(c. 121, 23 Stat. 53), section 14 (p. 57) imposed a tonnage duty of 3 cents per ton—

Provided, That the President of the United States shall suspend the collection of so much of the duty herein imposed [on vessels from certain-named countries] as may be in excess of the tonnage and lighthouse dues, or other equivalent tax or taxes imposed on American vessels.

* * *

(5) The Revenue Act of 1916, approved September 8, 1916 (c. 463, 39 Stat. 756, 799):

* * *

SEC. 804. That whenever any country * * shall prohibit the importation of any article of the United States * * * the President shall have power to prohibit, during the period of such prohibition is in force, the importation into the United States of similar articles, or * * * other articles, the products of such country

* * *

* * *

*

SEC. 805. That whenever during the existence of a war in which the United States is not engaged the President shall be satisfied that there is reasonable ground to believe that under the laws * * * * * of any country contrary to the law and practice of nations, the importation of any article the product * * * of the United States * * * is prevented or restricted, the President is authorized and empowered to prohibit or restrict during the period such prohibition or restriction is in force, the importation into the United States of similar or other articles ** *.

(6) The Antidumping Act, 1921, approved May 27, 1921 (c. 14, 42 Stat. 9, 11):

SEC. 201. (a) That whenever the Secretary of the Treasury * * * finds that an industry of the United States is being or is likely to be injured, or is prevented from being established, by reason of the importation into the United States of a class of * * * * foreign merchandise * and that [such] merchandise is being sold or is likely to be sold * * * at less than its fair value, then he shall make such finding public to the extent he deems necessary. Subdivision (a) of section 202 then imposes a duty in an amount equal to the difference between the foreign market value and the price at which the merchandise is sold in the United States.

(7) The Tariff Act of 1922, approved September 21, 1922 (c. 356, 42 Stat. 858):

Section 303 (p. 935) provides that the Secretary of the Treasury shall ascertain the net amount of direct or indirect bounties paid by any foreign country, and such amount shall be paid upon the importation of any merchandise on the dutiable list imported from such country.

Section 315 (p. 941) authorizes the President to ascertain differences in cost of production and to ascertain the amount of duty necessary to equalize the same. Thirty days after the proclamation the increase or decreased duties shall be levied, collected, and paid. Subdivision (b) authorizes the President to prescribe the American selling price when necessary to equalize costs of production. Increases or decreases of rates shall not exceed 50 per cent, and an article on the dutiable list can not be transferred to the free list, or vice versa.

Section 316 (p. 943) authorizes the President to determine the rate of additional duty necessary to offset any unfair method of competition, and such additional duty is imposed. In extreme cases the President may exclude merchandise from entry into the United States.

Section 317 (p. 944) authorizes the President to specify and declare a new or additional rate of duty necessary to offset any burden imposed by a foreign government upon the commerce of the United States, and such duty is imposed.

Several paragraphs of the Tariff Act authorize the President to impose countervailing duties. See, for example, paragraph 369 (p. 885), paragraph 371 (p. 885), paragraph 401 (p. 889) (grants an exemption in the case of logs imported from a government which has not during the preceding 12 months maintained any embargo or other restriction upon exportation from such country), paragraph 1302 (p. 909), paragraph 1541 (p. 925), and paragraph 1700 (p. 932).

CONCLUSION.

Your Committee concludes that the delegation of power to adjust imports is not an unusual delegation, is clearly within the decisions of the Supreme Court, and is valid.

VII.

SEPARABILITY OF PROVISIONS.

The separability clause is adequate to prevent the entire Act from falling because of the unconstitutionality of one or more provisions. The separability clause in section 406 of the bill is much stronger than, and differs from, the type frequently used. This section provides:

If any provision of this Act is declared unconstitutional or the applicability thereof to any person, commodity, or circumstance is held invalid, the validity of the remainder of the Act and the applicability thereof to other persons, commodities, and circumstances shall not be affected thereby.

The usual separability provision merely provides that if any clause, sentence, paragraph, or part is declared unconstitutional it shall not affect the remainder of the Act.

Section 406 of the bill will permit the bill to stand even if some particular transaction (as, for example, the imposition of an equalization fee upon the intrastate sale of corn to be used for fattening hogs) should prove not to affect interstate commerce, and therefore be beyond the power of regulation by Congress.

See for example, Hill v. Wallace (1922, 259 U. S. 44, 70); Dorchy v. Kansas (U. S. Sup. Ct. No. 163, October term, 1923, March 10, 1924); Graham v. Miles (D. C. 1922, 284 Fed. 878).

VIII.

OPINION OF SOLICITOR OF DEPARTMENT OF AGRICULTURE.

THE SECRETARY OF AGRICULTURE,

Washington, March 27, 1924.

DEAR MR. HAUGEN: In response to your letter of March 23, in which you request an opinion by the Solicitor of this Department as to the constitutionality of H. R. 5563, I referred this matter to the Solicitor, who has transmitted the report enclosed herewith.

Very truly,

Hon. GILBERT N. HAUGEN,

HENRY C. WALLACE.

