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Mr. HIRTH. I think certain gentlemen would like to give agriculture a bill that would tide it over the congressional elections. That does not mean anything.

Senator HARRELD. You are standing, as I understand it, on this confidential committee print-you and those you speak for?

Mr. HIRTH. With such modifications as may be agreed on with the cotton men.

Senator HEFLIN. In other words, you do not want the thing carried along, as Ollie James used to tell what his mother said about his father as a lawyer. She said, "Ollie, your paw continues all his cases from court to court until the witnesses die.

FURTHER STATEMENT OF F. W. MURPHY, WHEATON, MINN.

Mr. MURPHY. Continuing my statement of the other day, gentlemen, in view of a suggestion that you made, Senator Sackett, as to the constitutionality

of this proposed legislation, I want to refer you to the report of Mr. Haugen, as chairman of the House Committee on Agriculture, to Congress two years ago on the McNary-Haugen bill. I will have furnished to each member of this committee that report. I now present pages 57 to 109 of the report, which deal with the subject of the constitutionality of this legislation.

(The report follows).

MEMORANDUM UPON THE CONSTITUTIONALITY OF THE BILL.

The opponents of the McNary-Haugen bill have attacked its constitutionality. For this reason your Committee deems it desirable to submit a memorandum discussing the more important constitutional problems involved and indicating the constitutional bases for the provisions of the bill. The following problems are discussed:

I. The validity of the appropriation authorized.
II. The establishment of the ratio price as an interference with

liberty of contract. III. The equalization fee considered as a regulation of interstate

and foreign commerce. IV. The equalization fee considered as a tax.

V. The delegation of power to determine the amount of the fee. VI. The adjustment of imports.

I.

THE VALIDITY OF THE APPROPRIATION AUTHORIZED.

THE PROVISIONS OF THE BILL.

Section 31 of the bill provides that the United States shall subscribe to all of the capital stock of the corporation and authorizes an appropriation of $200,000,000 for that purpose.

THE PROBLEM.

The problem presented is, May Congress appropriate money for the purchase by the United States of the stock of a corporation which is to engage in the business of buying and selling agricultural com modities at the direction and under the supervision of the Federal Government?

DISCUSSION.

A. LIMITATIONS UPON THE POWER OF CONGRESS TO APPROPRIATE

MONEY.

Although the United States Supreme Court has not applied to Federal legislation the doctrine of the unconstitutionality of taxation for private purposes, it may be admitted that in a proper case the court will impose the limitation upon Congress.

In United States ex rel. Miles Planting Company v. Carlisle (1894, 5 App. D. C. 138), the Court of Appeals of the District of Columbia refused to issue a writ of mandamus to compel the payment of the sugar bounty under the provisions of the McKinley Tariff Act. The decision is based upon the theory that the appropriation was for a private purpose; that money for that appropriation must be raised by taxation; and that, therefore, any tax to raise the necessary money would be for a private purpose.

Although the restriction upon State taxation rests upon the dueprocess clause of the Fourteenth Amendment (Jones v. City of Portland, 1917, 245 U. S. 217; Green v. Frazier, 1920, 253 U. Š. 233), it has been stated repeatedly that the due-process clause of the Fifth Amendment (which is applicable to Federal legislation) does not limit the taxing power of Congress (Brushaber v. Union Pacific Co, 1916, 240 U. S. 1, and cases there cited). In consequence, the only remaining logical foundation for any limitation upon the power of Congress would seem to be section 8 of Article I of the Constitution. The first clause of that section provides:

The Congress shall have power to lay and collect taxes debts and provide for the

general welfare Under this provision, the test of the validity of an appropriation, therefore, is whether the tax necessary to raise the revenue is a tax "to provide for the general welfare".

to pay the

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B. THE GENERAL WELFARE.

It will probably be generally admitted that an appropriation to aid agriculture is for the general welfare," even without regard to the present emergency. In his final message to Congress President Washington, in recommending the establishment of a national university, stated:

It will not be doubted that with reference either to individual or national welfare agriculture is of primary importance. In proportion as nations advance in population and other circumstances of maturity this truth becomes more apparent and renders the cultivation of the soil more and more an object of public patronage. Institutions for promoting it grow up, supported by the public press; and to what object can it be dedicated with greater propriety? (1 Richardson, Messages and Papers of the Presidents, 201.)

President Coolidge, in his address before the National Republican Club in New York City, February 12, 1924, stated that agricultureis an interest on which it is estimated that more than 40,000,000 of our people are directly or indirectly dependent. It represents an investment several times as large as that of all the railroads of the country. It has an aggregate production of over $8,000,000,000 each year.

You can not long prosper with that great population and great area in distress.

This problem is not merely the problem of the agricultural sections of our country. It is the problem likewise of industry, of transportation, of commerce, and of banking.

The facts set forth in the earlier part of the report upon the bill establish beyond question the existence and the seriousness of the present emergency. The facts for the most part are beyond dispute. In view of this emergency, it would seem that there can be no doubt that the appropriation authorized is one" to provide for the general welfare”.

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C. THE LEGAL EFFECT OF THE DECISION OF CONGRESS.

If Congress determines that the appropriation is for the general welfare, its decision will be entitled to, and will be accorded, great weight by the court.

