Dred Scott Cited

Headlong into what some of its members proclaimed as the most momentous issue before U. S. citizens, the Senate last week plowed with historic fervor. The issue arises from the stern necessity which requires the Supreme Court to spend a large part of its time as a board of economists controlling the profits of public corporations under the 14th Amendment.

What prompted this onslaught upon the Supreme Court was the nomination of Charles Evans Hughes as Chief Justice, before the Senate for confirmation. Because his appointment was discussed under the Senate's new open-session rules, all the world could follow the bitter ebb and flow of debate which a year ago would have been secret. Likewise thrown aside was the taboo that the Supreme Court is sacrosanct and thus above criticism.

Though Mr. Hughes was the bull's eye at which his critics fired, the target was much larger than his personality. He merely served as a symbol of what many a Senator violently disliked in the Supreme Court itself. Even after the Senate had confirmed his nomination, senatorial hostility toward the court continued to run on in a series of resentful threats about curbing its enormous authority.

Behind the contest on the Hughes nomination was a major question of economics, in the centre of which stands the Supreme Court. The 14th Amendment says: "Nor shall any State deprive any person [or corporation] of life, liberty or property without due process of law." When a State agency attempts to reduce or regulate the rates charged by a public service corporation (power, gas, transportation, communications) and thereby affect its profits, that corporation may carry its objections to the Supreme Court. There it claims that the State agency has violated the 14th Amendment by depriving it of its "property" (i. e., a fair income on its investment) "without due process of law." The Supreme Court is asked to set aside the State agency's order as confiscatory. Immediately the Court is confronted with not a legal but an economic question: What is the "property" the corporation complains the State has deprived it of? To find an answer the Supreme Court must plunge into a maze of controversial economic facts and theories, on which the Constitution throws no light. Its judges become economists; hard-and-fast law is left behind.

A hypothetical case: a corporation has invested $100,000,000 in cash over 25 years in creating its public service property. Its rates return a profit of $10,000,000 per year or 10% on its actual investment. But the corporation figures that, after allowing for depreciation, its property is now worth $200,000,000--an estimate based on the cost of replacement at higher price levels, the value of franchises, patents, goodwill and other intangibles. On that basis it earns only 5%. It ups its rates to consumers to boost its earnings and its percentage of profit. The State interferes. The corporation appeals to the U. S. Supreme Court which must decide the concern's property value against which income may be figured. The court agrees that the company is worth say $195,000,000, that 5% is not a fair return on that valuation, and therefore voids the State's restraint as a Constitutional violation. The Court then says the corporation may earn 8% on its new and higher value. Rates to consumers are increased to return the corporation a profit to the limit of the Supreme Court's order.

What aroused Senators last week was the recurrent tendency of the Court to favor higher corporate valuations, bigger profits, and increased rates. Speaker after speaker grouped the eight associate justices into Conservatives who supported this tendency--Van Devanter, McReynolds, Sutherland, Butler, Sanford--and Liberals who strongly dissented from it--Holmes, Brandeis, Stone. The Court, it was claimed, was clearly divided between five or "property rights" and three for "human rights." Warning was heard that Chief Justice Hughes would, by virtue of his training, his professional associations, his cast of mind, take his place on the side of "property rights."

Not since Dec. 28, 1835, when President Andrew Jackson nominated Roger Brooke Taney of Maryland as Chief Justice to succeed John Marshall has a nominee for this highest judicial post been more severely flayed in the Senate than Mr. Hughes. Taney was opposed for just the reverse of the reasons advanced against Mr. Hughes. He was a Southern Democrat whom such Whigs as Clay and Webster denounced as "a tool of Jacksonian power"--just as Mr. Hughes was denounced as "a tool of Hooverian power." Progressives charged Mr. Hughes with favoring monopoly; Whigs excoriated Taney for opposing it. Both were conceded to be excellent lawyers. The Senate confirmed Taney as Chief Justice March 15, 1836, by a vote of 29 to 15. He lived to write the famed Dred Scott decision (1857) which voided the Missouri Compromise, denied Congress the right to abolish slavery in the territories and thus helped to advance the Civil War. Senators warned that Chief Justice Hughes might someday write a decision on an economic question as pregnant with awful consequences as was the Dred Scott decision.