House of Representatives

UNITED STATES DEPARTMENT OF AGRICULTURE,

OFFICE OF THE SOLICITOR, Washington, D. C., March 25, 1924.

MEMORANDUM OF THE SOLICITOR OF THE DEPARTMENT OF AGRICULTURE ON THE CONSTITUTIONALITY OF H. R. 5563, PREPARED AT THE DIRECTION OF THE SECRETARY OF AGRICULTURE PURSUANT TO RESOLUTION OF THE COMMITTEE ON AGRICULTURE OF THE HOUSE OF REPRESENTATIVES.

From my consideration of the proposed measure, I am of the opinion that in all probability it would be finally sustained by the Supreme Court as a valid exercise of the legislative power of Congress. I am certain, at least, that the arguments which could be made in support of its constitutionality are such that an inferior court, much less a law officer of the Government, would not be warranted in declaring it invalid, under the rule laid down by the Supreme Court in Nicoll v. Ames, 173 U. S. 509, 519, that no Act of Congress should be declared unconstitutional unless the question is free from any reasonable doubt. This is especially true in view of the temporary character of this legislation, which is intended to operate only during the period of a public emergency. As Justice Holmes observes in Block v. Hirsch, 256 U. S. 135, 157, a case involving the District of Columbia rent law-"A limit in time, to tide over a passing trouble, well may justify a law that could not be upheld as a permanent change."

The bill is predicated upon the existence of a general emergency in relation to agricultural commodities and a widespread depression in the commerce thereof. It provides for the creation of a supervisory commission composed of the Secretary of Agriculture, Chairman, the Secretary of Commerce, Vice Chairman, the Secretary of Treasury, the Chairman of the Tariff Commission, and three directors of the Agricultural Export Corporation, which is to be composed of five individuals and their successors, namely, the Secretary of Agriculture, the Secretary of Commerce, and three individuals appointed by the President by and with the advice and consent of the Senate. The Corporation is to be actively managed and its business conducted by a managing director. The Commission is to exercise supervisory functions and the Corporation is to do the actual trading. The mathematical ratio between the price of each of the specified agricultural commodities and the average price of agricultural commodities during the pre-war period of 1905-1914 is to be determined by the Commission according to the statistics compiled by the Department of Labor. The Commission will then take the current all commodities price and will compute the mathematical ratio which should exist and the all current commodities price in order to restore the pre-war ratio. If the Commission finds that the present price of any agricultural commodity is less than this ascertained ratio, it may declare a special emergency in respect to that commodity and determine the amount which should be purchased in order to remove the exportable surplus. The Corporation will then make the necessary purchases at the ratio price. By absorbing the exportable surplus it is contemplated that the domestic law of supply and demand will produce a domestic price for the commodities approximately equivalent to the ratio price. In order to permit the persons benefited by the Act to pay for the operations thereof, it is provided that an equalization fee is to be paid upon every sale by the producer. The Commission will establish the probable losses and will determine the amount necessary to be collected upon all sales, and the amount of any excess therefrom to be refunded. In order to prevent a flooding of the domestic markets, authority is given to make the necessary adjustments in import rates of duties on such products during the emergency. The actual trading will be conducted by the Agricultural Export Corporation under the supervision of the Commission. The legislation is to remain in effect for not more than five years from the thirtieth day of June after its passage except that the existence of the Corporation and Commission may be continued by Executive Order for such additional period as it may be necessary, in order to wind up its affairs.

The object of the proposed measure is to remedy an agricultural depression which affects not only the producers of agricultural commodities but indirectly the welfare of the whole nation, and to foster the whole commerce in agriculture so that during the existence of an emergency the commerce may be conducted so as to afford a reasonable return for the agricultural producers engaged in that

commerce, foreign and domestic. This is a legitimate aim and within the scope and power of Congress under the commerce clause of the Constitution. In the case of McCulloch v. Maryland, 4 Wheaton 427, Chief Justice Marshall said: "But we think the sound construction of the Constitution must allow to the national legislature that discretion, with respect to the means by which the powers it confers are to be carried into execution, which will enable that body to perform the high duties assigned to it, in the manner most beneficial to the people. 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."

And in the more recent case of Block v. Hirsh, the foregoing observation is substantially repeated by Mr. Justice Holmes. He says:

Assuming that the end in view otherwise justified the means adopted by Congress, we have no concern of course with the question whether those means were the wisest, whether they may not cost more than they come to, or will effect the result desired. It is enough that we are not warranted in saying that legislation that has been resorted to for the same purpose all over the world, is futile or has no reasonable relation to the relief sought." * * *

Again, in Gibbons v. Ogden, 9 Wheaton, 1, the power of Congress to regulate interstate and foreign commerce is said to be complete in itself and acknowledges no limitations except those laid down in the Constitution itself. I cannot see that the proposed legislation clearly transcends any express limitations upon the legislative power of Congress.