In United States v. Realty Co. (1896, 163 U. S. 427), holding that an appropriation to pay an amount equal to the bounties under the McKinley Tariff Act was valid and affirming a judgment against the United States for such amount, the court said (p. 444):

In regard to the question whether the facts existing in any given case bring it within the description of that class of claims which Congress can and ought to recognize as founded upon equitable and moral considerations and grounded upon principles of right and justice, we think that generally such question must in its nature be one for Congress to decide for itself. Its decision recognizing such a claim and appropriating money for its payment can rarely, if ever, be the subject of review by the judicial branch of the Government.

If it is "for Congress to decide for itself” whether an appropriation is “to pay the debts,” it must also be for Congress to decide (except in a rare case, at least) whether an appropriation is “to provide for the general welfare".

In Smith v. Kansas City Title Co. (1921, 255 U. S. 180, 210), the Federal Farm Loan Act was held constitutional, notwithstanding the contention that the appropriation of money for the capital stock of the Federal land banks and for the use of the Federal Farm Loan Board was beyond the power of Congress. (See the brief of Hon. Charles Evans Hughes in support of the validity of the appropriation, quoted in part by Corwin, The Spending Power of Congress, 36 Harvard Law Review, 548, 578, 581-notes 83, 84.)

Although it would not seem necessary in order to support the appropriation in question, there is good authority for the position that the question is a political one and will not be reviewed by the courts. (See Burdick, Federal Aid Legislation, 8 Cornell Law Quarterly 324; Corwin, The Spending Power of Congress, 36 Harvard Law Review 548; Note, 9 Cornell Law Quarterly 50).

D. THE DIFFICULTIES IN RAISING THE QUESTION.

In Frothingham v. Mellon (1923, 262 U. S. 447), the Supreme Court held for the first time that it lacked jurisdiction of a suit brought by a taxpayer to enjoin the payment of money. The case involved the Sheppard-Towner Maternity Act (42 Stat. 224).

Mr. Justice Sutherland, in rendering the decision of the court, stated (pp. 487-488):

But the relation of a taxpayer of the United States to the Federal Government is very different. His interest in the moneys of the Treasury-partly realized from taxation and partly from other sources—is shared with millions of others, is comparatively minute and indeterminable, and the effect upon future taxation of any payment out of the funds so remote, fluctuating, and uncertain that no basis is afforded for an appeal to the preventive powers of a court of equity.

It is of much significance that no precedent sustaining the right to maintain suits like this has been called to our attention, although, since the formation of the Government, as an examination of the acts of Congress will disclose, a large number of statutes appropriating or involving the expenditure of moneys for non-Federal purposes have been enacted and carried into effect

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E. LEGISLATIVE PRECEDENTS.

(1) Appropriations for the purchase of stock of corporations to engage in business.

Congress has appropriated money for the purchase of the stock of the Federal reserve banks (38 Stat. 251, 253); the Federal land banks (39 Stat. 360, 364-365); the Emergency Fleet Corporation (39 Stat. 728, 731); the United States Grain Corporation (see 40 Stat. 276, 283, 1352, 1353; Executive orders dated Aug. 14, 1917; June 21, 1918; and May 14, 1919); Federal intermediate credit banks (42 Stat. 1454, 1457); the Sugar Equalization Board; and the War Finance Corporation (40 Stat. 506).

(2) Appropriations for agriculture.

İt is needless to point out the appropriations by Congress since 1862 for, or the extent of, the activities of the Department of Agriculture.

(3) Appropriations to stimulate commerce.

The payment of drawbacks upon the exportation of articles imported for manufacture or processing in the United States (see, for example, sec. 313, Tariff Act of 1922, 42 Stat. 940); and bounties to certain types of American-owned vessels carrying ocean mails were appropriated for. (26 Stat. 830, 832.)

For a discussion of the growth of appropriations for rivers and harbors and roads and canals, see Corwin, The Spending Power of Congress, 36 Harvard Law Review, 548, and Burdick, Federal Aid Legislation, 8 Cornell Law Quarterly, 324.

(4) Appropriations for other than Federal governmental purposes, in the strict sense.

Examples of appropriations made for the relief of distress arising from emergency conditions may be found in 3 Stat. 211, 12 Stat. 652, 19 Stat. 374, 22 Stat. 379, 34 Stat. 825, 40 Stat. 917, and 42 Stat. 1072. Twenty million dollars was appropriated for grain for Russia (42 Stat. 351). Appropriations were made for polar expeditions (22 Stat. 384) and for observation of eclipses of the sun (12 Stat. 117). Appropriations for participation in expositions were made in 17 Stat. 203, 19 Stat. 3, 27 Stat. 389, 31 Stat. 1444, 38 Stat. 77, and 42 Stat. 210.

Examples of "grants-in-aid” appropriations are the Adams Act (34 Stat. 63), the Smith-Lever Act (38 Stat. 372), the Smith-Hughes Act (39 Stat. 929), the Smith-Sears Act (41 Stat. 735), and the Sheppard-Towner Act (42 Stat. 224).

CONCLUSION.

Your committee believes that the appropriation in question is sanctioned by legislative precedents, is for the general welfare, is within the decisions of the United States Supreme Court, and that if attacked it will be sustained as constitutional.

II.

THE ESTABLISHMENT OF THE RATIO PRICE AS AN INTER

FERENCE WITH LIBERTY OF CONTRACT.

THE PROVISIONS OF THE BILL.

Section 4 of the bill provides for the establishment of the ratio price. The corporation, whenever it is authorized to purchase. is required to purchase at the ratio price, or at a price based upon the ratio price." The corporation is prohibited from selling in the domestic market at less than the price at which it has purchased, until after the special emergency has terminated (sec. 44).

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