Supreme Court for many years.

A number of very important cases were decided by the Supreme Court in the domain of civil rights. Edwards v. People (62 Sup. Ct. 164) raised the question of whether a state (in this case, California) could prohibit the entry within its borders of indigent citizens of other states. The court was unanimous in its opinion that this could not be done. However, the various justices differed among themselves as to the reasons for this prohibition. Certain justices took the position that the California statute was an undue interference with interstate commerce. Others based their decision on the ground that the right of free movement across state boundaries is a right of national citizenship. Mr. Justice Jackson rested his decision on the ground that the right of free movement is one of the privileges and immunities of citizenship stating in his opinion:

'It is a privilege of citizenship of the United States protected from state abridgment, to enter any state of the Union, either for temporary sojourn or for the establishment of permanent residence therein and for gaining resultant citizenship thereof. If national citizenship means less than this, it means nothing.'

Mitchell v. U.S.

(313 U.S. 80) raised the question as to whether an interstate railroad could lawfully discriminate between whites and negroes in furnishing pullman accommodations. The plaintiff in this case, a colored congressman, had been removed from a pullman car in Arkansas and compelled to move into the car provided for colored passengers although he had bought a pullman ticket to his destination. This action was in purported compliance with an Arkansas statute requiring segregation of colored from white persons in railroad cars. This discrimination was held to be unlawful and was not justified even by the comparatively small demand for first class accommodations for colored people.

Bridges v. California and Times-Mirror v. California.

(62 Sup. Ct. 190) brought before the Supreme Court the extent of the right of a state court to punish as contempt comments in the newspapers on pending cases. The Bridges case arose out of publication by Bridges of a telegram to the Secretary of Labor regarding a judicial decision while a motion for a new trial was pending. The case involved a dispute between an A.F. of L. and a C.I.O. union. The telegram referred to the judge's decision as 'outrageous' and stated that its attempted enforcement would tie up the port of Los Angeles. The most serious charge against the Times-Mirror was that it had before sentence printed an editorial against 'probation for gorillas,' after two members of a labor union had been found guilty of assault. Punishment of these utterances as contempt by the Superior Court of California was based on the notion that they had an inherent tendency to interfere with the due administration of justice. Mr. Justice Black speaking for the majority of the Supreme Court, however, failed to find contempt in these utterances of Bridges or of the Times-Mirror. He failed to find in these statements the clear and present danger that they will bring about the substantive evils complained of, namely; the interference with the due course of justice. The action of the Superior Court of California was therefore contrary to constitutional guarantees of freedom of speech and freedom of the press. This view of the majority of the court was severely criticized by Mr. Justice Frankfurter in the following terms:

'Our whole history repels the view that it is an exercise of one of the civil liberties secured by the Bill of Rights for a leader of a large following or for a powerful metropolitan newspaper to attempt to overawe a judge in a matter immediately pending before him. The view of the majority deprives California of means for securing to its citizens justice according to law, means, which, since the Union was founded, have been the possession, hitherto unchallenged, of all the states. This sudden break with the uninterrupted course of constitutional history has no constitutional warrant. To find justification for such deprivation of the historic powers of the states is to misconceive the idea of freedom of thought and speech as guaranteed by the Constitution.'

Two other civil rights cases are worthy of notice. In Cox v. New Hampshire (312 U.S. 569), five Jehovah's Witnesses contended that a New Hampshire statute under which they had been convicted, prohibiting a parade or procession upon a public street without a license was unconstitutional because it deprived them of the rights of freedom of speech, press, worship and assembly. This contention was denied by the Supreme Court which stated:

'The authority of a municipality to impose regulations in order to assure the safety and convenience of the people in the use of public highways had never been regarded as inconsistent with civil liberties but rather as one of the means of safeguarding the good order upon which they ultimately depend.'

In Hines v. Davidovitz (312 U.S. 52) a Pennsylvania statute requiring aliens over 18 to register once each year was declared invalid because of the fact that Congress had in 1940 passed its own Alien Registration Act. By doing so, Congress provided a standard for alien registration in a single integrated and all embracing system in order to obtain the information deemed to be desirable in connection with aliens.

During the year 1941, there was considerable activity by the anti-trust division of the Department of Justice and other Federal agencies, against combinations and conspiracies in restraint of trade. Outstanding among this activity was the loss by the government of its suit against the Aluminum Co. of America after two years of trial. Of great significance to the defense effort was the active prosecution by the Anti Trust Division of an investigation into restrictions on defense materials. One branch of this investigation resulting in indictments, namely, the investigation of the magnesium industry, showed startling evidence of German influence in domestic industries, essential to national defense and an illegal attempt to restrict the production of magnesium by a combination of German and American corporations. Other attempts to restrain and restrict trade and commerce also received the attention of the Federal authorities, ranging from the prosecution of ASCAP for unlawfully restricting the sale of copyrighted music to indictments against labor unions for interfering with the sale and distribution of plumbing supplies.