The bill may be considered as regulating the entire commerce, foreign and domestic, in basic agricultural commodities, for the specific purpose of fostering that commerce and eliminating paralyzing obstacles to the successful conduct thereof. If enacted, it will include sales both local and interstate of each agricultural commodity concerning which an emergency has been declared. Yet since Congress has found, with reason, that this is necessary in order to bring about the relief intended, it may constitutionally legislate so as to include in its regulations, transactions which in themselves and apart from their relations to the entire current of commerce would be considered local and subject exclusively to regulation by the State. Such incidental regulation of intrastate transactions by Congress, however, has been held permissible in Swift v. U. S., 196 U. S. 375, Stafford v. Wallace, involving the Packers and Stockyards Act, 258 U. S. 495, Chicago Board of Trade v. Olson, involving the Grain Futures Act, 262 U. S. 1, U. S. v. Ferger, 250 U. S. 199, Lemke v. Farmers Grain Company, 258 U. S. 50. The provision subjecting every sale made for or on account of producers to the payment of an equalization fee would not appear to contravene the prohibitions of the Fifth Amendment against taking property without due process of law, or without just compensation, in view of the recent decision of the Supreme Court in Dayton Goose Creek Railway Company v. United States, 68 Lawyer's Edition, 216. This provision is closely analogous to the provision (Section 422) of the Transportation Act of 1920 (41 Stat. 456), whereby one-half of the net earnings of a railroad company in excess of six per cent must be contributed to a revolving fund to be maintained by the Interstate Commerce Commission to aid weaker roads, to the end that a uniform system of rates for the public service might be maintained, which was upheld in the Dayton Goose Creek case, supra, as a valid exercise of the power to regulate commerce. In that case the decision in the lower court sustained the enforced contribution by the Railway Company of the excess portion of its earnings upon the ground that it was in substance a tax, but the Supreme Court appears to have sustained the provision in question purely as a regulation of commerce.

Another objection which might be raised to the proposed bill is that it imposes a tax upon exports in violation of Article I, Section 9, Clause 5, of the Constitution. It is questionable, however, whether the exaction of an equalization fee on sales of agricultural commodities as to which an emergency has been declared in accordance with the Bill is a tax at all, when considered in the light of the decision in the Dayton Goose Creek Railway case cited above. It might possibly be viewed as analogous to inspection fees exacted in the course of administration of other regulatory statutes such as the Grain Standards Act, since the service here to be rendered, though not by way of inspection, is nevertheless a real service because it tends to stabilize the prices of the commodities affected just as inspection laws tend to improve their quality and popularity with consumers. In the circumstances, therefore, the exaction of the equalization fee is but the charging back to the beneficiaries of this measure the cost of

maintaining the necessary machinery created thereby for the purpose of effectuating this stabilization of the prices of basic agricultural commodities and fostering commerce therein. But if it is held to be a tax, I am inclined to the opinion that it would not be invalid as a tax upon exports but that it would be in the nature of a valid excise tax upon the sales of commodities and not a direct tax upon the commodity itself, or upon the export thereof.

Upon the foregoing considerations there would seem to be constitutional basis for the enactment of this bill.

Respectfully,

R. W. WILLIAMS, Solicitor.

Mr. MURPHY. Many of us have spent, as I told you the other day, about three years in an intensive study of this subject. Of course, we realize the futility of coming to this Congress and presenting a bill where there is any question of its legality. We have satisfied ourselves to a moral certainty that this legislation is constitutional. It is intended to be a regulation of interstate and foreign commerce, and I think, upon an examination of these briefs that are submitted, you will find that there are plenty of precedents in this government for this sort of legislation.

It is intended to regulate domestic and foreign commerce in foodstuffs, and undoubtedly the power to remedy the most critical situation that has ever arisen in all the domestic commerce of the United States lies in this government.

I do not agree with those who say that the wrong that has been done to agriculture can not be righted, because if that be true, I question sometimes whether we would be capable of governing ourselves. So, in all earnestness, and yet, gentlemen, with the greatest patience in the world, I want to impress upon you that we believe that this bill is constitutional. We concede that arguments may be made, as it is common to make such arguments, against its constitutionality; but as to whether the law will be constitutional is a matter for the Supreme Court to decide.

Senator HARRELD. Are you standing on the same bill that Mr. Hirth talked about?

Mr. MURPHY. Yes, sir.

There is another matter I want to clear up, gentlemen, in view, Mr. Chairman, of one or two questions you asked Mr. Hirth yesterday. You asked one question in regard to the national council of cooperatives. In addition to those for whom I said to you the other day I am authorized to speak specifically, and as a member of a legislative committee, I can speak as a personal representative of the Minnesota wheat pool. That pool is a member of the National Cooperative Association to which you referred, Mr. Chairman.

The CHAIRMAN. It is a member of the so-called national council? Mr. MURPHY. Yes; for that pool I pledge support to this legislation. I am also directed to speak directly for the North Dakota wheat pool. Whether it is a member of the national council or not I do not know, but it is a wheat commodity organization in the Northwest. It is for this legislation.

William Settle, representing the Indiana wheat pool, is a member of our committee, and he and his organization are behind this bill They belong to the national council.

In order that you gentlemen might have a little clearer understanding of the extent to which organized agriculture is here speaking in behalf of this bill, and supplementing what I said to you the other