The fight on Mr. Hughes commenced slowly, almost apologetically, at the instigation of Nebraska's Senator Norris. Gathering momentum, it quickly drew in Idaho's Senator Borah, chronic complainant. Within the year Senator Borah had opposed President Hoover on farm relief, on the tariff, on prohibition enforcement personnel, on "freedom-of-the-seas" at the London Naval Conference. It was no great leap from loyalty for him to object to President Hoover's choice as Chief Justice. One by one other Republican Progressives began to rally against Mr. Hughes. Such assorted Democratic Senators as Virginia's Glass and South Carolina's Blease, Georgia's George and Washington's Dill joined the hue and cry. For three full days with crowded galleries, the Senate Chamber rumbled and roared with pent-up liberal resentment against judicial conservatism. Always the issue remained larger than Mr. Hughes' appointment.

Senator Borah raked the Supreme Court for its decision, in the Baltimore Street R. R. case, wherein it had held that a franchise obtained for nothing was worth $5,000,000 to the company, that earnings of 6.26% were so low as to be confiscatory. He warned of "the great economic oppression" that would follow such decisions. Said he: "I do not know of a proposition of more concern to all the people than the relationship which these properties and natural resources shall bear to the masses of the people in the U. S." The Senator also found that Mr. Hughes's plea that General Electric Co. had a vested right in perpetuity in a broadcasting wave length temporarily assigned it, was "a shocking proposition." Mr. Hughes's views, contended the Senator, "are not views that ought to be incorporated in our legal and economic system."

Flaying the Supreme Court as "the economic dictator of the U. S.," stormy little Senator Glass declared that it "has gone far afield from its original functions and has constituted itself a court in economics." He recalled the fact that as an Associate Justice Mr. Hughes in 1914 had written the famed Shreveport decision which Senator Glass claimed destroyed the last vestige of State control of freight rates.* North Dakota's Senator Nye chimed in: "The sooner citizens get rid of this idea that a judge is more honorable than a legislator, the clearer will become our perception of the evils of judicial usurpation."

Wisconsin's young Senator La Follette blazed away like his father in this fight:/- "We are filling the jury box that will decide the issue between organized greed and the rights of the masses. . . . Aggregations of capital threaten to wipe out the great middle class in this country."

The objections specifically to Mr. Hughes were negligible: I) his resignation from the Supreme Court in 1916 to run for President; 2) his corporation law practice; 3) his silence on moral obloquy in the Harding Cabinet; 4) his defense of onetime Senator Newberry of Michigan on the ground that the Senate had no constitutional right to look into State primaries. Assuring critics he would be a fair-minded judge, his friends in the Senate let the opposition blow itself out. made no formal effort to defend him. Mr. Hughes was confirmed as the eleventh Chief Justice of the U. S. (The vote: 52 to 26.) He was ready to take his special oath which begins: "I do solemnly swear that I will administer justice without respect to persons and do equal rights to the rich and to the poor. . . ."

But this oath meant little to the critics of the Supreme Court. Washington's Senator Dill, who had shouted that Abraham Lincoln would have had no chance of appointment today as Chief Justice because he would be rated a "radical,''* warned that the people would find a method of curbing the Supreme Court if it did not change its ways on economic questions. The Senate was shocked at his passionate use of the word "revolution." Senator Norris predicted that the Hughes appointment would become an issue in the next campaign, called it "Banquo's ghost come back to plague" the G. O. P. Senator Brookhart babbled of more Constitutional Amendments to restrict the Supreme Court.

No one was foolish enough to imagine that the Supreme Court, now headed by Chief Justice Hughes, would for an instant be cowed by the criticism Senators had heaped upon its economic principles. Its members, as always, were silently aloof from such political ructions. But economics make war for politicians no less than for nations. To many the Senate phenomenon, no unwholesome sign, marked the commencement of wholesale political discussion of the Supreme Court's part in the economic destiny of the U. S.

*Texas had fixed intrastate rates in favor of local shippers, against shippers outside the State. Shreveport, La., appealed to the Supreme Court which voided the Texas-made rates as discriminatory.

/-As a third-party candidate for President in 1924 the elder La Follette advocated constitutional changes which would make 5-to-4 Supreme Court innocuous, would permit Congress to repass laws declared unconstitutional.

*An error. Lincoln was counsel for the Illinois Central R. R., for the Rock Island R. R., refused a $10,000 per year offer from the New York Central. His "Wall Street connections" almost kept him out of the Presidency.

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