Two interesting cases of combinations in restraint of trade and unfair methods of competition tending to monopoly came before the Supreme Court in Fashion Originators Guild v. Federal Trade Commission (312 U.S. 457) and Millinery Creators Guild v. Federal Trade Commission (312 U.S. 469). The Fashion Originators Guild was a combination of designers and manufacturers of women's dresses and textiles. They claimed that they made distinctive dresses and textiles. After their designs enter into the channels of trade, other manufacturers systematically make and copy them and sell them at lower prices than the originals. This is called by the members of the guild 'style' piracy,' although the original creations were not copyrighted. In the attempt to destroy these competitors and prevent 'style piracy,' the members of the guild boycotted retailers who sold garments copied from designs put out by guild members. Twelve thousand retailers signed agreements to co-operate with the guild boycott program. The Millinery Guild in the second case operated a plan similar to the Fashion Guild in the domain of women's hats.

Both plans and combinations were declared illegal by a unanimous court since they conflicted with the principles of the Clayton Act and the inhibitions of the Sherman Act. The court stated that the illegal combination could not be justified as an attempt to stop 'style piracy.' Even if this were a tort under the laws of the state in which it occurred, it would not justify a combination that sought to restrain interstate commerce in violation of Federal law.

New deal legislation and the revision by the Supreme Court of earlier interpretations of the scope of the Interstate Commerce Clause has made possible a considerable extension of the area of commercial, industrial, and economic activity regulated by agencies of the Federal Government. The case of Federal Trade Commission v. Bunte Bros. (312 U.S. 349), however, takes a restrictive view of the Federal Trade Commission's powers to prevent unfair methods of competition. In that case the Federal Trade Commission sued to prohibit the unfair business practices of a manufacturer of candy who sold his products intra-state because these practices gave him an unfair advantage in competition with competitors from outside the state who attempted to obtain local business. The Federal Trade Commission had prohibited the interstate manufacturers from engaging in the same practices. The court thru Justice Frankfurter took the view that section 5 of the Federal Trade Commission Act which proscribes 'unfair methods of competition in commerce' can not be construed to mean 'Unfair methods of competition in any way affecting interstate commerce.' Thus it denied the power of the Federal Trade Commission to act in this situation. The majority opinion, however, was criticized by Justice Douglas who stated:

'Under this decision respondent may continue to use this same unfair method of competition to increase its business at the expense of those who sell in interstate commerce and who are not free to employ the same methods in self-defense. I think the Act, an exercise by Congress of its commerce power, should be interpreted to protect interstate commerce not to permit discrimination against it.'

While the court in the Bunte case interfered with the effort of a Federal agency to control intra-state activity, the case of Olsen v. Nebraska (313 U.S. 236) indicates that the court would go a long way to sustain state action seeking to regulate commercial and industrial activity within its own borders. In that case a Nebraska statute limited the amount of fee which an employment agency could charge to 10 per cent of the first month's salary. In 1928 a similar statute in New Jersey had been declared unconstitutional (Ribnik v. McBride 277 U.S. 350). The Court in Olsen v. Nebraska, however, stated that the drift away from the Ribnik v. McBride case 'has been so great that it can no longer be deemed a controlling authority.' It, therefore, upheld the validity of the Nebraska statute.

While the Court was ready to go a long way to sustain the exercise by a state of regulatory powers over local activities, it frowned on state attempts to interfere with the exercise of powers by the Federal Government intrusted to it by the Constitution. This was evident in the case of Oklahoma v. Atkinson Co. (313 U.S. 508). There the state of Oklahoma sought to declare unconstitutional a Federal statute authorizing the construction of the Denison Reservoir and Dam on the Red River. Oklahoma complained that the dam would inundate 100,000 acres of its land, deprive it and its local communities of tax revenues, destroy its highways and bridges and create a serious social and economic problem because of the removal of its citizens from the inundated land. The Supreme Court held, however, that the Denison Dam and Reservoir Project is a valid exercise by Congress of the commerce power. The project is part of a comprehensive flood control plan to control the watershed of one of the principal tributaries of the Mississippi, the Red River. The project also aims to protect and improve the navigation of the Red River itself and its navigable stretches which lie below the state of Oklahoma. Congress may control the non-navigable parts of the stream in order to protect commerce on the navigable parts. Nor did the inclusion into the project of means of developing water power which necessitated an increase in the height of the dam and the consequent increase in the area of land to be inundated, invalidate the project. The dam was being built essentially for flood control and the waterpower features helped carry the cost of the flood control. See also GERMANY: Nazi Legal System; UNITED STATES.